2024-001 – Subrecipient Monitoring Cluster: Research and Development Cluster (“R&D Cluster”) Grantor: Various - All R&D Cluster awards with subrecipients Award Name: Various - All R&D Cluster awards with subrecipients Award Year: FY2024 Assistance Listing Number: Various – All R&D Cluster awards with subrecipients Pass-through entities and ID Number: Various - All R&D Cluster awards with subrecipients Condition The University has a detailed pre-award risk assessment process prior to entering into a subrecipient relationship, which includes review of subrecipient Uniform Guidance reports. Subsequent review of Uniform Guidance reports for monitoring purposes is completed at the time of a subaward amendment. However, subawards are not always amended within a year, which creates a potential gap in review. In the FY2023 audit, 4 out of the 25 subaward selections did not have a Uniform Guidance report review or other monitoring review during the year, which resulted in a reportable finding. In FY2024, in response to the FY2023 finding in subrecipient monitoring (2023-001), the University implemented an annual Post-Award review of all subrecipient Uniform Guidance reports. This review documented the report information, findings noted, and follow-up performed with the subrecipient, as necessary. However, this consolidated review was deemed to be incomplete, as 1 of the 25 subrecipient selections was not included in the Post-Award review of all subrecipient Uniform Guidance reports. Management subsequently reviewed the completeness of the consolidated review, and determined a total of 12 subrecipients were not monitored in FY2024. Criteria 2 CFR 200.332(d) notes that pass-through entity monitoring of the subrecipient must include: • Reviewing financial and performance reports required by the pass-through entity. • Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. • Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by 2 CFR 200.521. Additionally, 2 CFR 200.332(f) notes that a pass-through entity must verify that every subrecipient is audited as required by the Uniform Guidance when it is expected that the subrecipient's Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in 2 CFR 200.501. Cause In compiling the consolidated analysis of all subrecipients with active funding during the fiscal year, the Post-Award team utilized reporting of subrecipient expenditures from the general ledger. This report inadvertently omitted a period of time during the fiscal year, which caused omission of select subrecipients from the consolidated Post-Award analysis. Effect The lack of an annual review of subrecipient Uniform Guidance reports may result in potential compliance issues not being identified and management not addressing findings and issuing a management decision, as required under the Uniform Guidance. Questioned Costs There are no questioned costs associated with this finding. Through audit procedures, there was no evidence of non-compliance from subrecipients. Recommendation We recommend the University address the completeness of their consolidated subrecipient monitoring through review of the reports used to compile the analysis. Management’s Views and Corrective Action Plan Management’s response is included in “Management’s Views and Corrective Action Plan” included at the end of this report after the summary schedule of status of prior audit findings
2024-001 – Subrecipient Monitoring Cluster: Research and Development Cluster (“R&D Cluster”) Grantor: Various - All R&D Cluster awards with subrecipients Award Name: Various - All R&D Cluster awards with subrecipients Award Year: FY2024 Assistance Listing Number: Various – All R&D Cluster awards with subrecipients Pass-through entities and ID Number: Various - All R&D Cluster awards with subrecipients Condition The University has a detailed pre-award risk assessment process prior to entering into a subrecipient relationship, which includes review of subrecipient Uniform Guidance reports. Subsequent review of Uniform Guidance reports for monitoring purposes is completed at the time of a subaward amendment. However, subawards are not always amended within a year, which creates a potential gap in review. In the FY2023 audit, 4 out of the 25 subaward selections did not have a Uniform Guidance report review or other monitoring review during the year, which resulted in a reportable finding. In FY2024, in response to the FY2023 finding in subrecipient monitoring (2023-001), the University implemented an annual Post-Award review of all subrecipient Uniform Guidance reports. This review documented the report information, findings noted, and follow-up performed with the subrecipient, as necessary. However, this consolidated review was deemed to be incomplete, as 1 of the 25 subrecipient selections was not included in the Post-Award review of all subrecipient Uniform Guidance reports. Management subsequently reviewed the completeness of the consolidated review, and determined a total of 12 subrecipients were not monitored in FY2024. Criteria 2 CFR 200.332(d) notes that pass-through entity monitoring of the subrecipient must include: • Reviewing financial and performance reports required by the pass-through entity. • Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. • Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by 2 CFR 200.521. Additionally, 2 CFR 200.332(f) notes that a pass-through entity must verify that every subrecipient is audited as required by the Uniform Guidance when it is expected that the subrecipient's Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in 2 CFR 200.501. Cause In compiling the consolidated analysis of all subrecipients with active funding during the fiscal year, the Post-Award team utilized reporting of subrecipient expenditures from the general ledger. This report inadvertently omitted a period of time during the fiscal year, which caused omission of select subrecipients from the consolidated Post-Award analysis. Effect The lack of an annual review of subrecipient Uniform Guidance reports may result in potential compliance issues not being identified and management not addressing findings and issuing a management decision, as required under the Uniform Guidance. Questioned Costs There are no questioned costs associated with this finding. Through audit procedures, there was no evidence of non-compliance from subrecipients. Recommendation We recommend the University address the completeness of their consolidated subrecipient monitoring through review of the reports used to compile the analysis. Management’s Views and Corrective Action Plan Management’s response is included in “Management’s Views and Corrective Action Plan” included at the end of this report after the summary schedule of status of prior audit findings
2024-001 – Subrecipient Monitoring Cluster: Research and Development Cluster (“R&D Cluster”) Grantor: Various - All R&D Cluster awards with subrecipients Award Name: Various - All R&D Cluster awards with subrecipients Award Year: FY2024 Assistance Listing Number: Various – All R&D Cluster awards with subrecipients Pass-through entities and ID Number: Various - All R&D Cluster awards with subrecipients Condition The University has a detailed pre-award risk assessment process prior to entering into a subrecipient relationship, which includes review of subrecipient Uniform Guidance reports. Subsequent review of Uniform Guidance reports for monitoring purposes is completed at the time of a subaward amendment. However, subawards are not always amended within a year, which creates a potential gap in review. In the FY2023 audit, 4 out of the 25 subaward selections did not have a Uniform Guidance report review or other monitoring review during the year, which resulted in a reportable finding. In FY2024, in response to the FY2023 finding in subrecipient monitoring (2023-001), the University implemented an annual Post-Award review of all subrecipient Uniform Guidance reports. This review documented the report information, findings noted, and follow-up performed with the subrecipient, as necessary. However, this consolidated review was deemed to be incomplete, as 1 of the 25 subrecipient selections was not included in the Post-Award review of all subrecipient Uniform Guidance reports. Management subsequently reviewed the completeness of the consolidated review, and determined a total of 12 subrecipients were not monitored in FY2024. Criteria 2 CFR 200.332(d) notes that pass-through entity monitoring of the subrecipient must include: • Reviewing financial and performance reports required by the pass-through entity. • Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. • Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by 2 CFR 200.521. Additionally, 2 CFR 200.332(f) notes that a pass-through entity must verify that every subrecipient is audited as required by the Uniform Guidance when it is expected that the subrecipient's Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in 2 CFR 200.501. Cause In compiling the consolidated analysis of all subrecipients with active funding during the fiscal year, the Post-Award team utilized reporting of subrecipient expenditures from the general ledger. This report inadvertently omitted a period of time during the fiscal year, which caused omission of select subrecipients from the consolidated Post-Award analysis. Effect The lack of an annual review of subrecipient Uniform Guidance reports may result in potential compliance issues not being identified and management not addressing findings and issuing a management decision, as required under the Uniform Guidance. Questioned Costs There are no questioned costs associated with this finding. Through audit procedures, there was no evidence of non-compliance from subrecipients. Recommendation We recommend the University address the completeness of their consolidated subrecipient monitoring through review of the reports used to compile the analysis. Management’s Views and Corrective Action Plan Management’s response is included in “Management’s Views and Corrective Action Plan” included at the end of this report after the summary schedule of status of prior audit findings
2024-001 – Subrecipient Monitoring Cluster: Research and Development Cluster (“R&D Cluster”) Grantor: Various - All R&D Cluster awards with subrecipients Award Name: Various - All R&D Cluster awards with subrecipients Award Year: FY2024 Assistance Listing Number: Various – All R&D Cluster awards with subrecipients Pass-through entities and ID Number: Various - All R&D Cluster awards with subrecipients Condition The University has a detailed pre-award risk assessment process prior to entering into a subrecipient relationship, which includes review of subrecipient Uniform Guidance reports. Subsequent review of Uniform Guidance reports for monitoring purposes is completed at the time of a subaward amendment. However, subawards are not always amended within a year, which creates a potential gap in review. In the FY2023 audit, 4 out of the 25 subaward selections did not have a Uniform Guidance report review or other monitoring review during the year, which resulted in a reportable finding. In FY2024, in response to the FY2023 finding in subrecipient monitoring (2023-001), the University implemented an annual Post-Award review of all subrecipient Uniform Guidance reports. This review documented the report information, findings noted, and follow-up performed with the subrecipient, as necessary. However, this consolidated review was deemed to be incomplete, as 1 of the 25 subrecipient selections was not included in the Post-Award review of all subrecipient Uniform Guidance reports. Management subsequently reviewed the completeness of the consolidated review, and determined a total of 12 subrecipients were not monitored in FY2024. Criteria 2 CFR 200.332(d) notes that pass-through entity monitoring of the subrecipient must include: • Reviewing financial and performance reports required by the pass-through entity. • Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. • Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by 2 CFR 200.521. Additionally, 2 CFR 200.332(f) notes that a pass-through entity must verify that every subrecipient is audited as required by the Uniform Guidance when it is expected that the subrecipient's Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in 2 CFR 200.501. Cause In compiling the consolidated analysis of all subrecipients with active funding during the fiscal year, the Post-Award team utilized reporting of subrecipient expenditures from the general ledger. This report inadvertently omitted a period of time during the fiscal year, which caused omission of select subrecipients from the consolidated Post-Award analysis. Effect The lack of an annual review of subrecipient Uniform Guidance reports may result in potential compliance issues not being identified and management not addressing findings and issuing a management decision, as required under the Uniform Guidance. Questioned Costs There are no questioned costs associated with this finding. Through audit procedures, there was no evidence of non-compliance from subrecipients. Recommendation We recommend the University address the completeness of their consolidated subrecipient monitoring through review of the reports used to compile the analysis. Management’s Views and Corrective Action Plan Management’s response is included in “Management’s Views and Corrective Action Plan” included at the end of this report after the summary schedule of status of prior audit findings
2024-001 – Subrecipient Monitoring Cluster: Research and Development Cluster (“R&D Cluster”) Grantor: Various - All R&D Cluster awards with subrecipients Award Name: Various - All R&D Cluster awards with subrecipients Award Year: FY2024 Assistance Listing Number: Various – All R&D Cluster awards with subrecipients Pass-through entities and ID Number: Various - All R&D Cluster awards with subrecipients Condition The University has a detailed pre-award risk assessment process prior to entering into a subrecipient relationship, which includes review of subrecipient Uniform Guidance reports. Subsequent review of Uniform Guidance reports for monitoring purposes is completed at the time of a subaward amendment. However, subawards are not always amended within a year, which creates a potential gap in review. In the FY2023 audit, 4 out of the 25 subaward selections did not have a Uniform Guidance report review or other monitoring review during the year, which resulted in a reportable finding. In FY2024, in response to the FY2023 finding in subrecipient monitoring (2023-001), the University implemented an annual Post-Award review of all subrecipient Uniform Guidance reports. This review documented the report information, findings noted, and follow-up performed with the subrecipient, as necessary. However, this consolidated review was deemed to be incomplete, as 1 of the 25 subrecipient selections was not included in the Post-Award review of all subrecipient Uniform Guidance reports. Management subsequently reviewed the completeness of the consolidated review, and determined a total of 12 subrecipients were not monitored in FY2024. Criteria 2 CFR 200.332(d) notes that pass-through entity monitoring of the subrecipient must include: • Reviewing financial and performance reports required by the pass-through entity. • Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. • Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by 2 CFR 200.521. Additionally, 2 CFR 200.332(f) notes that a pass-through entity must verify that every subrecipient is audited as required by the Uniform Guidance when it is expected that the subrecipient's Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in 2 CFR 200.501. Cause In compiling the consolidated analysis of all subrecipients with active funding during the fiscal year, the Post-Award team utilized reporting of subrecipient expenditures from the general ledger. This report inadvertently omitted a period of time during the fiscal year, which caused omission of select subrecipients from the consolidated Post-Award analysis. Effect The lack of an annual review of subrecipient Uniform Guidance reports may result in potential compliance issues not being identified and management not addressing findings and issuing a management decision, as required under the Uniform Guidance. Questioned Costs There are no questioned costs associated with this finding. Through audit procedures, there was no evidence of non-compliance from subrecipients. Recommendation We recommend the University address the completeness of their consolidated subrecipient monitoring through review of the reports used to compile the analysis. Management’s Views and Corrective Action Plan Management’s response is included in “Management’s Views and Corrective Action Plan” included at the end of this report after the summary schedule of status of prior audit findings
2024-001 – Subrecipient Monitoring Cluster: Research and Development Cluster (“R&D Cluster”) Grantor: Various - All R&D Cluster awards with subrecipients Award Name: Various - All R&D Cluster awards with subrecipients Award Year: FY2024 Assistance Listing Number: Various – All R&D Cluster awards with subrecipients Pass-through entities and ID Number: Various - All R&D Cluster awards with subrecipients Condition The University has a detailed pre-award risk assessment process prior to entering into a subrecipient relationship, which includes review of subrecipient Uniform Guidance reports. Subsequent review of Uniform Guidance reports for monitoring purposes is completed at the time of a subaward amendment. However, subawards are not always amended within a year, which creates a potential gap in review. In the FY2023 audit, 4 out of the 25 subaward selections did not have a Uniform Guidance report review or other monitoring review during the year, which resulted in a reportable finding. In FY2024, in response to the FY2023 finding in subrecipient monitoring (2023-001), the University implemented an annual Post-Award review of all subrecipient Uniform Guidance reports. This review documented the report information, findings noted, and follow-up performed with the subrecipient, as necessary. However, this consolidated review was deemed to be incomplete, as 1 of the 25 subrecipient selections was not included in the Post-Award review of all subrecipient Uniform Guidance reports. Management subsequently reviewed the completeness of the consolidated review, and determined a total of 12 subrecipients were not monitored in FY2024. Criteria 2 CFR 200.332(d) notes that pass-through entity monitoring of the subrecipient must include: • Reviewing financial and performance reports required by the pass-through entity. • Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. • Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by 2 CFR 200.521. Additionally, 2 CFR 200.332(f) notes that a pass-through entity must verify that every subrecipient is audited as required by the Uniform Guidance when it is expected that the subrecipient's Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in 2 CFR 200.501. Cause In compiling the consolidated analysis of all subrecipients with active funding during the fiscal year, the Post-Award team utilized reporting of subrecipient expenditures from the general ledger. This report inadvertently omitted a period of time during the fiscal year, which caused omission of select subrecipients from the consolidated Post-Award analysis. Effect The lack of an annual review of subrecipient Uniform Guidance reports may result in potential compliance issues not being identified and management not addressing findings and issuing a management decision, as required under the Uniform Guidance. Questioned Costs There are no questioned costs associated with this finding. Through audit procedures, there was no evidence of non-compliance from subrecipients. Recommendation We recommend the University address the completeness of their consolidated subrecipient monitoring through review of the reports used to compile the analysis. Management’s Views and Corrective Action Plan Management’s response is included in “Management’s Views and Corrective Action Plan” included at the end of this report after the summary schedule of status of prior audit findings
2024-001 – Subrecipient Monitoring Cluster: Research and Development Cluster (“R&D Cluster”) Grantor: Various - All R&D Cluster awards with subrecipients Award Name: Various - All R&D Cluster awards with subrecipients Award Year: FY2024 Assistance Listing Number: Various – All R&D Cluster awards with subrecipients Pass-through entities and ID Number: Various - All R&D Cluster awards with subrecipients Condition The University has a detailed pre-award risk assessment process prior to entering into a subrecipient relationship, which includes review of subrecipient Uniform Guidance reports. Subsequent review of Uniform Guidance reports for monitoring purposes is completed at the time of a subaward amendment. However, subawards are not always amended within a year, which creates a potential gap in review. In the FY2023 audit, 4 out of the 25 subaward selections did not have a Uniform Guidance report review or other monitoring review during the year, which resulted in a reportable finding. In FY2024, in response to the FY2023 finding in subrecipient monitoring (2023-001), the University implemented an annual Post-Award review of all subrecipient Uniform Guidance reports. This review documented the report information, findings noted, and follow-up performed with the subrecipient, as necessary. However, this consolidated review was deemed to be incomplete, as 1 of the 25 subrecipient selections was not included in the Post-Award review of all subrecipient Uniform Guidance reports. Management subsequently reviewed the completeness of the consolidated review, and determined a total of 12 subrecipients were not monitored in FY2024. Criteria 2 CFR 200.332(d) notes that pass-through entity monitoring of the subrecipient must include: • Reviewing financial and performance reports required by the pass-through entity. • Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. • Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by 2 CFR 200.521. Additionally, 2 CFR 200.332(f) notes that a pass-through entity must verify that every subrecipient is audited as required by the Uniform Guidance when it is expected that the subrecipient's Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in 2 CFR 200.501. Cause In compiling the consolidated analysis of all subrecipients with active funding during the fiscal year, the Post-Award team utilized reporting of subrecipient expenditures from the general ledger. This report inadvertently omitted a period of time during the fiscal year, which caused omission of select subrecipients from the consolidated Post-Award analysis. Effect The lack of an annual review of subrecipient Uniform Guidance reports may result in potential compliance issues not being identified and management not addressing findings and issuing a management decision, as required under the Uniform Guidance. Questioned Costs There are no questioned costs associated with this finding. Through audit procedures, there was no evidence of non-compliance from subrecipients. Recommendation We recommend the University address the completeness of their consolidated subrecipient monitoring through review of the reports used to compile the analysis. Management’s Views and Corrective Action Plan Management’s response is included in “Management’s Views and Corrective Action Plan” included at the end of this report after the summary schedule of status of prior audit findings
2024-001 – Subrecipient Monitoring Cluster: Research and Development Cluster (“R&D Cluster”) Grantor: Various - All R&D Cluster awards with subrecipients Award Name: Various - All R&D Cluster awards with subrecipients Award Year: FY2024 Assistance Listing Number: Various – All R&D Cluster awards with subrecipients Pass-through entities and ID Number: Various - All R&D Cluster awards with subrecipients Condition The University has a detailed pre-award risk assessment process prior to entering into a subrecipient relationship, which includes review of subrecipient Uniform Guidance reports. Subsequent review of Uniform Guidance reports for monitoring purposes is completed at the time of a subaward amendment. However, subawards are not always amended within a year, which creates a potential gap in review. In the FY2023 audit, 4 out of the 25 subaward selections did not have a Uniform Guidance report review or other monitoring review during the year, which resulted in a reportable finding. In FY2024, in response to the FY2023 finding in subrecipient monitoring (2023-001), the University implemented an annual Post-Award review of all subrecipient Uniform Guidance reports. This review documented the report information, findings noted, and follow-up performed with the subrecipient, as necessary. However, this consolidated review was deemed to be incomplete, as 1 of the 25 subrecipient selections was not included in the Post-Award review of all subrecipient Uniform Guidance reports. Management subsequently reviewed the completeness of the consolidated review, and determined a total of 12 subrecipients were not monitored in FY2024. Criteria 2 CFR 200.332(d) notes that pass-through entity monitoring of the subrecipient must include: • Reviewing financial and performance reports required by the pass-through entity. • Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. • Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by 2 CFR 200.521. Additionally, 2 CFR 200.332(f) notes that a pass-through entity must verify that every subrecipient is audited as required by the Uniform Guidance when it is expected that the subrecipient's Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in 2 CFR 200.501. Cause In compiling the consolidated analysis of all subrecipients with active funding during the fiscal year, the Post-Award team utilized reporting of subrecipient expenditures from the general ledger. This report inadvertently omitted a period of time during the fiscal year, which caused omission of select subrecipients from the consolidated Post-Award analysis. Effect The lack of an annual review of subrecipient Uniform Guidance reports may result in potential compliance issues not being identified and management not addressing findings and issuing a management decision, as required under the Uniform Guidance. Questioned Costs There are no questioned costs associated with this finding. Through audit procedures, there was no evidence of non-compliance from subrecipients. Recommendation We recommend the University address the completeness of their consolidated subrecipient monitoring through review of the reports used to compile the analysis. Management’s Views and Corrective Action Plan Management’s response is included in “Management’s Views and Corrective Action Plan” included at the end of this report after the summary schedule of status of prior audit findings
2024-001 – Subrecipient Monitoring Cluster: Research and Development Cluster (“R&D Cluster”) Grantor: Various - All R&D Cluster awards with subrecipients Award Name: Various - All R&D Cluster awards with subrecipients Award Year: FY2024 Assistance Listing Number: Various – All R&D Cluster awards with subrecipients Pass-through entities and ID Number: Various - All R&D Cluster awards with subrecipients Condition The University has a detailed pre-award risk assessment process prior to entering into a subrecipient relationship, which includes review of subrecipient Uniform Guidance reports. Subsequent review of Uniform Guidance reports for monitoring purposes is completed at the time of a subaward amendment. However, subawards are not always amended within a year, which creates a potential gap in review. In the FY2023 audit, 4 out of the 25 subaward selections did not have a Uniform Guidance report review or other monitoring review during the year, which resulted in a reportable finding. In FY2024, in response to the FY2023 finding in subrecipient monitoring (2023-001), the University implemented an annual Post-Award review of all subrecipient Uniform Guidance reports. This review documented the report information, findings noted, and follow-up performed with the subrecipient, as necessary. However, this consolidated review was deemed to be incomplete, as 1 of the 25 subrecipient selections was not included in the Post-Award review of all subrecipient Uniform Guidance reports. Management subsequently reviewed the completeness of the consolidated review, and determined a total of 12 subrecipients were not monitored in FY2024. Criteria 2 CFR 200.332(d) notes that pass-through entity monitoring of the subrecipient must include: • Reviewing financial and performance reports required by the pass-through entity. • Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. • Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by 2 CFR 200.521. Additionally, 2 CFR 200.332(f) notes that a pass-through entity must verify that every subrecipient is audited as required by the Uniform Guidance when it is expected that the subrecipient's Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in 2 CFR 200.501. Cause In compiling the consolidated analysis of all subrecipients with active funding during the fiscal year, the Post-Award team utilized reporting of subrecipient expenditures from the general ledger. This report inadvertently omitted a period of time during the fiscal year, which caused omission of select subrecipients from the consolidated Post-Award analysis. Effect The lack of an annual review of subrecipient Uniform Guidance reports may result in potential compliance issues not being identified and management not addressing findings and issuing a management decision, as required under the Uniform Guidance. Questioned Costs There are no questioned costs associated with this finding. Through audit procedures, there was no evidence of non-compliance from subrecipients. Recommendation We recommend the University address the completeness of their consolidated subrecipient monitoring through review of the reports used to compile the analysis. Management’s Views and Corrective Action Plan Management’s response is included in “Management’s Views and Corrective Action Plan” included at the end of this report after the summary schedule of status of prior audit findings
2024-001 – Subrecipient Monitoring Cluster: Research and Development Cluster (“R&D Cluster”) Grantor: Various - All R&D Cluster awards with subrecipients Award Name: Various - All R&D Cluster awards with subrecipients Award Year: FY2024 Assistance Listing Number: Various – All R&D Cluster awards with subrecipients Pass-through entities and ID Number: Various - All R&D Cluster awards with subrecipients Condition The University has a detailed pre-award risk assessment process prior to entering into a subrecipient relationship, which includes review of subrecipient Uniform Guidance reports. Subsequent review of Uniform Guidance reports for monitoring purposes is completed at the time of a subaward amendment. However, subawards are not always amended within a year, which creates a potential gap in review. In the FY2023 audit, 4 out of the 25 subaward selections did not have a Uniform Guidance report review or other monitoring review during the year, which resulted in a reportable finding. In FY2024, in response to the FY2023 finding in subrecipient monitoring (2023-001), the University implemented an annual Post-Award review of all subrecipient Uniform Guidance reports. This review documented the report information, findings noted, and follow-up performed with the subrecipient, as necessary. However, this consolidated review was deemed to be incomplete, as 1 of the 25 subrecipient selections was not included in the Post-Award review of all subrecipient Uniform Guidance reports. Management subsequently reviewed the completeness of the consolidated review, and determined a total of 12 subrecipients were not monitored in FY2024. Criteria 2 CFR 200.332(d) notes that pass-through entity monitoring of the subrecipient must include: • Reviewing financial and performance reports required by the pass-through entity. • Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. • Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by 2 CFR 200.521. Additionally, 2 CFR 200.332(f) notes that a pass-through entity must verify that every subrecipient is audited as required by the Uniform Guidance when it is expected that the subrecipient's Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in 2 CFR 200.501. Cause In compiling the consolidated analysis of all subrecipients with active funding during the fiscal year, the Post-Award team utilized reporting of subrecipient expenditures from the general ledger. This report inadvertently omitted a period of time during the fiscal year, which caused omission of select subrecipients from the consolidated Post-Award analysis. Effect The lack of an annual review of subrecipient Uniform Guidance reports may result in potential compliance issues not being identified and management not addressing findings and issuing a management decision, as required under the Uniform Guidance. Questioned Costs There are no questioned costs associated with this finding. Through audit procedures, there was no evidence of non-compliance from subrecipients. Recommendation We recommend the University address the completeness of their consolidated subrecipient monitoring through review of the reports used to compile the analysis. Management’s Views and Corrective Action Plan Management’s response is included in “Management’s Views and Corrective Action Plan” included at the end of this report after the summary schedule of status of prior audit findings
2024-001 – Subrecipient Monitoring Cluster: Research and Development Cluster (“R&D Cluster”) Grantor: Various - All R&D Cluster awards with subrecipients Award Name: Various - All R&D Cluster awards with subrecipients Award Year: FY2024 Assistance Listing Number: Various – All R&D Cluster awards with subrecipients Pass-through entities and ID Number: Various - All R&D Cluster awards with subrecipients Condition The University has a detailed pre-award risk assessment process prior to entering into a subrecipient relationship, which includes review of subrecipient Uniform Guidance reports. Subsequent review of Uniform Guidance reports for monitoring purposes is completed at the time of a subaward amendment. However, subawards are not always amended within a year, which creates a potential gap in review. In the FY2023 audit, 4 out of the 25 subaward selections did not have a Uniform Guidance report review or other monitoring review during the year, which resulted in a reportable finding. In FY2024, in response to the FY2023 finding in subrecipient monitoring (2023-001), the University implemented an annual Post-Award review of all subrecipient Uniform Guidance reports. This review documented the report information, findings noted, and follow-up performed with the subrecipient, as necessary. However, this consolidated review was deemed to be incomplete, as 1 of the 25 subrecipient selections was not included in the Post-Award review of all subrecipient Uniform Guidance reports. Management subsequently reviewed the completeness of the consolidated review, and determined a total of 12 subrecipients were not monitored in FY2024. Criteria 2 CFR 200.332(d) notes that pass-through entity monitoring of the subrecipient must include: • Reviewing financial and performance reports required by the pass-through entity. • Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. • Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by 2 CFR 200.521. Additionally, 2 CFR 200.332(f) notes that a pass-through entity must verify that every subrecipient is audited as required by the Uniform Guidance when it is expected that the subrecipient's Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in 2 CFR 200.501. Cause In compiling the consolidated analysis of all subrecipients with active funding during the fiscal year, the Post-Award team utilized reporting of subrecipient expenditures from the general ledger. This report inadvertently omitted a period of time during the fiscal year, which caused omission of select subrecipients from the consolidated Post-Award analysis. Effect The lack of an annual review of subrecipient Uniform Guidance reports may result in potential compliance issues not being identified and management not addressing findings and issuing a management decision, as required under the Uniform Guidance. Questioned Costs There are no questioned costs associated with this finding. Through audit procedures, there was no evidence of non-compliance from subrecipients. Recommendation We recommend the University address the completeness of their consolidated subrecipient monitoring through review of the reports used to compile the analysis. Management’s Views and Corrective Action Plan Management’s response is included in “Management’s Views and Corrective Action Plan” included at the end of this report after the summary schedule of status of prior audit findings
2024-001 – Subrecipient Monitoring Cluster: Research and Development Cluster (“R&D Cluster”) Grantor: Various - All R&D Cluster awards with subrecipients Award Name: Various - All R&D Cluster awards with subrecipients Award Year: FY2024 Assistance Listing Number: Various – All R&D Cluster awards with subrecipients Pass-through entities and ID Number: Various - All R&D Cluster awards with subrecipients Condition The University has a detailed pre-award risk assessment process prior to entering into a subrecipient relationship, which includes review of subrecipient Uniform Guidance reports. Subsequent review of Uniform Guidance reports for monitoring purposes is completed at the time of a subaward amendment. However, subawards are not always amended within a year, which creates a potential gap in review. In the FY2023 audit, 4 out of the 25 subaward selections did not have a Uniform Guidance report review or other monitoring review during the year, which resulted in a reportable finding. In FY2024, in response to the FY2023 finding in subrecipient monitoring (2023-001), the University implemented an annual Post-Award review of all subrecipient Uniform Guidance reports. This review documented the report information, findings noted, and follow-up performed with the subrecipient, as necessary. However, this consolidated review was deemed to be incomplete, as 1 of the 25 subrecipient selections was not included in the Post-Award review of all subrecipient Uniform Guidance reports. Management subsequently reviewed the completeness of the consolidated review, and determined a total of 12 subrecipients were not monitored in FY2024. Criteria 2 CFR 200.332(d) notes that pass-through entity monitoring of the subrecipient must include: • Reviewing financial and performance reports required by the pass-through entity. • Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. • Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by 2 CFR 200.521. Additionally, 2 CFR 200.332(f) notes that a pass-through entity must verify that every subrecipient is audited as required by the Uniform Guidance when it is expected that the subrecipient's Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in 2 CFR 200.501. Cause In compiling the consolidated analysis of all subrecipients with active funding during the fiscal year, the Post-Award team utilized reporting of subrecipient expenditures from the general ledger. This report inadvertently omitted a period of time during the fiscal year, which caused omission of select subrecipients from the consolidated Post-Award analysis. Effect The lack of an annual review of subrecipient Uniform Guidance reports may result in potential compliance issues not being identified and management not addressing findings and issuing a management decision, as required under the Uniform Guidance. Questioned Costs There are no questioned costs associated with this finding. Through audit procedures, there was no evidence of non-compliance from subrecipients. Recommendation We recommend the University address the completeness of their consolidated subrecipient monitoring through review of the reports used to compile the analysis. Management’s Views and Corrective Action Plan Management’s response is included in “Management’s Views and Corrective Action Plan” included at the end of this report after the summary schedule of status of prior audit findings
2024-001 – Subrecipient Monitoring Cluster: Research and Development Cluster (“R&D Cluster”) Grantor: Various - All R&D Cluster awards with subrecipients Award Name: Various - All R&D Cluster awards with subrecipients Award Year: FY2024 Assistance Listing Number: Various – All R&D Cluster awards with subrecipients Pass-through entities and ID Number: Various - All R&D Cluster awards with subrecipients Condition The University has a detailed pre-award risk assessment process prior to entering into a subrecipient relationship, which includes review of subrecipient Uniform Guidance reports. Subsequent review of Uniform Guidance reports for monitoring purposes is completed at the time of a subaward amendment. However, subawards are not always amended within a year, which creates a potential gap in review. In the FY2023 audit, 4 out of the 25 subaward selections did not have a Uniform Guidance report review or other monitoring review during the year, which resulted in a reportable finding. In FY2024, in response to the FY2023 finding in subrecipient monitoring (2023-001), the University implemented an annual Post-Award review of all subrecipient Uniform Guidance reports. This review documented the report information, findings noted, and follow-up performed with the subrecipient, as necessary. However, this consolidated review was deemed to be incomplete, as 1 of the 25 subrecipient selections was not included in the Post-Award review of all subrecipient Uniform Guidance reports. Management subsequently reviewed the completeness of the consolidated review, and determined a total of 12 subrecipients were not monitored in FY2024. Criteria 2 CFR 200.332(d) notes that pass-through entity monitoring of the subrecipient must include: • Reviewing financial and performance reports required by the pass-through entity. • Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. • Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by 2 CFR 200.521. Additionally, 2 CFR 200.332(f) notes that a pass-through entity must verify that every subrecipient is audited as required by the Uniform Guidance when it is expected that the subrecipient's Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in 2 CFR 200.501. Cause In compiling the consolidated analysis of all subrecipients with active funding during the fiscal year, the Post-Award team utilized reporting of subrecipient expenditures from the general ledger. This report inadvertently omitted a period of time during the fiscal year, which caused omission of select subrecipients from the consolidated Post-Award analysis. Effect The lack of an annual review of subrecipient Uniform Guidance reports may result in potential compliance issues not being identified and management not addressing findings and issuing a management decision, as required under the Uniform Guidance. Questioned Costs There are no questioned costs associated with this finding. Through audit procedures, there was no evidence of non-compliance from subrecipients. Recommendation We recommend the University address the completeness of their consolidated subrecipient monitoring through review of the reports used to compile the analysis. Management’s Views and Corrective Action Plan Management’s response is included in “Management’s Views and Corrective Action Plan” included at the end of this report after the summary schedule of status of prior audit findings
2024-001 – Subrecipient Monitoring Cluster: Research and Development Cluster (“R&D Cluster”) Grantor: Various - All R&D Cluster awards with subrecipients Award Name: Various - All R&D Cluster awards with subrecipients Award Year: FY2024 Assistance Listing Number: Various – All R&D Cluster awards with subrecipients Pass-through entities and ID Number: Various - All R&D Cluster awards with subrecipients Condition The University has a detailed pre-award risk assessment process prior to entering into a subrecipient relationship, which includes review of subrecipient Uniform Guidance reports. Subsequent review of Uniform Guidance reports for monitoring purposes is completed at the time of a subaward amendment. However, subawards are not always amended within a year, which creates a potential gap in review. In the FY2023 audit, 4 out of the 25 subaward selections did not have a Uniform Guidance report review or other monitoring review during the year, which resulted in a reportable finding. In FY2024, in response to the FY2023 finding in subrecipient monitoring (2023-001), the University implemented an annual Post-Award review of all subrecipient Uniform Guidance reports. This review documented the report information, findings noted, and follow-up performed with the subrecipient, as necessary. However, this consolidated review was deemed to be incomplete, as 1 of the 25 subrecipient selections was not included in the Post-Award review of all subrecipient Uniform Guidance reports. Management subsequently reviewed the completeness of the consolidated review, and determined a total of 12 subrecipients were not monitored in FY2024. Criteria 2 CFR 200.332(d) notes that pass-through entity monitoring of the subrecipient must include: • Reviewing financial and performance reports required by the pass-through entity. • Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. • Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by 2 CFR 200.521. Additionally, 2 CFR 200.332(f) notes that a pass-through entity must verify that every subrecipient is audited as required by the Uniform Guidance when it is expected that the subrecipient's Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in 2 CFR 200.501. Cause In compiling the consolidated analysis of all subrecipients with active funding during the fiscal year, the Post-Award team utilized reporting of subrecipient expenditures from the general ledger. This report inadvertently omitted a period of time during the fiscal year, which caused omission of select subrecipients from the consolidated Post-Award analysis. Effect The lack of an annual review of subrecipient Uniform Guidance reports may result in potential compliance issues not being identified and management not addressing findings and issuing a management decision, as required under the Uniform Guidance. Questioned Costs There are no questioned costs associated with this finding. Through audit procedures, there was no evidence of non-compliance from subrecipients. Recommendation We recommend the University address the completeness of their consolidated subrecipient monitoring through review of the reports used to compile the analysis. Management’s Views and Corrective Action Plan Management’s response is included in “Management’s Views and Corrective Action Plan” included at the end of this report after the summary schedule of status of prior audit findings
2024-003 SUBRECIPIENT MONITORING – WOIA Federal agency: U.S. Department of Labor Federal Program Title & Assistance Listing Number: Workforce Investment Act Cluster - 17.258, 17.259, 17.578 Award Period: Program Year 2023-2024 Type of Finding: Material Weakness in Internal Control over Compliance; Material Non-compliance Compliance Areas: Subrecipient Monitoring Questioned Costs: None Condition During our testing, we noted the Department did not have adequate internal controls in place to ensure compliance with subrecipient monitoring to such an extent that the Department has a modified opinion on this federal grant compliance area. The Department is currently behind on performing monitoring controls such as quarterly desk reviews, annual on-site evaluations, and remote reviewing and testing of cost documentation. The Department has not completed fiscal or programmatic monitoring relating to Program Year 2023-2024 activity for any of its subrecipients. Due to staffing vacancies at the beginning of the fiscal year, as of January 2024, the Department had fallen approximately 2 years behind. By fiscal year-end for 2024, they had just completed Program Year 2022-2023 monitoring, and are now beginning the next Program Year. This program of the Department lacked evidence that sufficient risk assessments of subrecipients were performed that would allow the Department to identify any potential deficiencies that would require follow-up. The Department asserted that risk assessments had been included as attachments to the subgrant agreements, although these were not provided to us. These attachments were intended to be self-assessments, rather than being performed by the Department itself. There was no provided evidence of Department scoring or performing an independent evaluation of these. Criteria §200.332 Requirements for pass-through entities of 2 CFR Part 200, all pass-through entities must evaluate each subrecipient's risk of noncompliance with Federal statutes, regulations, and the terms and conditions of the subaward for purposes of determining the appropriate subrecipient monitoring. In addition, the pass-through entity must monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward; and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: (1) Reviewing financial and performance reports required by the pass-through entity. (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the passthrough entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. (3) Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by §200.521 Management Decision. Effect The lack of internal controls over this compliance requirement provides an opportunity for federal grant noncompliance at the subrecipient level. Potential costs outside the scope of work as well as overall effective project management at the subrecipient level. There is higher risk of material misstatement, fraud, noncompliance, or errors. This condition has caused the Department’s audit opinion over this grant’s compliance area to be modified. Cause The Department has not established internal controls and procedures over financial grant management to ensure compliance with applicable compliance requirements. The Department has experienced staffing turnover during these time periods and training and monitoring is needed.
2024-003 SUBRECIPIENT MONITORING – WOIA Federal agency: U.S. Department of Labor Federal Program Title & Assistance Listing Number: Workforce Investment Act Cluster - 17.258, 17.259, 17.578 Award Period: Program Year 2023-2024 Type of Finding: Material Weakness in Internal Control over Compliance; Material Non-compliance Compliance Areas: Subrecipient Monitoring Questioned Costs: None Condition During our testing, we noted the Department did not have adequate internal controls in place to ensure compliance with subrecipient monitoring to such an extent that the Department has a modified opinion on this federal grant compliance area. The Department is currently behind on performing monitoring controls such as quarterly desk reviews, annual on-site evaluations, and remote reviewing and testing of cost documentation. The Department has not completed fiscal or programmatic monitoring relating to Program Year 2023-2024 activity for any of its subrecipients. Due to staffing vacancies at the beginning of the fiscal year, as of January 2024, the Department had fallen approximately 2 years behind. By fiscal year-end for 2024, they had just completed Program Year 2022-2023 monitoring, and are now beginning the next Program Year. This program of the Department lacked evidence that sufficient risk assessments of subrecipients were performed that would allow the Department to identify any potential deficiencies that would require follow-up. The Department asserted that risk assessments had been included as attachments to the subgrant agreements, although these were not provided to us. These attachments were intended to be self-assessments, rather than being performed by the Department itself. There was no provided evidence of Department scoring or performing an independent evaluation of these. Criteria §200.332 Requirements for pass-through entities of 2 CFR Part 200, all pass-through entities must evaluate each subrecipient's risk of noncompliance with Federal statutes, regulations, and the terms and conditions of the subaward for purposes of determining the appropriate subrecipient monitoring. In addition, the pass-through entity must monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward; and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: (1) Reviewing financial and performance reports required by the pass-through entity. (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the passthrough entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. (3) Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by §200.521 Management Decision. Effect The lack of internal controls over this compliance requirement provides an opportunity for federal grant noncompliance at the subrecipient level. Potential costs outside the scope of work as well as overall effective project management at the subrecipient level. There is higher risk of material misstatement, fraud, noncompliance, or errors. This condition has caused the Department’s audit opinion over this grant’s compliance area to be modified. Cause The Department has not established internal controls and procedures over financial grant management to ensure compliance with applicable compliance requirements. The Department has experienced staffing turnover during these time periods and training and monitoring is needed.
2024-003 SUBRECIPIENT MONITORING – WOIA Federal agency: U.S. Department of Labor Federal Program Title & Assistance Listing Number: Workforce Investment Act Cluster - 17.258, 17.259, 17.578 Award Period: Program Year 2023-2024 Type of Finding: Material Weakness in Internal Control over Compliance; Material Non-compliance Compliance Areas: Subrecipient Monitoring Questioned Costs: None Condition During our testing, we noted the Department did not have adequate internal controls in place to ensure compliance with subrecipient monitoring to such an extent that the Department has a modified opinion on this federal grant compliance area. The Department is currently behind on performing monitoring controls such as quarterly desk reviews, annual on-site evaluations, and remote reviewing and testing of cost documentation. The Department has not completed fiscal or programmatic monitoring relating to Program Year 2023-2024 activity for any of its subrecipients. Due to staffing vacancies at the beginning of the fiscal year, as of January 2024, the Department had fallen approximately 2 years behind. By fiscal year-end for 2024, they had just completed Program Year 2022-2023 monitoring, and are now beginning the next Program Year. This program of the Department lacked evidence that sufficient risk assessments of subrecipients were performed that would allow the Department to identify any potential deficiencies that would require follow-up. The Department asserted that risk assessments had been included as attachments to the subgrant agreements, although these were not provided to us. These attachments were intended to be self-assessments, rather than being performed by the Department itself. There was no provided evidence of Department scoring or performing an independent evaluation of these. Criteria §200.332 Requirements for pass-through entities of 2 CFR Part 200, all pass-through entities must evaluate each subrecipient's risk of noncompliance with Federal statutes, regulations, and the terms and conditions of the subaward for purposes of determining the appropriate subrecipient monitoring. In addition, the pass-through entity must monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward; and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: (1) Reviewing financial and performance reports required by the pass-through entity. (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the passthrough entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. (3) Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by §200.521 Management Decision. Effect The lack of internal controls over this compliance requirement provides an opportunity for federal grant noncompliance at the subrecipient level. Potential costs outside the scope of work as well as overall effective project management at the subrecipient level. There is higher risk of material misstatement, fraud, noncompliance, or errors. This condition has caused the Department’s audit opinion over this grant’s compliance area to be modified. Cause The Department has not established internal controls and procedures over financial grant management to ensure compliance with applicable compliance requirements. The Department has experienced staffing turnover during these time periods and training and monitoring is needed.
2024-004 SUBRECIPIENT MONITORING – AMERICORPS Federal agency: U.S. Corporation for National and Community Service Federal Program Title & Assistance Listing Number: AmeriCorps - 94.006 Award Period: Program Year 2023-2024 Type of Finding: Material Weakness in Internal Control over Compliance;Otherl Non-compliance Compliance Areas: Subrecipient Monitoring Questioned Costs: None Condition During our testing, we noted the Department did not have adequate internal controls in place to ensure compliance with subrecipient monitoring. The Department represented to us that annual site visits had been performed, but that there was no documentation related to those visits or the nature of the monitoring performed that could be provided as evidence. The extent of fiscal monitoring did not appear sufficient. There was no evidence of review of cost documentation for subrecipients who were not subject to heightened fiscal monitoring, other than summary-level reports and general ledger data. For subrecipients who were subject to heightened fiscal monitoring, one month of costs were selected for testing. The Department did not utilize an audit test sheet to record the results of these tests. Criteria §200.332 Requirements for pass-through entities of 2 CFR Part 200, all pass-through entities must evaluate each subrecipient's risk of noncompliance with Federal statutes, regulations, and the terms and conditions of the subaward for purposes of determining the appropriate subrecipient monitoring. In addition, the pass-through entity must monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward; and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: (1) Reviewing financial and performance reports required by the pass-through entity. (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the passthrough entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. (3) Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by §200.521 Management Decision. Effect The lack of internal controls over this compliance requirement provides an opportunity for noncompliance at the subrecipient level. Potential costs outside the scope of work as well as overall effective project management at the subrecipient level. There is higher risk of material misstatement, fraud, noncompliance, or errors. Cause The Department has not established internal controls and procedures over financial grant management to ensure compliance with applicable compliance requirements. The Department has experienced staffing turnover during these time periods and training and monitoring is needed.
FINDING 2024-002 Subject: PPHF Geriatric Education Centers - Subrecipient Monitoring Federal Agency: U.S. Department of Health and Human Services Federal Program: PPHF Geriatric Education Centers Assistance Listings Number: 93.969 Federal Award Number and Year (or Other Identifying Number): FY2024 Compliance Requirement: Subrecipient Monitoring Audit Findings: Material Weakness, Other Matters Condition and Context The University expended $831,232 in PPHF Geriatric Education Centers funds during the audit period. Of that amount, $309,264 was passed through to three subrecipients. As a pass-through entity, the University was required to identify the award and applicable requirements and monitor the subrecipient. Procedures to monitor its subrecipients included the following: Reviewing financial and programmatic reports as required by the University. Following up and ensuring the subrecipient takes timely and appropriate actions on all deficiencies pertaining to the federal award provided to the subrecipient detected through audits, on-site reviews, and other means. Issuing a management decision for audit findings pertaining to the federal award provided to the subrecipient. INDIANA STATE BOARD OF ACCOUNTS 17 UNIVERSITY OF SOUTHERN INDIANA SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Two of the three subrecipients expended more than $750,000 in federal awards in fiscal year 2023, thus subjecting each to a Single Audit as required by the Uniform Guidance. As such, both subrecipients were required to submit a Single Audit report to the Federal Audit Clearinghouse (FAC) by March 31, 2024. The University should have expected that the two subrecipients would receive a Single Audit report as both subrecipients were subject to a Single Audit for multiple years leading up to 2023. However, the University did not obtain a copy of either subrecipient's 2023 Single Audit report. Obtaining and reviewing Single Audit reports of subrecipients is a required component of conducting proper monitoring of subrecipients. The lack of proper monitoring would not have allowed the University to follow up and ensure that the subrecipients took timely and appropriate action on all deficiencies pertaining to the federal awards passed through to the subrecipients from the University. In addition, it would not have allowed for the University to issue a management decision for audit findings pertaining to the federal award provided to the subrecipient within six months of acceptance by the FAC. The lack of effective internal controls was a systemic issue throughout the audit period. The noncompliance was isolated to two of the University's three subrecipients during the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal 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. 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). . . ." 2 CFR 200.332 states in part: "All pass-through entities must: . . . (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward; and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: . . . (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. (3) Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by § 200.521. . . ." INDIANA STATE BOARD OF ACCOUNTS 18 UNIVERSITY OF SOUTHERN INDIANA SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 2 CFR 200.521(d) states in part: ". . . The federal awarding agency or pass-through entity responsible for issuing a management decision must do so within six months of acceptance of the audit report by the FAC. . . ." Cause Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the University's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. The University's management had not designed or implemented a system of internal controls to ensure that subrecipient audit reports were received and reviewed. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, subrecipients to whom payments were made were not adequately monitored. The failure to establish a sufficient system of internal controls allowed noncompliance with the grant agreements and the Subrecipient Monitoring compliance requirement. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the University's management establish a system of internal controls to ensure that subrecipient audit reports are received and reviewed, when required, to ensure that subrecipients are properly monitored in accordance with the federal regulations. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
Various Agencies Finding 2024 ¬– 015: ALN 10.565, 10.568, 10.569 – Food Distribution Cluster ALN 15.252 – Abandoned Mine Land Reclamation (AMLR) ALN 21.027 – COVID 19 – Coronavirus State and Local Fiscal Recovery Funds ALN 84.425C – COVID 19 – Education Stabilization Fund – GEER Fund ALN 84.425D – COVID 19 – Education Stabilization Fund – ESSER Fund ALN 84.425R – COVID 19 – Education Stabilization Fund – CRRSA EANS Program ALN 84.425U – COVID 19 – Education Stabilization Fund – ARP ESSER ALN 84.425V – COVID 19 – Education Stabilization Fund – ARP EANS Program ALN 84.425W – COVID 19 – Education Stabilization Fund – ARP ESSER HCY ALN 93.044, 93.045, 93.053 – Aging Cluster (including COVID-19) ALN 93.558 – Temporary Assistance for Needy Families ALN 93.667 – Social Services Block Grant A Material Weakness and Material Noncompliance Exist in the Commonwealth’s Subrecipient Audit Resolution Process (A Similar Condition Was Noted in Prior Year Finding 2023-024) Federal Grant Number(s) and Year(s): 228PA100I1003 (6/13/2022 – 6/30/2025), 231PA445Q2204 (10/01/2022 – 9/30/2023), 231PA825Y8005 (10/01/2022 – 9/30/2023), 231PA825Y8105 (10/01/2022 – 9/30/2023), 241PA825Y8005 (10/01/2023 – 9/30/2024), 241PA825Y8105 (10/01/2023 – 9/30/2024), S18AF20004 (11/01/2017 – 10/31/2025), S19AF20004 (12/01/2018 – 11/30/2025), S21AF10015 (1/01/2021 – 12/31/2023), S22AF00017 (1/01/2022 – 12/31/2024), S23AF00002 (11/01/2022 – 10/31/2027), TN75GJE1S7G3 (3/03/2021 – 12/31/2024), S425W210039 (4/23/2021 – 9/30/2024), S425U210028 (3/24/2021– 9/30/2024), S425D210028 (1/05/2021 – 9/30/2024), S425C200013 (5/18/2020 – 4/01/2024), S425R210037 (3/13/2020 – 9/30/2024), S425V210037 (11/16/2021 – 9/30/2024), S425C210013 (3/13/2020 – 9/30/2024), 2101PACMC6 (4/01/2021 – 9/30/2024), 2101PAHDC6 (4/01/2021 – 9/30/2024), 2101PAPHC6 (4/01/2021 – 9/30/2024), 2101PASSC6 (4/01/2021 – 9/30/2024), 2201PAOASS (10/01/2021 – 9/30/2023), 2201PASTPH (1/01/2022 – 9/30/2024), 2301PAOACM (10/01/2022 – 9/30/2024), 2301PAOAHD (10/01/2022 – 9/30/2024), 2301PAOANS (10/01/2022 – 9/30/2024), 2301PAOASS (10/01/2022 – 9/30/2024), 2401PAOACM (10/01/2023 – 9/30/2025), 2401PAOAHD (10/01/2023 – 9/30/2025), 2401PAOANS (10/01/2023 – 9/30/2025), 2401PAOASS (10/01/2023 – 9/30/2025), 2101PATANF (10/01/2020 – 9/30/2021), 2201PATANF (10/01/2021 – 9/30/2022), 2301PATANF (10/01/2022 – 9/30/2023), 2401PATANF (10/01/2023 – 9/30/2024), 2301PASOSR (10/01/2022 – 9/30/2024), 2401PASOSR (10/01/2023 – 9/30/2025), 2301PATANF (10/01/2022 – 9/30/2024), 2401PATANF (10/01/2023 – 9/30/2025) Type of Finding: Significant Deficiency in Internal Control over Compliance, Other Matters for Abandoned Mine Land Reclamation (AMLR), Temporary Assistance for Needy Families, Coronavirus State and Local Fiscal Recovery Funds, and Social Services Block Grant Material Weakness in Internal Control over Compliance, Material Noncompliance for Food Distribution Cluster, Education Stabilization Fund, and Aging Cluster Compliance Requirement: Subrecipient Monitoring Condition: Under the Commonwealth of Pennsylvania's (Commonwealth) implementation of the Single Audit Act, review and resolution of subrecipient Single Audit reports is split into two stages. The Office of the Budget’s Bureau of Accounting and Financial Management (OB-BAFM) ensures the reports meet technical standards through a centralized desk review process. The various funding agencies in the Commonwealth are responsible for making a management decision on each finding within six months of the Federal Audit Clearinghouse’s (FAC) Acceptance date for audits subject to Uniform Guidance and to ensure appropriate corrective action is taken by the subrecipient (except for Uniform Guidance Finding 2024 ¬– 015: (continued) audits under U.S. Department of Labor programs which are permitted 12 months for management decisions in accordance with 2 CFR Section 2900.21). Each Commonwealth agency is also responsible for reviewing financial information in each audit report to determine whether the audit included all pass-through funding provided by the agency to ensure pass-through funds were subject to audit. Most agencies meet this requirement by performing Schedule of Expenditures of Federal Awards (SEFA) reconciliations. The agency is also required to adjust Commonwealth records, if necessary. Our fiscal year ended June 30, 2024 audit of the Commonwealth’s process for review and resolution of subrecipient Single Audits included an evaluation of the Commonwealth’s fiscal year ended June 30, 2023 subrecipient audit universe for audits due for submission to the FAC during the fiscal year ended June 30, 2024. We also evaluated the Commonwealth’s review of 45 subrecipient audit reports with findings in major programs/clusters which were identified on the Commonwealth agencies’ tracking lists during the fiscal year ended June 30, 2024 and required management decisions by Commonwealth agencies. Our testing disclosed the following audit exceptions regarding the Commonwealth agencies’ review of subrecipient audit reports: • Pennsylvania Department of Aging (PDOA): Our testing disclosed that PDOA did not have procedures in place to track audit reports including having an audit tracking list. The time period for making a management decision on findings was approximately 17.6 months to over 18 months after the FAC Acceptance date for two out of two audit reports with findings. There was also a delay in PDOA’s procedures to ensure the subrecipient SEFAs were accurate so that major programs were properly determined and subjected to audit. • Department of Agriculture (PDA): Our testing disclosed that PDA did not have procedures in place to track audit reports including having an audit tracking list. The time period for making a management decision on findings was approximately 8.7 months to over 16 months after the FAC Acceptance date for four out of four audit reports with findings. • Department of Education (PDE): The time period for making a management decision on findings was approximately 7.8 months to over 12 months after the FAC Acceptance date for seven out of 22 audit reports with findings. There were additional audit reports with findings listed on PDE’s audit tracking list where management decisions were not made timely. • Department of Environmental Protection (DEP): The time period for making a management decision on findings was approximately 11.6 months to over 12 months after the FAC Acceptance date for two out of two audit reports with findings. Our testing disclosed for the two late audit reports, DEP made management decisions timely. However, DEP did not notify the subrecipients of the management decisions within the required six month time period after the audit reports FAC Acceptance date. • Department of Human Services (DHS): The time period for making a management decision on findings was approximately 7.2 months after the FAC Acceptance date for one out of two audit reports with findings. Our testing disclosed for the one late audit report DHS made a management decision timely. However, DHS did not notify the subrecipient of the management decision within the required six month time period after the audit reports FAC Acceptance date. Criteria: 2 CFR §200.332, Requirements for pass-through entities, states in part: All pass-through entities must: (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward, and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: Finding 2024 ¬– 015: (continued) (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. (3) Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by §200.521 [Management decision]. (f) Verify that every subrecipient is audited as required by Subpart F [Audit Requirements] of this part when it is expected that the subrecipient’s Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in §200.501 [Audit requirements]. (g) Consider whether the results of the subrecipient’s audit, on-site review, or other monitoring indicate conditions that necessitate adjustments to the pass-through entity’s own records. (h) Consider taking enforcement action against noncompliant subrecipients as described in §200.339 [Remedies for noncompliance] of this part and in program regulations. In order to carry out these responsibilities properly, good internal control dictates that state pass-through agencies ensure subrecipient Single Audit SEFAs are representative of state payment records each year, and that the related federal programs have been properly subjected to Single Audit procedures. 2 CFR §200.512, Report submission, states in part: (a) General. (1) The audit must be completed and the data collection form described in paragraph (b) of this section and reporting package described in paragraph (c) of this section must be submitted within the earlier of 30 calendar days after receipt of the auditor’s report(s), or nine months after the end of the audit period. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day. 2 CFR §200.521, Management decision, states in part: (a) General. The management decision must clearly state whether or not the finding is sustained, the reasons for the decision, and the expected auditee action to repay disallowed costs, make financial adjustments, or take other action. (d) Time requirements. The Federal awarding agency or pass-through entity responsible for issuing a management decision must do so within six months of acceptance of the audit report by the FAC. The auditee must initiate and proceed with corrective action as rapidly as possible and corrective action should begin no later than upon receipt of the audit report. 2 CFR §200.505, Sanctions, states: In cases of continued inability or unwillingness to have an audit conducted in accordance with this part, Federal agencies and pass-through entities must take appropriate action as provided in §200.339 [Remedies for noncompliance]. 2 CFR §200.339, Remedies for noncompliance, states in part: If a non-Federal entity fails to comply with the U.S. Constitution, Federal statutes, regulations or the terms and conditions of a Federal award, the Federal awarding agency or pass-through entity may impose additional conditions, as described in §200.208 [Specific conditions]. If the Federal awarding agency or pass-through entity determines that noncompliance cannot be remedied by imposing additional conditions, the federal awarding agency or pass-through entity may take one or more of the following actions, as appropriate in the circumstances. Finding 2024 ¬– 015: (continued) (a) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency or pass-through entity. (b) Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost of the activity or action not in compliance. (c) Wholly or partly suspend or terminate the Federal award. (d) Initiate suspension or debarment proceedings as authorized under 2 CFR Part 180 and Federal awarding agency regulations (or in the case of a pass-through entity, recommend such a proceeding be initiated by a Federal awarding agency). (e) Withhold further Federal awards for the project or program. (f) Take other remedies that may be legally available. To ensure Commonwealth enforcement of federal regulations for subrecipient noncompliance with audit requirements, Commonwealth Management Directive 325.08, Amended – Remedies for Recipient Noncompliance with Audit Requirements, Section 5 related to policy, states in part: (a) Agencies must develop and implement remedial action that reflects the unique requirements of each program… (b) The remedial action should be implemented within six months from the date the first remedial action is initiated. At the end of the six-month period, the recipient should take the appropriate corrective action or the final stage of remedial action should be imposed on the recipient. Examples of remedial action include, but are not limited to: (1) Meeting or calling the recipient to explain the importance and benefits of the audit and audit resolution processes, emphasizing the value of the audit as an administrative tool and the Commonwealth’s reliance on an acceptable audit and prompt resolution as evidence of the recipient’s ability to properly administer the program. (2) Encouraging the entity to establish an audit committee or designate an individual as the single point of contact to: (a) Communicate regarding the audit. (b) Arrange for and oversee the audit. (c) Direct and monitor audit resolution. (3) Providing technical assistance to the recipient in devising and implementing an appropriate plan to remedy the noncompliance. (4) Withholding a portion of assistance payments until the noncompliance is resolved. (5) Withholding or disallowing overhead costs until the noncompliance is resolved. (6) Suspending the assistance agreement until the noncompliance is resolved. (7) Terminating the assistance agreement with the recipient and, if necessary, seeking alternative entities to administer the program. Finding 2024 ¬– 015: (continued) Management Directive 325.09, Amended – Processing Subrecipient Single Audits of Federal Pass-Through Funds, Section 7 related to procedures, states in part: c. Agencies. (2) Evaluate single audit report submissions received from BAFM to determine program purpose acceptability by verifying, at a minimum, that all agency-funded programs are properly included on the applicable financial schedules; that findings affecting the agency contain sufficient information to facilitate a management decision; and that the subrecipient has submitted an adequate corrective action plan. (5) Issue management decisions relative to audit findings and crosscutting findings assigned to the agency for resolution, as required by 2 CFR §200.521. If responsible for the resolution of crosscutting findings, notify the affected agency or agencies upon resolution of such findings. (6) Impose or coordinate the imposition of remedial action in accordance with 2 CFR Part 200.339 and Management Directive 325.08 Amended, Remedies for Recipient Noncompliance with Audit Requirements, when subrecipients fail to comply with the provisions of Subpart F. Management Directive 325.12, Amended – Standards for Enterprise Risk Management in Commonwealth Agencies, adopted the internal control framework outlined in the United States Government Accountability Office’s, Standards for Internal Control in the Federal Government (Green Book). The Green Book states in part: Management should establish and operate monitoring activities to monitor the internal control system and evaluate the results. Management should remediate identified internal control deficiencies on a timely basis. Cause: One reason provided by Commonwealth management for untimely audit resolution in the various agencies, including making management decisions, approving corrective action, and performing procedures to ensure the accuracy of subrecipient SEFAs, was either a change in staff or a lack of staff to follow up and process subrecipient audit reports more timely. Effect: Since required management decisions were not made within six months to ensure appropriate corrective action was taken on audits received from subrecipients, the Commonwealth did not comply with federal regulations, and subrecipients were not made aware of acceptance or rejection of corrective action plans in a timely manner. Further, noncompliance may recur in future periods if control deficiencies are not corrected on a timely basis, and there is an increased risk of unallowable charges being made to federal programs if corrective action and recovery of questioned costs is not timely. Regarding the SEFA reviews or alternate procedures which are not being performed timely, there is an increased risk that subrecipients could be misspending and/or inappropriately tracking and reporting federal funds over multiple year periods, and these discrepancies may not be properly monitored, detected, and corrected by agency personnel on a timely basis as required. Recommendation: We recommend that the above weaknesses that cause untimely subrecipient Single Audit resolution, including untimely management decisions on findings, and untimely review of the SEFA or alternate procedures be corrected to ensure compliance with federal requirements and Commonwealth Management Directives, and to better ensure timelier subrecipient compliance with program requirements. PDOA Response: PDOA agrees with the finding. PDA Response: PDA agrees with the finding. PDE Response: PDE agrees with the finding. DEP Response: DEP agrees with the finding. Finding 2024 ¬– 015: (continued) DHS Response: DHS agrees that there was an exception where human error caused a management decision on one single audit report to be issued untimely; in this instance, the decision itself was made timely but was not communicated in a timely manner. DHS disagrees that an isolated incident due to human error signifies a weakness in internal controls. This was not a systemic issue and therefore should not have been considered a significant deficiency in internal controls, and DHS should not have been included in this finding. Auditors’ Conclusion: The agency responses from PDOA, PDA, PDE, and DEP indicate agreement with the finding. DHS agrees that an error occurred resulting in untimely submission of one management decision, DHS disagrees that the error represents a significant deficiency. We acknowledge the error occurred due to an oversight and is not a systemic error, however, the error resulted in noncompliance with one of two audit reports that required timely management decisions. We will evaluate corrective action in the subsequent audit. The finding remains as stated. Questioned Costs: The amount of questioned costs cannot be determined.
Various Agencies Finding 2024 ¬– 015: ALN 10.565, 10.568, 10.569 – Food Distribution Cluster ALN 15.252 – Abandoned Mine Land Reclamation (AMLR) ALN 21.027 – COVID 19 – Coronavirus State and Local Fiscal Recovery Funds ALN 84.425C – COVID 19 – Education Stabilization Fund – GEER Fund ALN 84.425D – COVID 19 – Education Stabilization Fund – ESSER Fund ALN 84.425R – COVID 19 – Education Stabilization Fund – CRRSA EANS Program ALN 84.425U – COVID 19 – Education Stabilization Fund – ARP ESSER ALN 84.425V – COVID 19 – Education Stabilization Fund – ARP EANS Program ALN 84.425W – COVID 19 – Education Stabilization Fund – ARP ESSER HCY ALN 93.044, 93.045, 93.053 – Aging Cluster (including COVID-19) ALN 93.558 – Temporary Assistance for Needy Families ALN 93.667 – Social Services Block Grant A Material Weakness and Material Noncompliance Exist in the Commonwealth’s Subrecipient Audit Resolution Process (A Similar Condition Was Noted in Prior Year Finding 2023-024) Federal Grant Number(s) and Year(s): 228PA100I1003 (6/13/2022 – 6/30/2025), 231PA445Q2204 (10/01/2022 – 9/30/2023), 231PA825Y8005 (10/01/2022 – 9/30/2023), 231PA825Y8105 (10/01/2022 – 9/30/2023), 241PA825Y8005 (10/01/2023 – 9/30/2024), 241PA825Y8105 (10/01/2023 – 9/30/2024), S18AF20004 (11/01/2017 – 10/31/2025), S19AF20004 (12/01/2018 – 11/30/2025), S21AF10015 (1/01/2021 – 12/31/2023), S22AF00017 (1/01/2022 – 12/31/2024), S23AF00002 (11/01/2022 – 10/31/2027), TN75GJE1S7G3 (3/03/2021 – 12/31/2024), S425W210039 (4/23/2021 – 9/30/2024), S425U210028 (3/24/2021– 9/30/2024), S425D210028 (1/05/2021 – 9/30/2024), S425C200013 (5/18/2020 – 4/01/2024), S425R210037 (3/13/2020 – 9/30/2024), S425V210037 (11/16/2021 – 9/30/2024), S425C210013 (3/13/2020 – 9/30/2024), 2101PACMC6 (4/01/2021 – 9/30/2024), 2101PAHDC6 (4/01/2021 – 9/30/2024), 2101PAPHC6 (4/01/2021 – 9/30/2024), 2101PASSC6 (4/01/2021 – 9/30/2024), 2201PAOASS (10/01/2021 – 9/30/2023), 2201PASTPH (1/01/2022 – 9/30/2024), 2301PAOACM (10/01/2022 – 9/30/2024), 2301PAOAHD (10/01/2022 – 9/30/2024), 2301PAOANS (10/01/2022 – 9/30/2024), 2301PAOASS (10/01/2022 – 9/30/2024), 2401PAOACM (10/01/2023 – 9/30/2025), 2401PAOAHD (10/01/2023 – 9/30/2025), 2401PAOANS (10/01/2023 – 9/30/2025), 2401PAOASS (10/01/2023 – 9/30/2025), 2101PATANF (10/01/2020 – 9/30/2021), 2201PATANF (10/01/2021 – 9/30/2022), 2301PATANF (10/01/2022 – 9/30/2023), 2401PATANF (10/01/2023 – 9/30/2024), 2301PASOSR (10/01/2022 – 9/30/2024), 2401PASOSR (10/01/2023 – 9/30/2025), 2301PATANF (10/01/2022 – 9/30/2024), 2401PATANF (10/01/2023 – 9/30/2025) Type of Finding: Significant Deficiency in Internal Control over Compliance, Other Matters for Abandoned Mine Land Reclamation (AMLR), Temporary Assistance for Needy Families, Coronavirus State and Local Fiscal Recovery Funds, and Social Services Block Grant Material Weakness in Internal Control over Compliance, Material Noncompliance for Food Distribution Cluster, Education Stabilization Fund, and Aging Cluster Compliance Requirement: Subrecipient Monitoring Condition: Under the Commonwealth of Pennsylvania's (Commonwealth) implementation of the Single Audit Act, review and resolution of subrecipient Single Audit reports is split into two stages. The Office of the Budget’s Bureau of Accounting and Financial Management (OB-BAFM) ensures the reports meet technical standards through a centralized desk review process. The various funding agencies in the Commonwealth are responsible for making a management decision on each finding within six months of the Federal Audit Clearinghouse’s (FAC) Acceptance date for audits subject to Uniform Guidance and to ensure appropriate corrective action is taken by the subrecipient (except for Uniform Guidance Finding 2024 ¬– 015: (continued) audits under U.S. Department of Labor programs which are permitted 12 months for management decisions in accordance with 2 CFR Section 2900.21). Each Commonwealth agency is also responsible for reviewing financial information in each audit report to determine whether the audit included all pass-through funding provided by the agency to ensure pass-through funds were subject to audit. Most agencies meet this requirement by performing Schedule of Expenditures of Federal Awards (SEFA) reconciliations. The agency is also required to adjust Commonwealth records, if necessary. Our fiscal year ended June 30, 2024 audit of the Commonwealth’s process for review and resolution of subrecipient Single Audits included an evaluation of the Commonwealth’s fiscal year ended June 30, 2023 subrecipient audit universe for audits due for submission to the FAC during the fiscal year ended June 30, 2024. We also evaluated the Commonwealth’s review of 45 subrecipient audit reports with findings in major programs/clusters which were identified on the Commonwealth agencies’ tracking lists during the fiscal year ended June 30, 2024 and required management decisions by Commonwealth agencies. Our testing disclosed the following audit exceptions regarding the Commonwealth agencies’ review of subrecipient audit reports: • Pennsylvania Department of Aging (PDOA): Our testing disclosed that PDOA did not have procedures in place to track audit reports including having an audit tracking list. The time period for making a management decision on findings was approximately 17.6 months to over 18 months after the FAC Acceptance date for two out of two audit reports with findings. There was also a delay in PDOA’s procedures to ensure the subrecipient SEFAs were accurate so that major programs were properly determined and subjected to audit. • Department of Agriculture (PDA): Our testing disclosed that PDA did not have procedures in place to track audit reports including having an audit tracking list. The time period for making a management decision on findings was approximately 8.7 months to over 16 months after the FAC Acceptance date for four out of four audit reports with findings. • Department of Education (PDE): The time period for making a management decision on findings was approximately 7.8 months to over 12 months after the FAC Acceptance date for seven out of 22 audit reports with findings. There were additional audit reports with findings listed on PDE’s audit tracking list where management decisions were not made timely. • Department of Environmental Protection (DEP): The time period for making a management decision on findings was approximately 11.6 months to over 12 months after the FAC Acceptance date for two out of two audit reports with findings. Our testing disclosed for the two late audit reports, DEP made management decisions timely. However, DEP did not notify the subrecipients of the management decisions within the required six month time period after the audit reports FAC Acceptance date. • Department of Human Services (DHS): The time period for making a management decision on findings was approximately 7.2 months after the FAC Acceptance date for one out of two audit reports with findings. Our testing disclosed for the one late audit report DHS made a management decision timely. However, DHS did not notify the subrecipient of the management decision within the required six month time period after the audit reports FAC Acceptance date. Criteria: 2 CFR §200.332, Requirements for pass-through entities, states in part: All pass-through entities must: (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward, and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: Finding 2024 ¬– 015: (continued) (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. (3) Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by §200.521 [Management decision]. (f) Verify that every subrecipient is audited as required by Subpart F [Audit Requirements] of this part when it is expected that the subrecipient’s Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in §200.501 [Audit requirements]. (g) Consider whether the results of the subrecipient’s audit, on-site review, or other monitoring indicate conditions that necessitate adjustments to the pass-through entity’s own records. (h) Consider taking enforcement action against noncompliant subrecipients as described in §200.339 [Remedies for noncompliance] of this part and in program regulations. In order to carry out these responsibilities properly, good internal control dictates that state pass-through agencies ensure subrecipient Single Audit SEFAs are representative of state payment records each year, and that the related federal programs have been properly subjected to Single Audit procedures. 2 CFR §200.512, Report submission, states in part: (a) General. (1) The audit must be completed and the data collection form described in paragraph (b) of this section and reporting package described in paragraph (c) of this section must be submitted within the earlier of 30 calendar days after receipt of the auditor’s report(s), or nine months after the end of the audit period. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day. 2 CFR §200.521, Management decision, states in part: (a) General. The management decision must clearly state whether or not the finding is sustained, the reasons for the decision, and the expected auditee action to repay disallowed costs, make financial adjustments, or take other action. (d) Time requirements. The Federal awarding agency or pass-through entity responsible for issuing a management decision must do so within six months of acceptance of the audit report by the FAC. The auditee must initiate and proceed with corrective action as rapidly as possible and corrective action should begin no later than upon receipt of the audit report. 2 CFR §200.505, Sanctions, states: In cases of continued inability or unwillingness to have an audit conducted in accordance with this part, Federal agencies and pass-through entities must take appropriate action as provided in §200.339 [Remedies for noncompliance]. 2 CFR §200.339, Remedies for noncompliance, states in part: If a non-Federal entity fails to comply with the U.S. Constitution, Federal statutes, regulations or the terms and conditions of a Federal award, the Federal awarding agency or pass-through entity may impose additional conditions, as described in §200.208 [Specific conditions]. If the Federal awarding agency or pass-through entity determines that noncompliance cannot be remedied by imposing additional conditions, the federal awarding agency or pass-through entity may take one or more of the following actions, as appropriate in the circumstances. Finding 2024 ¬– 015: (continued) (a) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency or pass-through entity. (b) Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost of the activity or action not in compliance. (c) Wholly or partly suspend or terminate the Federal award. (d) Initiate suspension or debarment proceedings as authorized under 2 CFR Part 180 and Federal awarding agency regulations (or in the case of a pass-through entity, recommend such a proceeding be initiated by a Federal awarding agency). (e) Withhold further Federal awards for the project or program. (f) Take other remedies that may be legally available. To ensure Commonwealth enforcement of federal regulations for subrecipient noncompliance with audit requirements, Commonwealth Management Directive 325.08, Amended – Remedies for Recipient Noncompliance with Audit Requirements, Section 5 related to policy, states in part: (a) Agencies must develop and implement remedial action that reflects the unique requirements of each program… (b) The remedial action should be implemented within six months from the date the first remedial action is initiated. At the end of the six-month period, the recipient should take the appropriate corrective action or the final stage of remedial action should be imposed on the recipient. Examples of remedial action include, but are not limited to: (1) Meeting or calling the recipient to explain the importance and benefits of the audit and audit resolution processes, emphasizing the value of the audit as an administrative tool and the Commonwealth’s reliance on an acceptable audit and prompt resolution as evidence of the recipient’s ability to properly administer the program. (2) Encouraging the entity to establish an audit committee or designate an individual as the single point of contact to: (a) Communicate regarding the audit. (b) Arrange for and oversee the audit. (c) Direct and monitor audit resolution. (3) Providing technical assistance to the recipient in devising and implementing an appropriate plan to remedy the noncompliance. (4) Withholding a portion of assistance payments until the noncompliance is resolved. (5) Withholding or disallowing overhead costs until the noncompliance is resolved. (6) Suspending the assistance agreement until the noncompliance is resolved. (7) Terminating the assistance agreement with the recipient and, if necessary, seeking alternative entities to administer the program. Finding 2024 ¬– 015: (continued) Management Directive 325.09, Amended – Processing Subrecipient Single Audits of Federal Pass-Through Funds, Section 7 related to procedures, states in part: c. Agencies. (2) Evaluate single audit report submissions received from BAFM to determine program purpose acceptability by verifying, at a minimum, that all agency-funded programs are properly included on the applicable financial schedules; that findings affecting the agency contain sufficient information to facilitate a management decision; and that the subrecipient has submitted an adequate corrective action plan. (5) Issue management decisions relative to audit findings and crosscutting findings assigned to the agency for resolution, as required by 2 CFR §200.521. If responsible for the resolution of crosscutting findings, notify the affected agency or agencies upon resolution of such findings. (6) Impose or coordinate the imposition of remedial action in accordance with 2 CFR Part 200.339 and Management Directive 325.08 Amended, Remedies for Recipient Noncompliance with Audit Requirements, when subrecipients fail to comply with the provisions of Subpart F. Management Directive 325.12, Amended – Standards for Enterprise Risk Management in Commonwealth Agencies, adopted the internal control framework outlined in the United States Government Accountability Office’s, Standards for Internal Control in the Federal Government (Green Book). The Green Book states in part: Management should establish and operate monitoring activities to monitor the internal control system and evaluate the results. Management should remediate identified internal control deficiencies on a timely basis. Cause: One reason provided by Commonwealth management for untimely audit resolution in the various agencies, including making management decisions, approving corrective action, and performing procedures to ensure the accuracy of subrecipient SEFAs, was either a change in staff or a lack of staff to follow up and process subrecipient audit reports more timely. Effect: Since required management decisions were not made within six months to ensure appropriate corrective action was taken on audits received from subrecipients, the Commonwealth did not comply with federal regulations, and subrecipients were not made aware of acceptance or rejection of corrective action plans in a timely manner. Further, noncompliance may recur in future periods if control deficiencies are not corrected on a timely basis, and there is an increased risk of unallowable charges being made to federal programs if corrective action and recovery of questioned costs is not timely. Regarding the SEFA reviews or alternate procedures which are not being performed timely, there is an increased risk that subrecipients could be misspending and/or inappropriately tracking and reporting federal funds over multiple year periods, and these discrepancies may not be properly monitored, detected, and corrected by agency personnel on a timely basis as required. Recommendation: We recommend that the above weaknesses that cause untimely subrecipient Single Audit resolution, including untimely management decisions on findings, and untimely review of the SEFA or alternate procedures be corrected to ensure compliance with federal requirements and Commonwealth Management Directives, and to better ensure timelier subrecipient compliance with program requirements. PDOA Response: PDOA agrees with the finding. PDA Response: PDA agrees with the finding. PDE Response: PDE agrees with the finding. DEP Response: DEP agrees with the finding. Finding 2024 ¬– 015: (continued) DHS Response: DHS agrees that there was an exception where human error caused a management decision on one single audit report to be issued untimely; in this instance, the decision itself was made timely but was not communicated in a timely manner. DHS disagrees that an isolated incident due to human error signifies a weakness in internal controls. This was not a systemic issue and therefore should not have been considered a significant deficiency in internal controls, and DHS should not have been included in this finding. Auditors’ Conclusion: The agency responses from PDOA, PDA, PDE, and DEP indicate agreement with the finding. DHS agrees that an error occurred resulting in untimely submission of one management decision, DHS disagrees that the error represents a significant deficiency. We acknowledge the error occurred due to an oversight and is not a systemic error, however, the error resulted in noncompliance with one of two audit reports that required timely management decisions. We will evaluate corrective action in the subsequent audit. The finding remains as stated. Questioned Costs: The amount of questioned costs cannot be determined.
Various Agencies Finding 2024 ¬– 015: ALN 10.565, 10.568, 10.569 – Food Distribution Cluster ALN 15.252 – Abandoned Mine Land Reclamation (AMLR) ALN 21.027 – COVID 19 – Coronavirus State and Local Fiscal Recovery Funds ALN 84.425C – COVID 19 – Education Stabilization Fund – GEER Fund ALN 84.425D – COVID 19 – Education Stabilization Fund – ESSER Fund ALN 84.425R – COVID 19 – Education Stabilization Fund – CRRSA EANS Program ALN 84.425U – COVID 19 – Education Stabilization Fund – ARP ESSER ALN 84.425V – COVID 19 – Education Stabilization Fund – ARP EANS Program ALN 84.425W – COVID 19 – Education Stabilization Fund – ARP ESSER HCY ALN 93.044, 93.045, 93.053 – Aging Cluster (including COVID-19) ALN 93.558 – Temporary Assistance for Needy Families ALN 93.667 – Social Services Block Grant A Material Weakness and Material Noncompliance Exist in the Commonwealth’s Subrecipient Audit Resolution Process (A Similar Condition Was Noted in Prior Year Finding 2023-024) Federal Grant Number(s) and Year(s): 228PA100I1003 (6/13/2022 – 6/30/2025), 231PA445Q2204 (10/01/2022 – 9/30/2023), 231PA825Y8005 (10/01/2022 – 9/30/2023), 231PA825Y8105 (10/01/2022 – 9/30/2023), 241PA825Y8005 (10/01/2023 – 9/30/2024), 241PA825Y8105 (10/01/2023 – 9/30/2024), S18AF20004 (11/01/2017 – 10/31/2025), S19AF20004 (12/01/2018 – 11/30/2025), S21AF10015 (1/01/2021 – 12/31/2023), S22AF00017 (1/01/2022 – 12/31/2024), S23AF00002 (11/01/2022 – 10/31/2027), TN75GJE1S7G3 (3/03/2021 – 12/31/2024), S425W210039 (4/23/2021 – 9/30/2024), S425U210028 (3/24/2021– 9/30/2024), S425D210028 (1/05/2021 – 9/30/2024), S425C200013 (5/18/2020 – 4/01/2024), S425R210037 (3/13/2020 – 9/30/2024), S425V210037 (11/16/2021 – 9/30/2024), S425C210013 (3/13/2020 – 9/30/2024), 2101PACMC6 (4/01/2021 – 9/30/2024), 2101PAHDC6 (4/01/2021 – 9/30/2024), 2101PAPHC6 (4/01/2021 – 9/30/2024), 2101PASSC6 (4/01/2021 – 9/30/2024), 2201PAOASS (10/01/2021 – 9/30/2023), 2201PASTPH (1/01/2022 – 9/30/2024), 2301PAOACM (10/01/2022 – 9/30/2024), 2301PAOAHD (10/01/2022 – 9/30/2024), 2301PAOANS (10/01/2022 – 9/30/2024), 2301PAOASS (10/01/2022 – 9/30/2024), 2401PAOACM (10/01/2023 – 9/30/2025), 2401PAOAHD (10/01/2023 – 9/30/2025), 2401PAOANS (10/01/2023 – 9/30/2025), 2401PAOASS (10/01/2023 – 9/30/2025), 2101PATANF (10/01/2020 – 9/30/2021), 2201PATANF (10/01/2021 – 9/30/2022), 2301PATANF (10/01/2022 – 9/30/2023), 2401PATANF (10/01/2023 – 9/30/2024), 2301PASOSR (10/01/2022 – 9/30/2024), 2401PASOSR (10/01/2023 – 9/30/2025), 2301PATANF (10/01/2022 – 9/30/2024), 2401PATANF (10/01/2023 – 9/30/2025) Type of Finding: Significant Deficiency in Internal Control over Compliance, Other Matters for Abandoned Mine Land Reclamation (AMLR), Temporary Assistance for Needy Families, Coronavirus State and Local Fiscal Recovery Funds, and Social Services Block Grant Material Weakness in Internal Control over Compliance, Material Noncompliance for Food Distribution Cluster, Education Stabilization Fund, and Aging Cluster Compliance Requirement: Subrecipient Monitoring Condition: Under the Commonwealth of Pennsylvania's (Commonwealth) implementation of the Single Audit Act, review and resolution of subrecipient Single Audit reports is split into two stages. The Office of the Budget’s Bureau of Accounting and Financial Management (OB-BAFM) ensures the reports meet technical standards through a centralized desk review process. The various funding agencies in the Commonwealth are responsible for making a management decision on each finding within six months of the Federal Audit Clearinghouse’s (FAC) Acceptance date for audits subject to Uniform Guidance and to ensure appropriate corrective action is taken by the subrecipient (except for Uniform Guidance Finding 2024 ¬– 015: (continued) audits under U.S. Department of Labor programs which are permitted 12 months for management decisions in accordance with 2 CFR Section 2900.21). Each Commonwealth agency is also responsible for reviewing financial information in each audit report to determine whether the audit included all pass-through funding provided by the agency to ensure pass-through funds were subject to audit. Most agencies meet this requirement by performing Schedule of Expenditures of Federal Awards (SEFA) reconciliations. The agency is also required to adjust Commonwealth records, if necessary. Our fiscal year ended June 30, 2024 audit of the Commonwealth’s process for review and resolution of subrecipient Single Audits included an evaluation of the Commonwealth’s fiscal year ended June 30, 2023 subrecipient audit universe for audits due for submission to the FAC during the fiscal year ended June 30, 2024. We also evaluated the Commonwealth’s review of 45 subrecipient audit reports with findings in major programs/clusters which were identified on the Commonwealth agencies’ tracking lists during the fiscal year ended June 30, 2024 and required management decisions by Commonwealth agencies. Our testing disclosed the following audit exceptions regarding the Commonwealth agencies’ review of subrecipient audit reports: • Pennsylvania Department of Aging (PDOA): Our testing disclosed that PDOA did not have procedures in place to track audit reports including having an audit tracking list. The time period for making a management decision on findings was approximately 17.6 months to over 18 months after the FAC Acceptance date for two out of two audit reports with findings. There was also a delay in PDOA’s procedures to ensure the subrecipient SEFAs were accurate so that major programs were properly determined and subjected to audit. • Department of Agriculture (PDA): Our testing disclosed that PDA did not have procedures in place to track audit reports including having an audit tracking list. The time period for making a management decision on findings was approximately 8.7 months to over 16 months after the FAC Acceptance date for four out of four audit reports with findings. • Department of Education (PDE): The time period for making a management decision on findings was approximately 7.8 months to over 12 months after the FAC Acceptance date for seven out of 22 audit reports with findings. There were additional audit reports with findings listed on PDE’s audit tracking list where management decisions were not made timely. • Department of Environmental Protection (DEP): The time period for making a management decision on findings was approximately 11.6 months to over 12 months after the FAC Acceptance date for two out of two audit reports with findings. Our testing disclosed for the two late audit reports, DEP made management decisions timely. However, DEP did not notify the subrecipients of the management decisions within the required six month time period after the audit reports FAC Acceptance date. • Department of Human Services (DHS): The time period for making a management decision on findings was approximately 7.2 months after the FAC Acceptance date for one out of two audit reports with findings. Our testing disclosed for the one late audit report DHS made a management decision timely. However, DHS did not notify the subrecipient of the management decision within the required six month time period after the audit reports FAC Acceptance date. Criteria: 2 CFR §200.332, Requirements for pass-through entities, states in part: All pass-through entities must: (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward, and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: Finding 2024 ¬– 015: (continued) (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. (3) Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by §200.521 [Management decision]. (f) Verify that every subrecipient is audited as required by Subpart F [Audit Requirements] of this part when it is expected that the subrecipient’s Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in §200.501 [Audit requirements]. (g) Consider whether the results of the subrecipient’s audit, on-site review, or other monitoring indicate conditions that necessitate adjustments to the pass-through entity’s own records. (h) Consider taking enforcement action against noncompliant subrecipients as described in §200.339 [Remedies for noncompliance] of this part and in program regulations. In order to carry out these responsibilities properly, good internal control dictates that state pass-through agencies ensure subrecipient Single Audit SEFAs are representative of state payment records each year, and that the related federal programs have been properly subjected to Single Audit procedures. 2 CFR §200.512, Report submission, states in part: (a) General. (1) The audit must be completed and the data collection form described in paragraph (b) of this section and reporting package described in paragraph (c) of this section must be submitted within the earlier of 30 calendar days after receipt of the auditor’s report(s), or nine months after the end of the audit period. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day. 2 CFR §200.521, Management decision, states in part: (a) General. The management decision must clearly state whether or not the finding is sustained, the reasons for the decision, and the expected auditee action to repay disallowed costs, make financial adjustments, or take other action. (d) Time requirements. The Federal awarding agency or pass-through entity responsible for issuing a management decision must do so within six months of acceptance of the audit report by the FAC. The auditee must initiate and proceed with corrective action as rapidly as possible and corrective action should begin no later than upon receipt of the audit report. 2 CFR §200.505, Sanctions, states: In cases of continued inability or unwillingness to have an audit conducted in accordance with this part, Federal agencies and pass-through entities must take appropriate action as provided in §200.339 [Remedies for noncompliance]. 2 CFR §200.339, Remedies for noncompliance, states in part: If a non-Federal entity fails to comply with the U.S. Constitution, Federal statutes, regulations or the terms and conditions of a Federal award, the Federal awarding agency or pass-through entity may impose additional conditions, as described in §200.208 [Specific conditions]. If the Federal awarding agency or pass-through entity determines that noncompliance cannot be remedied by imposing additional conditions, the federal awarding agency or pass-through entity may take one or more of the following actions, as appropriate in the circumstances. Finding 2024 ¬– 015: (continued) (a) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency or pass-through entity. (b) Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost of the activity or action not in compliance. (c) Wholly or partly suspend or terminate the Federal award. (d) Initiate suspension or debarment proceedings as authorized under 2 CFR Part 180 and Federal awarding agency regulations (or in the case of a pass-through entity, recommend such a proceeding be initiated by a Federal awarding agency). (e) Withhold further Federal awards for the project or program. (f) Take other remedies that may be legally available. To ensure Commonwealth enforcement of federal regulations for subrecipient noncompliance with audit requirements, Commonwealth Management Directive 325.08, Amended – Remedies for Recipient Noncompliance with Audit Requirements, Section 5 related to policy, states in part: (a) Agencies must develop and implement remedial action that reflects the unique requirements of each program… (b) The remedial action should be implemented within six months from the date the first remedial action is initiated. At the end of the six-month period, the recipient should take the appropriate corrective action or the final stage of remedial action should be imposed on the recipient. Examples of remedial action include, but are not limited to: (1) Meeting or calling the recipient to explain the importance and benefits of the audit and audit resolution processes, emphasizing the value of the audit as an administrative tool and the Commonwealth’s reliance on an acceptable audit and prompt resolution as evidence of the recipient’s ability to properly administer the program. (2) Encouraging the entity to establish an audit committee or designate an individual as the single point of contact to: (a) Communicate regarding the audit. (b) Arrange for and oversee the audit. (c) Direct and monitor audit resolution. (3) Providing technical assistance to the recipient in devising and implementing an appropriate plan to remedy the noncompliance. (4) Withholding a portion of assistance payments until the noncompliance is resolved. (5) Withholding or disallowing overhead costs until the noncompliance is resolved. (6) Suspending the assistance agreement until the noncompliance is resolved. (7) Terminating the assistance agreement with the recipient and, if necessary, seeking alternative entities to administer the program. Finding 2024 ¬– 015: (continued) Management Directive 325.09, Amended – Processing Subrecipient Single Audits of Federal Pass-Through Funds, Section 7 related to procedures, states in part: c. Agencies. (2) Evaluate single audit report submissions received from BAFM to determine program purpose acceptability by verifying, at a minimum, that all agency-funded programs are properly included on the applicable financial schedules; that findings affecting the agency contain sufficient information to facilitate a management decision; and that the subrecipient has submitted an adequate corrective action plan. (5) Issue management decisions relative to audit findings and crosscutting findings assigned to the agency for resolution, as required by 2 CFR §200.521. If responsible for the resolution of crosscutting findings, notify the affected agency or agencies upon resolution of such findings. (6) Impose or coordinate the imposition of remedial action in accordance with 2 CFR Part 200.339 and Management Directive 325.08 Amended, Remedies for Recipient Noncompliance with Audit Requirements, when subrecipients fail to comply with the provisions of Subpart F. Management Directive 325.12, Amended – Standards for Enterprise Risk Management in Commonwealth Agencies, adopted the internal control framework outlined in the United States Government Accountability Office’s, Standards for Internal Control in the Federal Government (Green Book). The Green Book states in part: Management should establish and operate monitoring activities to monitor the internal control system and evaluate the results. Management should remediate identified internal control deficiencies on a timely basis. Cause: One reason provided by Commonwealth management for untimely audit resolution in the various agencies, including making management decisions, approving corrective action, and performing procedures to ensure the accuracy of subrecipient SEFAs, was either a change in staff or a lack of staff to follow up and process subrecipient audit reports more timely. Effect: Since required management decisions were not made within six months to ensure appropriate corrective action was taken on audits received from subrecipients, the Commonwealth did not comply with federal regulations, and subrecipients were not made aware of acceptance or rejection of corrective action plans in a timely manner. Further, noncompliance may recur in future periods if control deficiencies are not corrected on a timely basis, and there is an increased risk of unallowable charges being made to federal programs if corrective action and recovery of questioned costs is not timely. Regarding the SEFA reviews or alternate procedures which are not being performed timely, there is an increased risk that subrecipients could be misspending and/or inappropriately tracking and reporting federal funds over multiple year periods, and these discrepancies may not be properly monitored, detected, and corrected by agency personnel on a timely basis as required. Recommendation: We recommend that the above weaknesses that cause untimely subrecipient Single Audit resolution, including untimely management decisions on findings, and untimely review of the SEFA or alternate procedures be corrected to ensure compliance with federal requirements and Commonwealth Management Directives, and to better ensure timelier subrecipient compliance with program requirements. PDOA Response: PDOA agrees with the finding. PDA Response: PDA agrees with the finding. PDE Response: PDE agrees with the finding. DEP Response: DEP agrees with the finding. Finding 2024 ¬– 015: (continued) DHS Response: DHS agrees that there was an exception where human error caused a management decision on one single audit report to be issued untimely; in this instance, the decision itself was made timely but was not communicated in a timely manner. DHS disagrees that an isolated incident due to human error signifies a weakness in internal controls. This was not a systemic issue and therefore should not have been considered a significant deficiency in internal controls, and DHS should not have been included in this finding. Auditors’ Conclusion: The agency responses from PDOA, PDA, PDE, and DEP indicate agreement with the finding. DHS agrees that an error occurred resulting in untimely submission of one management decision, DHS disagrees that the error represents a significant deficiency. We acknowledge the error occurred due to an oversight and is not a systemic error, however, the error resulted in noncompliance with one of two audit reports that required timely management decisions. We will evaluate corrective action in the subsequent audit. The finding remains as stated. Questioned Costs: The amount of questioned costs cannot be determined.
Various Agencies Finding 2024 ¬– 015: ALN 10.565, 10.568, 10.569 – Food Distribution Cluster ALN 15.252 – Abandoned Mine Land Reclamation (AMLR) ALN 21.027 – COVID 19 – Coronavirus State and Local Fiscal Recovery Funds ALN 84.425C – COVID 19 – Education Stabilization Fund – GEER Fund ALN 84.425D – COVID 19 – Education Stabilization Fund – ESSER Fund ALN 84.425R – COVID 19 – Education Stabilization Fund – CRRSA EANS Program ALN 84.425U – COVID 19 – Education Stabilization Fund – ARP ESSER ALN 84.425V – COVID 19 – Education Stabilization Fund – ARP EANS Program ALN 84.425W – COVID 19 – Education Stabilization Fund – ARP ESSER HCY ALN 93.044, 93.045, 93.053 – Aging Cluster (including COVID-19) ALN 93.558 – Temporary Assistance for Needy Families ALN 93.667 – Social Services Block Grant A Material Weakness and Material Noncompliance Exist in the Commonwealth’s Subrecipient Audit Resolution Process (A Similar Condition Was Noted in Prior Year Finding 2023-024) Federal Grant Number(s) and Year(s): 228PA100I1003 (6/13/2022 – 6/30/2025), 231PA445Q2204 (10/01/2022 – 9/30/2023), 231PA825Y8005 (10/01/2022 – 9/30/2023), 231PA825Y8105 (10/01/2022 – 9/30/2023), 241PA825Y8005 (10/01/2023 – 9/30/2024), 241PA825Y8105 (10/01/2023 – 9/30/2024), S18AF20004 (11/01/2017 – 10/31/2025), S19AF20004 (12/01/2018 – 11/30/2025), S21AF10015 (1/01/2021 – 12/31/2023), S22AF00017 (1/01/2022 – 12/31/2024), S23AF00002 (11/01/2022 – 10/31/2027), TN75GJE1S7G3 (3/03/2021 – 12/31/2024), S425W210039 (4/23/2021 – 9/30/2024), S425U210028 (3/24/2021– 9/30/2024), S425D210028 (1/05/2021 – 9/30/2024), S425C200013 (5/18/2020 – 4/01/2024), S425R210037 (3/13/2020 – 9/30/2024), S425V210037 (11/16/2021 – 9/30/2024), S425C210013 (3/13/2020 – 9/30/2024), 2101PACMC6 (4/01/2021 – 9/30/2024), 2101PAHDC6 (4/01/2021 – 9/30/2024), 2101PAPHC6 (4/01/2021 – 9/30/2024), 2101PASSC6 (4/01/2021 – 9/30/2024), 2201PAOASS (10/01/2021 – 9/30/2023), 2201PASTPH (1/01/2022 – 9/30/2024), 2301PAOACM (10/01/2022 – 9/30/2024), 2301PAOAHD (10/01/2022 – 9/30/2024), 2301PAOANS (10/01/2022 – 9/30/2024), 2301PAOASS (10/01/2022 – 9/30/2024), 2401PAOACM (10/01/2023 – 9/30/2025), 2401PAOAHD (10/01/2023 – 9/30/2025), 2401PAOANS (10/01/2023 – 9/30/2025), 2401PAOASS (10/01/2023 – 9/30/2025), 2101PATANF (10/01/2020 – 9/30/2021), 2201PATANF (10/01/2021 – 9/30/2022), 2301PATANF (10/01/2022 – 9/30/2023), 2401PATANF (10/01/2023 – 9/30/2024), 2301PASOSR (10/01/2022 – 9/30/2024), 2401PASOSR (10/01/2023 – 9/30/2025), 2301PATANF (10/01/2022 – 9/30/2024), 2401PATANF (10/01/2023 – 9/30/2025) Type of Finding: Significant Deficiency in Internal Control over Compliance, Other Matters for Abandoned Mine Land Reclamation (AMLR), Temporary Assistance for Needy Families, Coronavirus State and Local Fiscal Recovery Funds, and Social Services Block Grant Material Weakness in Internal Control over Compliance, Material Noncompliance for Food Distribution Cluster, Education Stabilization Fund, and Aging Cluster Compliance Requirement: Subrecipient Monitoring Condition: Under the Commonwealth of Pennsylvania's (Commonwealth) implementation of the Single Audit Act, review and resolution of subrecipient Single Audit reports is split into two stages. The Office of the Budget’s Bureau of Accounting and Financial Management (OB-BAFM) ensures the reports meet technical standards through a centralized desk review process. The various funding agencies in the Commonwealth are responsible for making a management decision on each finding within six months of the Federal Audit Clearinghouse’s (FAC) Acceptance date for audits subject to Uniform Guidance and to ensure appropriate corrective action is taken by the subrecipient (except for Uniform Guidance Finding 2024 ¬– 015: (continued) audits under U.S. Department of Labor programs which are permitted 12 months for management decisions in accordance with 2 CFR Section 2900.21). Each Commonwealth agency is also responsible for reviewing financial information in each audit report to determine whether the audit included all pass-through funding provided by the agency to ensure pass-through funds were subject to audit. Most agencies meet this requirement by performing Schedule of Expenditures of Federal Awards (SEFA) reconciliations. The agency is also required to adjust Commonwealth records, if necessary. Our fiscal year ended June 30, 2024 audit of the Commonwealth’s process for review and resolution of subrecipient Single Audits included an evaluation of the Commonwealth’s fiscal year ended June 30, 2023 subrecipient audit universe for audits due for submission to the FAC during the fiscal year ended June 30, 2024. We also evaluated the Commonwealth’s review of 45 subrecipient audit reports with findings in major programs/clusters which were identified on the Commonwealth agencies’ tracking lists during the fiscal year ended June 30, 2024 and required management decisions by Commonwealth agencies. Our testing disclosed the following audit exceptions regarding the Commonwealth agencies’ review of subrecipient audit reports: • Pennsylvania Department of Aging (PDOA): Our testing disclosed that PDOA did not have procedures in place to track audit reports including having an audit tracking list. The time period for making a management decision on findings was approximately 17.6 months to over 18 months after the FAC Acceptance date for two out of two audit reports with findings. There was also a delay in PDOA’s procedures to ensure the subrecipient SEFAs were accurate so that major programs were properly determined and subjected to audit. • Department of Agriculture (PDA): Our testing disclosed that PDA did not have procedures in place to track audit reports including having an audit tracking list. The time period for making a management decision on findings was approximately 8.7 months to over 16 months after the FAC Acceptance date for four out of four audit reports with findings. • Department of Education (PDE): The time period for making a management decision on findings was approximately 7.8 months to over 12 months after the FAC Acceptance date for seven out of 22 audit reports with findings. There were additional audit reports with findings listed on PDE’s audit tracking list where management decisions were not made timely. • Department of Environmental Protection (DEP): The time period for making a management decision on findings was approximately 11.6 months to over 12 months after the FAC Acceptance date for two out of two audit reports with findings. Our testing disclosed for the two late audit reports, DEP made management decisions timely. However, DEP did not notify the subrecipients of the management decisions within the required six month time period after the audit reports FAC Acceptance date. • Department of Human Services (DHS): The time period for making a management decision on findings was approximately 7.2 months after the FAC Acceptance date for one out of two audit reports with findings. Our testing disclosed for the one late audit report DHS made a management decision timely. However, DHS did not notify the subrecipient of the management decision within the required six month time period after the audit reports FAC Acceptance date. Criteria: 2 CFR §200.332, Requirements for pass-through entities, states in part: All pass-through entities must: (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward, and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: Finding 2024 ¬– 015: (continued) (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. (3) Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by §200.521 [Management decision]. (f) Verify that every subrecipient is audited as required by Subpart F [Audit Requirements] of this part when it is expected that the subrecipient’s Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in §200.501 [Audit requirements]. (g) Consider whether the results of the subrecipient’s audit, on-site review, or other monitoring indicate conditions that necessitate adjustments to the pass-through entity’s own records. (h) Consider taking enforcement action against noncompliant subrecipients as described in §200.339 [Remedies for noncompliance] of this part and in program regulations. In order to carry out these responsibilities properly, good internal control dictates that state pass-through agencies ensure subrecipient Single Audit SEFAs are representative of state payment records each year, and that the related federal programs have been properly subjected to Single Audit procedures. 2 CFR §200.512, Report submission, states in part: (a) General. (1) The audit must be completed and the data collection form described in paragraph (b) of this section and reporting package described in paragraph (c) of this section must be submitted within the earlier of 30 calendar days after receipt of the auditor’s report(s), or nine months after the end of the audit period. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day. 2 CFR §200.521, Management decision, states in part: (a) General. The management decision must clearly state whether or not the finding is sustained, the reasons for the decision, and the expected auditee action to repay disallowed costs, make financial adjustments, or take other action. (d) Time requirements. The Federal awarding agency or pass-through entity responsible for issuing a management decision must do so within six months of acceptance of the audit report by the FAC. The auditee must initiate and proceed with corrective action as rapidly as possible and corrective action should begin no later than upon receipt of the audit report. 2 CFR §200.505, Sanctions, states: In cases of continued inability or unwillingness to have an audit conducted in accordance with this part, Federal agencies and pass-through entities must take appropriate action as provided in §200.339 [Remedies for noncompliance]. 2 CFR §200.339, Remedies for noncompliance, states in part: If a non-Federal entity fails to comply with the U.S. Constitution, Federal statutes, regulations or the terms and conditions of a Federal award, the Federal awarding agency or pass-through entity may impose additional conditions, as described in §200.208 [Specific conditions]. If the Federal awarding agency or pass-through entity determines that noncompliance cannot be remedied by imposing additional conditions, the federal awarding agency or pass-through entity may take one or more of the following actions, as appropriate in the circumstances. Finding 2024 ¬– 015: (continued) (a) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency or pass-through entity. (b) Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost of the activity or action not in compliance. (c) Wholly or partly suspend or terminate the Federal award. (d) Initiate suspension or debarment proceedings as authorized under 2 CFR Part 180 and Federal awarding agency regulations (or in the case of a pass-through entity, recommend such a proceeding be initiated by a Federal awarding agency). (e) Withhold further Federal awards for the project or program. (f) Take other remedies that may be legally available. To ensure Commonwealth enforcement of federal regulations for subrecipient noncompliance with audit requirements, Commonwealth Management Directive 325.08, Amended – Remedies for Recipient Noncompliance with Audit Requirements, Section 5 related to policy, states in part: (a) Agencies must develop and implement remedial action that reflects the unique requirements of each program… (b) The remedial action should be implemented within six months from the date the first remedial action is initiated. At the end of the six-month period, the recipient should take the appropriate corrective action or the final stage of remedial action should be imposed on the recipient. Examples of remedial action include, but are not limited to: (1) Meeting or calling the recipient to explain the importance and benefits of the audit and audit resolution processes, emphasizing the value of the audit as an administrative tool and the Commonwealth’s reliance on an acceptable audit and prompt resolution as evidence of the recipient’s ability to properly administer the program. (2) Encouraging the entity to establish an audit committee or designate an individual as the single point of contact to: (a) Communicate regarding the audit. (b) Arrange for and oversee the audit. (c) Direct and monitor audit resolution. (3) Providing technical assistance to the recipient in devising and implementing an appropriate plan to remedy the noncompliance. (4) Withholding a portion of assistance payments until the noncompliance is resolved. (5) Withholding or disallowing overhead costs until the noncompliance is resolved. (6) Suspending the assistance agreement until the noncompliance is resolved. (7) Terminating the assistance agreement with the recipient and, if necessary, seeking alternative entities to administer the program. Finding 2024 ¬– 015: (continued) Management Directive 325.09, Amended – Processing Subrecipient Single Audits of Federal Pass-Through Funds, Section 7 related to procedures, states in part: c. Agencies. (2) Evaluate single audit report submissions received from BAFM to determine program purpose acceptability by verifying, at a minimum, that all agency-funded programs are properly included on the applicable financial schedules; that findings affecting the agency contain sufficient information to facilitate a management decision; and that the subrecipient has submitted an adequate corrective action plan. (5) Issue management decisions relative to audit findings and crosscutting findings assigned to the agency for resolution, as required by 2 CFR §200.521. If responsible for the resolution of crosscutting findings, notify the affected agency or agencies upon resolution of such findings. (6) Impose or coordinate the imposition of remedial action in accordance with 2 CFR Part 200.339 and Management Directive 325.08 Amended, Remedies for Recipient Noncompliance with Audit Requirements, when subrecipients fail to comply with the provisions of Subpart F. Management Directive 325.12, Amended – Standards for Enterprise Risk Management in Commonwealth Agencies, adopted the internal control framework outlined in the United States Government Accountability Office’s, Standards for Internal Control in the Federal Government (Green Book). The Green Book states in part: Management should establish and operate monitoring activities to monitor the internal control system and evaluate the results. Management should remediate identified internal control deficiencies on a timely basis. Cause: One reason provided by Commonwealth management for untimely audit resolution in the various agencies, including making management decisions, approving corrective action, and performing procedures to ensure the accuracy of subrecipient SEFAs, was either a change in staff or a lack of staff to follow up and process subrecipient audit reports more timely. Effect: Since required management decisions were not made within six months to ensure appropriate corrective action was taken on audits received from subrecipients, the Commonwealth did not comply with federal regulations, and subrecipients were not made aware of acceptance or rejection of corrective action plans in a timely manner. Further, noncompliance may recur in future periods if control deficiencies are not corrected on a timely basis, and there is an increased risk of unallowable charges being made to federal programs if corrective action and recovery of questioned costs is not timely. Regarding the SEFA reviews or alternate procedures which are not being performed timely, there is an increased risk that subrecipients could be misspending and/or inappropriately tracking and reporting federal funds over multiple year periods, and these discrepancies may not be properly monitored, detected, and corrected by agency personnel on a timely basis as required. Recommendation: We recommend that the above weaknesses that cause untimely subrecipient Single Audit resolution, including untimely management decisions on findings, and untimely review of the SEFA or alternate procedures be corrected to ensure compliance with federal requirements and Commonwealth Management Directives, and to better ensure timelier subrecipient compliance with program requirements. PDOA Response: PDOA agrees with the finding. PDA Response: PDA agrees with the finding. PDE Response: PDE agrees with the finding. DEP Response: DEP agrees with the finding. Finding 2024 ¬– 015: (continued) DHS Response: DHS agrees that there was an exception where human error caused a management decision on one single audit report to be issued untimely; in this instance, the decision itself was made timely but was not communicated in a timely manner. DHS disagrees that an isolated incident due to human error signifies a weakness in internal controls. This was not a systemic issue and therefore should not have been considered a significant deficiency in internal controls, and DHS should not have been included in this finding. Auditors’ Conclusion: The agency responses from PDOA, PDA, PDE, and DEP indicate agreement with the finding. DHS agrees that an error occurred resulting in untimely submission of one management decision, DHS disagrees that the error represents a significant deficiency. We acknowledge the error occurred due to an oversight and is not a systemic error, however, the error resulted in noncompliance with one of two audit reports that required timely management decisions. We will evaluate corrective action in the subsequent audit. The finding remains as stated. Questioned Costs: The amount of questioned costs cannot be determined.
Various Agencies Finding 2024 ¬– 015: ALN 10.565, 10.568, 10.569 – Food Distribution Cluster ALN 15.252 – Abandoned Mine Land Reclamation (AMLR) ALN 21.027 – COVID 19 – Coronavirus State and Local Fiscal Recovery Funds ALN 84.425C – COVID 19 – Education Stabilization Fund – GEER Fund ALN 84.425D – COVID 19 – Education Stabilization Fund – ESSER Fund ALN 84.425R – COVID 19 – Education Stabilization Fund – CRRSA EANS Program ALN 84.425U – COVID 19 – Education Stabilization Fund – ARP ESSER ALN 84.425V – COVID 19 – Education Stabilization Fund – ARP EANS Program ALN 84.425W – COVID 19 – Education Stabilization Fund – ARP ESSER HCY ALN 93.044, 93.045, 93.053 – Aging Cluster (including COVID-19) ALN 93.558 – Temporary Assistance for Needy Families ALN 93.667 – Social Services Block Grant A Material Weakness and Material Noncompliance Exist in the Commonwealth’s Subrecipient Audit Resolution Process (A Similar Condition Was Noted in Prior Year Finding 2023-024) Federal Grant Number(s) and Year(s): 228PA100I1003 (6/13/2022 – 6/30/2025), 231PA445Q2204 (10/01/2022 – 9/30/2023), 231PA825Y8005 (10/01/2022 – 9/30/2023), 231PA825Y8105 (10/01/2022 – 9/30/2023), 241PA825Y8005 (10/01/2023 – 9/30/2024), 241PA825Y8105 (10/01/2023 – 9/30/2024), S18AF20004 (11/01/2017 – 10/31/2025), S19AF20004 (12/01/2018 – 11/30/2025), S21AF10015 (1/01/2021 – 12/31/2023), S22AF00017 (1/01/2022 – 12/31/2024), S23AF00002 (11/01/2022 – 10/31/2027), TN75GJE1S7G3 (3/03/2021 – 12/31/2024), S425W210039 (4/23/2021 – 9/30/2024), S425U210028 (3/24/2021– 9/30/2024), S425D210028 (1/05/2021 – 9/30/2024), S425C200013 (5/18/2020 – 4/01/2024), S425R210037 (3/13/2020 – 9/30/2024), S425V210037 (11/16/2021 – 9/30/2024), S425C210013 (3/13/2020 – 9/30/2024), 2101PACMC6 (4/01/2021 – 9/30/2024), 2101PAHDC6 (4/01/2021 – 9/30/2024), 2101PAPHC6 (4/01/2021 – 9/30/2024), 2101PASSC6 (4/01/2021 – 9/30/2024), 2201PAOASS (10/01/2021 – 9/30/2023), 2201PASTPH (1/01/2022 – 9/30/2024), 2301PAOACM (10/01/2022 – 9/30/2024), 2301PAOAHD (10/01/2022 – 9/30/2024), 2301PAOANS (10/01/2022 – 9/30/2024), 2301PAOASS (10/01/2022 – 9/30/2024), 2401PAOACM (10/01/2023 – 9/30/2025), 2401PAOAHD (10/01/2023 – 9/30/2025), 2401PAOANS (10/01/2023 – 9/30/2025), 2401PAOASS (10/01/2023 – 9/30/2025), 2101PATANF (10/01/2020 – 9/30/2021), 2201PATANF (10/01/2021 – 9/30/2022), 2301PATANF (10/01/2022 – 9/30/2023), 2401PATANF (10/01/2023 – 9/30/2024), 2301PASOSR (10/01/2022 – 9/30/2024), 2401PASOSR (10/01/2023 – 9/30/2025), 2301PATANF (10/01/2022 – 9/30/2024), 2401PATANF (10/01/2023 – 9/30/2025) Type of Finding: Significant Deficiency in Internal Control over Compliance, Other Matters for Abandoned Mine Land Reclamation (AMLR), Temporary Assistance for Needy Families, Coronavirus State and Local Fiscal Recovery Funds, and Social Services Block Grant Material Weakness in Internal Control over Compliance, Material Noncompliance for Food Distribution Cluster, Education Stabilization Fund, and Aging Cluster Compliance Requirement: Subrecipient Monitoring Condition: Under the Commonwealth of Pennsylvania's (Commonwealth) implementation of the Single Audit Act, review and resolution of subrecipient Single Audit reports is split into two stages. The Office of the Budget’s Bureau of Accounting and Financial Management (OB-BAFM) ensures the reports meet technical standards through a centralized desk review process. The various funding agencies in the Commonwealth are responsible for making a management decision on each finding within six months of the Federal Audit Clearinghouse’s (FAC) Acceptance date for audits subject to Uniform Guidance and to ensure appropriate corrective action is taken by the subrecipient (except for Uniform Guidance Finding 2024 ¬– 015: (continued) audits under U.S. Department of Labor programs which are permitted 12 months for management decisions in accordance with 2 CFR Section 2900.21). Each Commonwealth agency is also responsible for reviewing financial information in each audit report to determine whether the audit included all pass-through funding provided by the agency to ensure pass-through funds were subject to audit. Most agencies meet this requirement by performing Schedule of Expenditures of Federal Awards (SEFA) reconciliations. The agency is also required to adjust Commonwealth records, if necessary. Our fiscal year ended June 30, 2024 audit of the Commonwealth’s process for review and resolution of subrecipient Single Audits included an evaluation of the Commonwealth’s fiscal year ended June 30, 2023 subrecipient audit universe for audits due for submission to the FAC during the fiscal year ended June 30, 2024. We also evaluated the Commonwealth’s review of 45 subrecipient audit reports with findings in major programs/clusters which were identified on the Commonwealth agencies’ tracking lists during the fiscal year ended June 30, 2024 and required management decisions by Commonwealth agencies. Our testing disclosed the following audit exceptions regarding the Commonwealth agencies’ review of subrecipient audit reports: • Pennsylvania Department of Aging (PDOA): Our testing disclosed that PDOA did not have procedures in place to track audit reports including having an audit tracking list. The time period for making a management decision on findings was approximately 17.6 months to over 18 months after the FAC Acceptance date for two out of two audit reports with findings. There was also a delay in PDOA’s procedures to ensure the subrecipient SEFAs were accurate so that major programs were properly determined and subjected to audit. • Department of Agriculture (PDA): Our testing disclosed that PDA did not have procedures in place to track audit reports including having an audit tracking list. The time period for making a management decision on findings was approximately 8.7 months to over 16 months after the FAC Acceptance date for four out of four audit reports with findings. • Department of Education (PDE): The time period for making a management decision on findings was approximately 7.8 months to over 12 months after the FAC Acceptance date for seven out of 22 audit reports with findings. There were additional audit reports with findings listed on PDE’s audit tracking list where management decisions were not made timely. • Department of Environmental Protection (DEP): The time period for making a management decision on findings was approximately 11.6 months to over 12 months after the FAC Acceptance date for two out of two audit reports with findings. Our testing disclosed for the two late audit reports, DEP made management decisions timely. However, DEP did not notify the subrecipients of the management decisions within the required six month time period after the audit reports FAC Acceptance date. • Department of Human Services (DHS): The time period for making a management decision on findings was approximately 7.2 months after the FAC Acceptance date for one out of two audit reports with findings. Our testing disclosed for the one late audit report DHS made a management decision timely. However, DHS did not notify the subrecipient of the management decision within the required six month time period after the audit reports FAC Acceptance date. Criteria: 2 CFR §200.332, Requirements for pass-through entities, states in part: All pass-through entities must: (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward, and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: Finding 2024 ¬– 015: (continued) (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. (3) Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by §200.521 [Management decision]. (f) Verify that every subrecipient is audited as required by Subpart F [Audit Requirements] of this part when it is expected that the subrecipient’s Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in §200.501 [Audit requirements]. (g) Consider whether the results of the subrecipient’s audit, on-site review, or other monitoring indicate conditions that necessitate adjustments to the pass-through entity’s own records. (h) Consider taking enforcement action against noncompliant subrecipients as described in §200.339 [Remedies for noncompliance] of this part and in program regulations. In order to carry out these responsibilities properly, good internal control dictates that state pass-through agencies ensure subrecipient Single Audit SEFAs are representative of state payment records each year, and that the related federal programs have been properly subjected to Single Audit procedures. 2 CFR §200.512, Report submission, states in part: (a) General. (1) The audit must be completed and the data collection form described in paragraph (b) of this section and reporting package described in paragraph (c) of this section must be submitted within the earlier of 30 calendar days after receipt of the auditor’s report(s), or nine months after the end of the audit period. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day. 2 CFR §200.521, Management decision, states in part: (a) General. The management decision must clearly state whether or not the finding is sustained, the reasons for the decision, and the expected auditee action to repay disallowed costs, make financial adjustments, or take other action. (d) Time requirements. The Federal awarding agency or pass-through entity responsible for issuing a management decision must do so within six months of acceptance of the audit report by the FAC. The auditee must initiate and proceed with corrective action as rapidly as possible and corrective action should begin no later than upon receipt of the audit report. 2 CFR §200.505, Sanctions, states: In cases of continued inability or unwillingness to have an audit conducted in accordance with this part, Federal agencies and pass-through entities must take appropriate action as provided in §200.339 [Remedies for noncompliance]. 2 CFR §200.339, Remedies for noncompliance, states in part: If a non-Federal entity fails to comply with the U.S. Constitution, Federal statutes, regulations or the terms and conditions of a Federal award, the Federal awarding agency or pass-through entity may impose additional conditions, as described in §200.208 [Specific conditions]. If the Federal awarding agency or pass-through entity determines that noncompliance cannot be remedied by imposing additional conditions, the federal awarding agency or pass-through entity may take one or more of the following actions, as appropriate in the circumstances. Finding 2024 ¬– 015: (continued) (a) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency or pass-through entity. (b) Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost of the activity or action not in compliance. (c) Wholly or partly suspend or terminate the Federal award. (d) Initiate suspension or debarment proceedings as authorized under 2 CFR Part 180 and Federal awarding agency regulations (or in the case of a pass-through entity, recommend such a proceeding be initiated by a Federal awarding agency). (e) Withhold further Federal awards for the project or program. (f) Take other remedies that may be legally available. To ensure Commonwealth enforcement of federal regulations for subrecipient noncompliance with audit requirements, Commonwealth Management Directive 325.08, Amended – Remedies for Recipient Noncompliance with Audit Requirements, Section 5 related to policy, states in part: (a) Agencies must develop and implement remedial action that reflects the unique requirements of each program… (b) The remedial action should be implemented within six months from the date the first remedial action is initiated. At the end of the six-month period, the recipient should take the appropriate corrective action or the final stage of remedial action should be imposed on the recipient. Examples of remedial action include, but are not limited to: (1) Meeting or calling the recipient to explain the importance and benefits of the audit and audit resolution processes, emphasizing the value of the audit as an administrative tool and the Commonwealth’s reliance on an acceptable audit and prompt resolution as evidence of the recipient’s ability to properly administer the program. (2) Encouraging the entity to establish an audit committee or designate an individual as the single point of contact to: (a) Communicate regarding the audit. (b) Arrange for and oversee the audit. (c) Direct and monitor audit resolution. (3) Providing technical assistance to the recipient in devising and implementing an appropriate plan to remedy the noncompliance. (4) Withholding a portion of assistance payments until the noncompliance is resolved. (5) Withholding or disallowing overhead costs until the noncompliance is resolved. (6) Suspending the assistance agreement until the noncompliance is resolved. (7) Terminating the assistance agreement with the recipient and, if necessary, seeking alternative entities to administer the program. Finding 2024 ¬– 015: (continued) Management Directive 325.09, Amended – Processing Subrecipient Single Audits of Federal Pass-Through Funds, Section 7 related to procedures, states in part: c. Agencies. (2) Evaluate single audit report submissions received from BAFM to determine program purpose acceptability by verifying, at a minimum, that all agency-funded programs are properly included on the applicable financial schedules; that findings affecting the agency contain sufficient information to facilitate a management decision; and that the subrecipient has submitted an adequate corrective action plan. (5) Issue management decisions relative to audit findings and crosscutting findings assigned to the agency for resolution, as required by 2 CFR §200.521. If responsible for the resolution of crosscutting findings, notify the affected agency or agencies upon resolution of such findings. (6) Impose or coordinate the imposition of remedial action in accordance with 2 CFR Part 200.339 and Management Directive 325.08 Amended, Remedies for Recipient Noncompliance with Audit Requirements, when subrecipients fail to comply with the provisions of Subpart F. Management Directive 325.12, Amended – Standards for Enterprise Risk Management in Commonwealth Agencies, adopted the internal control framework outlined in the United States Government Accountability Office’s, Standards for Internal Control in the Federal Government (Green Book). The Green Book states in part: Management should establish and operate monitoring activities to monitor the internal control system and evaluate the results. Management should remediate identified internal control deficiencies on a timely basis. Cause: One reason provided by Commonwealth management for untimely audit resolution in the various agencies, including making management decisions, approving corrective action, and performing procedures to ensure the accuracy of subrecipient SEFAs, was either a change in staff or a lack of staff to follow up and process subrecipient audit reports more timely. Effect: Since required management decisions were not made within six months to ensure appropriate corrective action was taken on audits received from subrecipients, the Commonwealth did not comply with federal regulations, and subrecipients were not made aware of acceptance or rejection of corrective action plans in a timely manner. Further, noncompliance may recur in future periods if control deficiencies are not corrected on a timely basis, and there is an increased risk of unallowable charges being made to federal programs if corrective action and recovery of questioned costs is not timely. Regarding the SEFA reviews or alternate procedures which are not being performed timely, there is an increased risk that subrecipients could be misspending and/or inappropriately tracking and reporting federal funds over multiple year periods, and these discrepancies may not be properly monitored, detected, and corrected by agency personnel on a timely basis as required. Recommendation: We recommend that the above weaknesses that cause untimely subrecipient Single Audit resolution, including untimely management decisions on findings, and untimely review of the SEFA or alternate procedures be corrected to ensure compliance with federal requirements and Commonwealth Management Directives, and to better ensure timelier subrecipient compliance with program requirements. PDOA Response: PDOA agrees with the finding. PDA Response: PDA agrees with the finding. PDE Response: PDE agrees with the finding. DEP Response: DEP agrees with the finding. Finding 2024 ¬– 015: (continued) DHS Response: DHS agrees that there was an exception where human error caused a management decision on one single audit report to be issued untimely; in this instance, the decision itself was made timely but was not communicated in a timely manner. DHS disagrees that an isolated incident due to human error signifies a weakness in internal controls. This was not a systemic issue and therefore should not have been considered a significant deficiency in internal controls, and DHS should not have been included in this finding. Auditors’ Conclusion: The agency responses from PDOA, PDA, PDE, and DEP indicate agreement with the finding. DHS agrees that an error occurred resulting in untimely submission of one management decision, DHS disagrees that the error represents a significant deficiency. We acknowledge the error occurred due to an oversight and is not a systemic error, however, the error resulted in noncompliance with one of two audit reports that required timely management decisions. We will evaluate corrective action in the subsequent audit. The finding remains as stated. Questioned Costs: The amount of questioned costs cannot be determined.
Various Agencies Finding 2024 ¬– 015: ALN 10.565, 10.568, 10.569 – Food Distribution Cluster ALN 15.252 – Abandoned Mine Land Reclamation (AMLR) ALN 21.027 – COVID 19 – Coronavirus State and Local Fiscal Recovery Funds ALN 84.425C – COVID 19 – Education Stabilization Fund – GEER Fund ALN 84.425D – COVID 19 – Education Stabilization Fund – ESSER Fund ALN 84.425R – COVID 19 – Education Stabilization Fund – CRRSA EANS Program ALN 84.425U – COVID 19 – Education Stabilization Fund – ARP ESSER ALN 84.425V – COVID 19 – Education Stabilization Fund – ARP EANS Program ALN 84.425W – COVID 19 – Education Stabilization Fund – ARP ESSER HCY ALN 93.044, 93.045, 93.053 – Aging Cluster (including COVID-19) ALN 93.558 – Temporary Assistance for Needy Families ALN 93.667 – Social Services Block Grant A Material Weakness and Material Noncompliance Exist in the Commonwealth’s Subrecipient Audit Resolution Process (A Similar Condition Was Noted in Prior Year Finding 2023-024) Federal Grant Number(s) and Year(s): 228PA100I1003 (6/13/2022 – 6/30/2025), 231PA445Q2204 (10/01/2022 – 9/30/2023), 231PA825Y8005 (10/01/2022 – 9/30/2023), 231PA825Y8105 (10/01/2022 – 9/30/2023), 241PA825Y8005 (10/01/2023 – 9/30/2024), 241PA825Y8105 (10/01/2023 – 9/30/2024), S18AF20004 (11/01/2017 – 10/31/2025), S19AF20004 (12/01/2018 – 11/30/2025), S21AF10015 (1/01/2021 – 12/31/2023), S22AF00017 (1/01/2022 – 12/31/2024), S23AF00002 (11/01/2022 – 10/31/2027), TN75GJE1S7G3 (3/03/2021 – 12/31/2024), S425W210039 (4/23/2021 – 9/30/2024), S425U210028 (3/24/2021– 9/30/2024), S425D210028 (1/05/2021 – 9/30/2024), S425C200013 (5/18/2020 – 4/01/2024), S425R210037 (3/13/2020 – 9/30/2024), S425V210037 (11/16/2021 – 9/30/2024), S425C210013 (3/13/2020 – 9/30/2024), 2101PACMC6 (4/01/2021 – 9/30/2024), 2101PAHDC6 (4/01/2021 – 9/30/2024), 2101PAPHC6 (4/01/2021 – 9/30/2024), 2101PASSC6 (4/01/2021 – 9/30/2024), 2201PAOASS (10/01/2021 – 9/30/2023), 2201PASTPH (1/01/2022 – 9/30/2024), 2301PAOACM (10/01/2022 – 9/30/2024), 2301PAOAHD (10/01/2022 – 9/30/2024), 2301PAOANS (10/01/2022 – 9/30/2024), 2301PAOASS (10/01/2022 – 9/30/2024), 2401PAOACM (10/01/2023 – 9/30/2025), 2401PAOAHD (10/01/2023 – 9/30/2025), 2401PAOANS (10/01/2023 – 9/30/2025), 2401PAOASS (10/01/2023 – 9/30/2025), 2101PATANF (10/01/2020 – 9/30/2021), 2201PATANF (10/01/2021 – 9/30/2022), 2301PATANF (10/01/2022 – 9/30/2023), 2401PATANF (10/01/2023 – 9/30/2024), 2301PASOSR (10/01/2022 – 9/30/2024), 2401PASOSR (10/01/2023 – 9/30/2025), 2301PATANF (10/01/2022 – 9/30/2024), 2401PATANF (10/01/2023 – 9/30/2025) Type of Finding: Significant Deficiency in Internal Control over Compliance, Other Matters for Abandoned Mine Land Reclamation (AMLR), Temporary Assistance for Needy Families, Coronavirus State and Local Fiscal Recovery Funds, and Social Services Block Grant Material Weakness in Internal Control over Compliance, Material Noncompliance for Food Distribution Cluster, Education Stabilization Fund, and Aging Cluster Compliance Requirement: Subrecipient Monitoring Condition: Under the Commonwealth of Pennsylvania's (Commonwealth) implementation of the Single Audit Act, review and resolution of subrecipient Single Audit reports is split into two stages. The Office of the Budget’s Bureau of Accounting and Financial Management (OB-BAFM) ensures the reports meet technical standards through a centralized desk review process. The various funding agencies in the Commonwealth are responsible for making a management decision on each finding within six months of the Federal Audit Clearinghouse’s (FAC) Acceptance date for audits subject to Uniform Guidance and to ensure appropriate corrective action is taken by the subrecipient (except for Uniform Guidance Finding 2024 ¬– 015: (continued) audits under U.S. Department of Labor programs which are permitted 12 months for management decisions in accordance with 2 CFR Section 2900.21). Each Commonwealth agency is also responsible for reviewing financial information in each audit report to determine whether the audit included all pass-through funding provided by the agency to ensure pass-through funds were subject to audit. Most agencies meet this requirement by performing Schedule of Expenditures of Federal Awards (SEFA) reconciliations. The agency is also required to adjust Commonwealth records, if necessary. Our fiscal year ended June 30, 2024 audit of the Commonwealth’s process for review and resolution of subrecipient Single Audits included an evaluation of the Commonwealth’s fiscal year ended June 30, 2023 subrecipient audit universe for audits due for submission to the FAC during the fiscal year ended June 30, 2024. We also evaluated the Commonwealth’s review of 45 subrecipient audit reports with findings in major programs/clusters which were identified on the Commonwealth agencies’ tracking lists during the fiscal year ended June 30, 2024 and required management decisions by Commonwealth agencies. Our testing disclosed the following audit exceptions regarding the Commonwealth agencies’ review of subrecipient audit reports: • Pennsylvania Department of Aging (PDOA): Our testing disclosed that PDOA did not have procedures in place to track audit reports including having an audit tracking list. The time period for making a management decision on findings was approximately 17.6 months to over 18 months after the FAC Acceptance date for two out of two audit reports with findings. There was also a delay in PDOA’s procedures to ensure the subrecipient SEFAs were accurate so that major programs were properly determined and subjected to audit. • Department of Agriculture (PDA): Our testing disclosed that PDA did not have procedures in place to track audit reports including having an audit tracking list. The time period for making a management decision on findings was approximately 8.7 months to over 16 months after the FAC Acceptance date for four out of four audit reports with findings. • Department of Education (PDE): The time period for making a management decision on findings was approximately 7.8 months to over 12 months after the FAC Acceptance date for seven out of 22 audit reports with findings. There were additional audit reports with findings listed on PDE’s audit tracking list where management decisions were not made timely. • Department of Environmental Protection (DEP): The time period for making a management decision on findings was approximately 11.6 months to over 12 months after the FAC Acceptance date for two out of two audit reports with findings. Our testing disclosed for the two late audit reports, DEP made management decisions timely. However, DEP did not notify the subrecipients of the management decisions within the required six month time period after the audit reports FAC Acceptance date. • Department of Human Services (DHS): The time period for making a management decision on findings was approximately 7.2 months after the FAC Acceptance date for one out of two audit reports with findings. Our testing disclosed for the one late audit report DHS made a management decision timely. However, DHS did not notify the subrecipient of the management decision within the required six month time period after the audit reports FAC Acceptance date. Criteria: 2 CFR §200.332, Requirements for pass-through entities, states in part: All pass-through entities must: (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward, and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: Finding 2024 ¬– 015: (continued) (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. (3) Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by §200.521 [Management decision]. (f) Verify that every subrecipient is audited as required by Subpart F [Audit Requirements] of this part when it is expected that the subrecipient’s Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in §200.501 [Audit requirements]. (g) Consider whether the results of the subrecipient’s audit, on-site review, or other monitoring indicate conditions that necessitate adjustments to the pass-through entity’s own records. (h) Consider taking enforcement action against noncompliant subrecipients as described in §200.339 [Remedies for noncompliance] of this part and in program regulations. In order to carry out these responsibilities properly, good internal control dictates that state pass-through agencies ensure subrecipient Single Audit SEFAs are representative of state payment records each year, and that the related federal programs have been properly subjected to Single Audit procedures. 2 CFR §200.512, Report submission, states in part: (a) General. (1) The audit must be completed and the data collection form described in paragraph (b) of this section and reporting package described in paragraph (c) of this section must be submitted within the earlier of 30 calendar days after receipt of the auditor’s report(s), or nine months after the end of the audit period. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day. 2 CFR §200.521, Management decision, states in part: (a) General. The management decision must clearly state whether or not the finding is sustained, the reasons for the decision, and the expected auditee action to repay disallowed costs, make financial adjustments, or take other action. (d) Time requirements. The Federal awarding agency or pass-through entity responsible for issuing a management decision must do so within six months of acceptance of the audit report by the FAC. The auditee must initiate and proceed with corrective action as rapidly as possible and corrective action should begin no later than upon receipt of the audit report. 2 CFR §200.505, Sanctions, states: In cases of continued inability or unwillingness to have an audit conducted in accordance with this part, Federal agencies and pass-through entities must take appropriate action as provided in §200.339 [Remedies for noncompliance]. 2 CFR §200.339, Remedies for noncompliance, states in part: If a non-Federal entity fails to comply with the U.S. Constitution, Federal statutes, regulations or the terms and conditions of a Federal award, the Federal awarding agency or pass-through entity may impose additional conditions, as described in §200.208 [Specific conditions]. If the Federal awarding agency or pass-through entity determines that noncompliance cannot be remedied by imposing additional conditions, the federal awarding agency or pass-through entity may take one or more of the following actions, as appropriate in the circumstances. Finding 2024 ¬– 015: (continued) (a) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency or pass-through entity. (b) Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost of the activity or action not in compliance. (c) Wholly or partly suspend or terminate the Federal award. (d) Initiate suspension or debarment proceedings as authorized under 2 CFR Part 180 and Federal awarding agency regulations (or in the case of a pass-through entity, recommend such a proceeding be initiated by a Federal awarding agency). (e) Withhold further Federal awards for the project or program. (f) Take other remedies that may be legally available. To ensure Commonwealth enforcement of federal regulations for subrecipient noncompliance with audit requirements, Commonwealth Management Directive 325.08, Amended – Remedies for Recipient Noncompliance with Audit Requirements, Section 5 related to policy, states in part: (a) Agencies must develop and implement remedial action that reflects the unique requirements of each program… (b) The remedial action should be implemented within six months from the date the first remedial action is initiated. At the end of the six-month period, the recipient should take the appropriate corrective action or the final stage of remedial action should be imposed on the recipient. Examples of remedial action include, but are not limited to: (1) Meeting or calling the recipient to explain the importance and benefits of the audit and audit resolution processes, emphasizing the value of the audit as an administrative tool and the Commonwealth’s reliance on an acceptable audit and prompt resolution as evidence of the recipient’s ability to properly administer the program. (2) Encouraging the entity to establish an audit committee or designate an individual as the single point of contact to: (a) Communicate regarding the audit. (b) Arrange for and oversee the audit. (c) Direct and monitor audit resolution. (3) Providing technical assistance to the recipient in devising and implementing an appropriate plan to remedy the noncompliance. (4) Withholding a portion of assistance payments until the noncompliance is resolved. (5) Withholding or disallowing overhead costs until the noncompliance is resolved. (6) Suspending the assistance agreement until the noncompliance is resolved. (7) Terminating the assistance agreement with the recipient and, if necessary, seeking alternative entities to administer the program. Finding 2024 ¬– 015: (continued) Management Directive 325.09, Amended – Processing Subrecipient Single Audits of Federal Pass-Through Funds, Section 7 related to procedures, states in part: c. Agencies. (2) Evaluate single audit report submissions received from BAFM to determine program purpose acceptability by verifying, at a minimum, that all agency-funded programs are properly included on the applicable financial schedules; that findings affecting the agency contain sufficient information to facilitate a management decision; and that the subrecipient has submitted an adequate corrective action plan. (5) Issue management decisions relative to audit findings and crosscutting findings assigned to the agency for resolution, as required by 2 CFR §200.521. If responsible for the resolution of crosscutting findings, notify the affected agency or agencies upon resolution of such findings. (6) Impose or coordinate the imposition of remedial action in accordance with 2 CFR Part 200.339 and Management Directive 325.08 Amended, Remedies for Recipient Noncompliance with Audit Requirements, when subrecipients fail to comply with the provisions of Subpart F. Management Directive 325.12, Amended – Standards for Enterprise Risk Management in Commonwealth Agencies, adopted the internal control framework outlined in the United States Government Accountability Office’s, Standards for Internal Control in the Federal Government (Green Book). The Green Book states in part: Management should establish and operate monitoring activities to monitor the internal control system and evaluate the results. Management should remediate identified internal control deficiencies on a timely basis. Cause: One reason provided by Commonwealth management for untimely audit resolution in the various agencies, including making management decisions, approving corrective action, and performing procedures to ensure the accuracy of subrecipient SEFAs, was either a change in staff or a lack of staff to follow up and process subrecipient audit reports more timely. Effect: Since required management decisions were not made within six months to ensure appropriate corrective action was taken on audits received from subrecipients, the Commonwealth did not comply with federal regulations, and subrecipients were not made aware of acceptance or rejection of corrective action plans in a timely manner. Further, noncompliance may recur in future periods if control deficiencies are not corrected on a timely basis, and there is an increased risk of unallowable charges being made to federal programs if corrective action and recovery of questioned costs is not timely. Regarding the SEFA reviews or alternate procedures which are not being performed timely, there is an increased risk that subrecipients could be misspending and/or inappropriately tracking and reporting federal funds over multiple year periods, and these discrepancies may not be properly monitored, detected, and corrected by agency personnel on a timely basis as required. Recommendation: We recommend that the above weaknesses that cause untimely subrecipient Single Audit resolution, including untimely management decisions on findings, and untimely review of the SEFA or alternate procedures be corrected to ensure compliance with federal requirements and Commonwealth Management Directives, and to better ensure timelier subrecipient compliance with program requirements. PDOA Response: PDOA agrees with the finding. PDA Response: PDA agrees with the finding. PDE Response: PDE agrees with the finding. DEP Response: DEP agrees with the finding. Finding 2024 ¬– 015: (continued) DHS Response: DHS agrees that there was an exception where human error caused a management decision on one single audit report to be issued untimely; in this instance, the decision itself was made timely but was not communicated in a timely manner. DHS disagrees that an isolated incident due to human error signifies a weakness in internal controls. This was not a systemic issue and therefore should not have been considered a significant deficiency in internal controls, and DHS should not have been included in this finding. Auditors’ Conclusion: The agency responses from PDOA, PDA, PDE, and DEP indicate agreement with the finding. DHS agrees that an error occurred resulting in untimely submission of one management decision, DHS disagrees that the error represents a significant deficiency. We acknowledge the error occurred due to an oversight and is not a systemic error, however, the error resulted in noncompliance with one of two audit reports that required timely management decisions. We will evaluate corrective action in the subsequent audit. The finding remains as stated. Questioned Costs: The amount of questioned costs cannot be determined.
Various Agencies Finding 2024 ¬– 015: ALN 10.565, 10.568, 10.569 – Food Distribution Cluster ALN 15.252 – Abandoned Mine Land Reclamation (AMLR) ALN 21.027 – COVID 19 – Coronavirus State and Local Fiscal Recovery Funds ALN 84.425C – COVID 19 – Education Stabilization Fund – GEER Fund ALN 84.425D – COVID 19 – Education Stabilization Fund – ESSER Fund ALN 84.425R – COVID 19 – Education Stabilization Fund – CRRSA EANS Program ALN 84.425U – COVID 19 – Education Stabilization Fund – ARP ESSER ALN 84.425V – COVID 19 – Education Stabilization Fund – ARP EANS Program ALN 84.425W – COVID 19 – Education Stabilization Fund – ARP ESSER HCY ALN 93.044, 93.045, 93.053 – Aging Cluster (including COVID-19) ALN 93.558 – Temporary Assistance for Needy Families ALN 93.667 – Social Services Block Grant A Material Weakness and Material Noncompliance Exist in the Commonwealth’s Subrecipient Audit Resolution Process (A Similar Condition Was Noted in Prior Year Finding 2023-024) Federal Grant Number(s) and Year(s): 228PA100I1003 (6/13/2022 – 6/30/2025), 231PA445Q2204 (10/01/2022 – 9/30/2023), 231PA825Y8005 (10/01/2022 – 9/30/2023), 231PA825Y8105 (10/01/2022 – 9/30/2023), 241PA825Y8005 (10/01/2023 – 9/30/2024), 241PA825Y8105 (10/01/2023 – 9/30/2024), S18AF20004 (11/01/2017 – 10/31/2025), S19AF20004 (12/01/2018 – 11/30/2025), S21AF10015 (1/01/2021 – 12/31/2023), S22AF00017 (1/01/2022 – 12/31/2024), S23AF00002 (11/01/2022 – 10/31/2027), TN75GJE1S7G3 (3/03/2021 – 12/31/2024), S425W210039 (4/23/2021 – 9/30/2024), S425U210028 (3/24/2021– 9/30/2024), S425D210028 (1/05/2021 – 9/30/2024), S425C200013 (5/18/2020 – 4/01/2024), S425R210037 (3/13/2020 – 9/30/2024), S425V210037 (11/16/2021 – 9/30/2024), S425C210013 (3/13/2020 – 9/30/2024), 2101PACMC6 (4/01/2021 – 9/30/2024), 2101PAHDC6 (4/01/2021 – 9/30/2024), 2101PAPHC6 (4/01/2021 – 9/30/2024), 2101PASSC6 (4/01/2021 – 9/30/2024), 2201PAOASS (10/01/2021 – 9/30/2023), 2201PASTPH (1/01/2022 – 9/30/2024), 2301PAOACM (10/01/2022 – 9/30/2024), 2301PAOAHD (10/01/2022 – 9/30/2024), 2301PAOANS (10/01/2022 – 9/30/2024), 2301PAOASS (10/01/2022 – 9/30/2024), 2401PAOACM (10/01/2023 – 9/30/2025), 2401PAOAHD (10/01/2023 – 9/30/2025), 2401PAOANS (10/01/2023 – 9/30/2025), 2401PAOASS (10/01/2023 – 9/30/2025), 2101PATANF (10/01/2020 – 9/30/2021), 2201PATANF (10/01/2021 – 9/30/2022), 2301PATANF (10/01/2022 – 9/30/2023), 2401PATANF (10/01/2023 – 9/30/2024), 2301PASOSR (10/01/2022 – 9/30/2024), 2401PASOSR (10/01/2023 – 9/30/2025), 2301PATANF (10/01/2022 – 9/30/2024), 2401PATANF (10/01/2023 – 9/30/2025) Type of Finding: Significant Deficiency in Internal Control over Compliance, Other Matters for Abandoned Mine Land Reclamation (AMLR), Temporary Assistance for Needy Families, Coronavirus State and Local Fiscal Recovery Funds, and Social Services Block Grant Material Weakness in Internal Control over Compliance, Material Noncompliance for Food Distribution Cluster, Education Stabilization Fund, and Aging Cluster Compliance Requirement: Subrecipient Monitoring Condition: Under the Commonwealth of Pennsylvania's (Commonwealth) implementation of the Single Audit Act, review and resolution of subrecipient Single Audit reports is split into two stages. The Office of the Budget’s Bureau of Accounting and Financial Management (OB-BAFM) ensures the reports meet technical standards through a centralized desk review process. The various funding agencies in the Commonwealth are responsible for making a management decision on each finding within six months of the Federal Audit Clearinghouse’s (FAC) Acceptance date for audits subject to Uniform Guidance and to ensure appropriate corrective action is taken by the subrecipient (except for Uniform Guidance Finding 2024 ¬– 015: (continued) audits under U.S. Department of Labor programs which are permitted 12 months for management decisions in accordance with 2 CFR Section 2900.21). Each Commonwealth agency is also responsible for reviewing financial information in each audit report to determine whether the audit included all pass-through funding provided by the agency to ensure pass-through funds were subject to audit. Most agencies meet this requirement by performing Schedule of Expenditures of Federal Awards (SEFA) reconciliations. The agency is also required to adjust Commonwealth records, if necessary. Our fiscal year ended June 30, 2024 audit of the Commonwealth’s process for review and resolution of subrecipient Single Audits included an evaluation of the Commonwealth’s fiscal year ended June 30, 2023 subrecipient audit universe for audits due for submission to the FAC during the fiscal year ended June 30, 2024. We also evaluated the Commonwealth’s review of 45 subrecipient audit reports with findings in major programs/clusters which were identified on the Commonwealth agencies’ tracking lists during the fiscal year ended June 30, 2024 and required management decisions by Commonwealth agencies. Our testing disclosed the following audit exceptions regarding the Commonwealth agencies’ review of subrecipient audit reports: • Pennsylvania Department of Aging (PDOA): Our testing disclosed that PDOA did not have procedures in place to track audit reports including having an audit tracking list. The time period for making a management decision on findings was approximately 17.6 months to over 18 months after the FAC Acceptance date for two out of two audit reports with findings. There was also a delay in PDOA’s procedures to ensure the subrecipient SEFAs were accurate so that major programs were properly determined and subjected to audit. • Department of Agriculture (PDA): Our testing disclosed that PDA did not have procedures in place to track audit reports including having an audit tracking list. The time period for making a management decision on findings was approximately 8.7 months to over 16 months after the FAC Acceptance date for four out of four audit reports with findings. • Department of Education (PDE): The time period for making a management decision on findings was approximately 7.8 months to over 12 months after the FAC Acceptance date for seven out of 22 audit reports with findings. There were additional audit reports with findings listed on PDE’s audit tracking list where management decisions were not made timely. • Department of Environmental Protection (DEP): The time period for making a management decision on findings was approximately 11.6 months to over 12 months after the FAC Acceptance date for two out of two audit reports with findings. Our testing disclosed for the two late audit reports, DEP made management decisions timely. However, DEP did not notify the subrecipients of the management decisions within the required six month time period after the audit reports FAC Acceptance date. • Department of Human Services (DHS): The time period for making a management decision on findings was approximately 7.2 months after the FAC Acceptance date for one out of two audit reports with findings. Our testing disclosed for the one late audit report DHS made a management decision timely. However, DHS did not notify the subrecipient of the management decision within the required six month time period after the audit reports FAC Acceptance date. Criteria: 2 CFR §200.332, Requirements for pass-through entities, states in part: All pass-through entities must: (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward, and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: Finding 2024 ¬– 015: (continued) (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. (3) Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by §200.521 [Management decision]. (f) Verify that every subrecipient is audited as required by Subpart F [Audit Requirements] of this part when it is expected that the subrecipient’s Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in §200.501 [Audit requirements]. (g) Consider whether the results of the subrecipient’s audit, on-site review, or other monitoring indicate conditions that necessitate adjustments to the pass-through entity’s own records. (h) Consider taking enforcement action against noncompliant subrecipients as described in §200.339 [Remedies for noncompliance] of this part and in program regulations. In order to carry out these responsibilities properly, good internal control dictates that state pass-through agencies ensure subrecipient Single Audit SEFAs are representative of state payment records each year, and that the related federal programs have been properly subjected to Single Audit procedures. 2 CFR §200.512, Report submission, states in part: (a) General. (1) The audit must be completed and the data collection form described in paragraph (b) of this section and reporting package described in paragraph (c) of this section must be submitted within the earlier of 30 calendar days after receipt of the auditor’s report(s), or nine months after the end of the audit period. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day. 2 CFR §200.521, Management decision, states in part: (a) General. The management decision must clearly state whether or not the finding is sustained, the reasons for the decision, and the expected auditee action to repay disallowed costs, make financial adjustments, or take other action. (d) Time requirements. The Federal awarding agency or pass-through entity responsible for issuing a management decision must do so within six months of acceptance of the audit report by the FAC. The auditee must initiate and proceed with corrective action as rapidly as possible and corrective action should begin no later than upon receipt of the audit report. 2 CFR §200.505, Sanctions, states: In cases of continued inability or unwillingness to have an audit conducted in accordance with this part, Federal agencies and pass-through entities must take appropriate action as provided in §200.339 [Remedies for noncompliance]. 2 CFR §200.339, Remedies for noncompliance, states in part: If a non-Federal entity fails to comply with the U.S. Constitution, Federal statutes, regulations or the terms and conditions of a Federal award, the Federal awarding agency or pass-through entity may impose additional conditions, as described in §200.208 [Specific conditions]. If the Federal awarding agency or pass-through entity determines that noncompliance cannot be remedied by imposing additional conditions, the federal awarding agency or pass-through entity may take one or more of the following actions, as appropriate in the circumstances. Finding 2024 ¬– 015: (continued) (a) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency or pass-through entity. (b) Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost of the activity or action not in compliance. (c) Wholly or partly suspend or terminate the Federal award. (d) Initiate suspension or debarment proceedings as authorized under 2 CFR Part 180 and Federal awarding agency regulations (or in the case of a pass-through entity, recommend such a proceeding be initiated by a Federal awarding agency). (e) Withhold further Federal awards for the project or program. (f) Take other remedies that may be legally available. To ensure Commonwealth enforcement of federal regulations for subrecipient noncompliance with audit requirements, Commonwealth Management Directive 325.08, Amended – Remedies for Recipient Noncompliance with Audit Requirements, Section 5 related to policy, states in part: (a) Agencies must develop and implement remedial action that reflects the unique requirements of each program… (b) The remedial action should be implemented within six months from the date the first remedial action is initiated. At the end of the six-month period, the recipient should take the appropriate corrective action or the final stage of remedial action should be imposed on the recipient. Examples of remedial action include, but are not limited to: (1) Meeting or calling the recipient to explain the importance and benefits of the audit and audit resolution processes, emphasizing the value of the audit as an administrative tool and the Commonwealth’s reliance on an acceptable audit and prompt resolution as evidence of the recipient’s ability to properly administer the program. (2) Encouraging the entity to establish an audit committee or designate an individual as the single point of contact to: (a) Communicate regarding the audit. (b) Arrange for and oversee the audit. (c) Direct and monitor audit resolution. (3) Providing technical assistance to the recipient in devising and implementing an appropriate plan to remedy the noncompliance. (4) Withholding a portion of assistance payments until the noncompliance is resolved. (5) Withholding or disallowing overhead costs until the noncompliance is resolved. (6) Suspending the assistance agreement until the noncompliance is resolved. (7) Terminating the assistance agreement with the recipient and, if necessary, seeking alternative entities to administer the program. Finding 2024 ¬– 015: (continued) Management Directive 325.09, Amended – Processing Subrecipient Single Audits of Federal Pass-Through Funds, Section 7 related to procedures, states in part: c. Agencies. (2) Evaluate single audit report submissions received from BAFM to determine program purpose acceptability by verifying, at a minimum, that all agency-funded programs are properly included on the applicable financial schedules; that findings affecting the agency contain sufficient information to facilitate a management decision; and that the subrecipient has submitted an adequate corrective action plan. (5) Issue management decisions relative to audit findings and crosscutting findings assigned to the agency for resolution, as required by 2 CFR §200.521. If responsible for the resolution of crosscutting findings, notify the affected agency or agencies upon resolution of such findings. (6) Impose or coordinate the imposition of remedial action in accordance with 2 CFR Part 200.339 and Management Directive 325.08 Amended, Remedies for Recipient Noncompliance with Audit Requirements, when subrecipients fail to comply with the provisions of Subpart F. Management Directive 325.12, Amended – Standards for Enterprise Risk Management in Commonwealth Agencies, adopted the internal control framework outlined in the United States Government Accountability Office’s, Standards for Internal Control in the Federal Government (Green Book). The Green Book states in part: Management should establish and operate monitoring activities to monitor the internal control system and evaluate the results. Management should remediate identified internal control deficiencies on a timely basis. Cause: One reason provided by Commonwealth management for untimely audit resolution in the various agencies, including making management decisions, approving corrective action, and performing procedures to ensure the accuracy of subrecipient SEFAs, was either a change in staff or a lack of staff to follow up and process subrecipient audit reports more timely. Effect: Since required management decisions were not made within six months to ensure appropriate corrective action was taken on audits received from subrecipients, the Commonwealth did not comply with federal regulations, and subrecipients were not made aware of acceptance or rejection of corrective action plans in a timely manner. Further, noncompliance may recur in future periods if control deficiencies are not corrected on a timely basis, and there is an increased risk of unallowable charges being made to federal programs if corrective action and recovery of questioned costs is not timely. Regarding the SEFA reviews or alternate procedures which are not being performed timely, there is an increased risk that subrecipients could be misspending and/or inappropriately tracking and reporting federal funds over multiple year periods, and these discrepancies may not be properly monitored, detected, and corrected by agency personnel on a timely basis as required. Recommendation: We recommend that the above weaknesses that cause untimely subrecipient Single Audit resolution, including untimely management decisions on findings, and untimely review of the SEFA or alternate procedures be corrected to ensure compliance with federal requirements and Commonwealth Management Directives, and to better ensure timelier subrecipient compliance with program requirements. PDOA Response: PDOA agrees with the finding. PDA Response: PDA agrees with the finding. PDE Response: PDE agrees with the finding. DEP Response: DEP agrees with the finding. Finding 2024 ¬– 015: (continued) DHS Response: DHS agrees that there was an exception where human error caused a management decision on one single audit report to be issued untimely; in this instance, the decision itself was made timely but was not communicated in a timely manner. DHS disagrees that an isolated incident due to human error signifies a weakness in internal controls. This was not a systemic issue and therefore should not have been considered a significant deficiency in internal controls, and DHS should not have been included in this finding. Auditors’ Conclusion: The agency responses from PDOA, PDA, PDE, and DEP indicate agreement with the finding. DHS agrees that an error occurred resulting in untimely submission of one management decision, DHS disagrees that the error represents a significant deficiency. We acknowledge the error occurred due to an oversight and is not a systemic error, however, the error resulted in noncompliance with one of two audit reports that required timely management decisions. We will evaluate corrective action in the subsequent audit. The finding remains as stated. Questioned Costs: The amount of questioned costs cannot be determined.
Various Agencies Finding 2024 ¬– 015: ALN 10.565, 10.568, 10.569 – Food Distribution Cluster ALN 15.252 – Abandoned Mine Land Reclamation (AMLR) ALN 21.027 – COVID 19 – Coronavirus State and Local Fiscal Recovery Funds ALN 84.425C – COVID 19 – Education Stabilization Fund – GEER Fund ALN 84.425D – COVID 19 – Education Stabilization Fund – ESSER Fund ALN 84.425R – COVID 19 – Education Stabilization Fund – CRRSA EANS Program ALN 84.425U – COVID 19 – Education Stabilization Fund – ARP ESSER ALN 84.425V – COVID 19 – Education Stabilization Fund – ARP EANS Program ALN 84.425W – COVID 19 – Education Stabilization Fund – ARP ESSER HCY ALN 93.044, 93.045, 93.053 – Aging Cluster (including COVID-19) ALN 93.558 – Temporary Assistance for Needy Families ALN 93.667 – Social Services Block Grant A Material Weakness and Material Noncompliance Exist in the Commonwealth’s Subrecipient Audit Resolution Process (A Similar Condition Was Noted in Prior Year Finding 2023-024) Federal Grant Number(s) and Year(s): 228PA100I1003 (6/13/2022 – 6/30/2025), 231PA445Q2204 (10/01/2022 – 9/30/2023), 231PA825Y8005 (10/01/2022 – 9/30/2023), 231PA825Y8105 (10/01/2022 – 9/30/2023), 241PA825Y8005 (10/01/2023 – 9/30/2024), 241PA825Y8105 (10/01/2023 – 9/30/2024), S18AF20004 (11/01/2017 – 10/31/2025), S19AF20004 (12/01/2018 – 11/30/2025), S21AF10015 (1/01/2021 – 12/31/2023), S22AF00017 (1/01/2022 – 12/31/2024), S23AF00002 (11/01/2022 – 10/31/2027), TN75GJE1S7G3 (3/03/2021 – 12/31/2024), S425W210039 (4/23/2021 – 9/30/2024), S425U210028 (3/24/2021– 9/30/2024), S425D210028 (1/05/2021 – 9/30/2024), S425C200013 (5/18/2020 – 4/01/2024), S425R210037 (3/13/2020 – 9/30/2024), S425V210037 (11/16/2021 – 9/30/2024), S425C210013 (3/13/2020 – 9/30/2024), 2101PACMC6 (4/01/2021 – 9/30/2024), 2101PAHDC6 (4/01/2021 – 9/30/2024), 2101PAPHC6 (4/01/2021 – 9/30/2024), 2101PASSC6 (4/01/2021 – 9/30/2024), 2201PAOASS (10/01/2021 – 9/30/2023), 2201PASTPH (1/01/2022 – 9/30/2024), 2301PAOACM (10/01/2022 – 9/30/2024), 2301PAOAHD (10/01/2022 – 9/30/2024), 2301PAOANS (10/01/2022 – 9/30/2024), 2301PAOASS (10/01/2022 – 9/30/2024), 2401PAOACM (10/01/2023 – 9/30/2025), 2401PAOAHD (10/01/2023 – 9/30/2025), 2401PAOANS (10/01/2023 – 9/30/2025), 2401PAOASS (10/01/2023 – 9/30/2025), 2101PATANF (10/01/2020 – 9/30/2021), 2201PATANF (10/01/2021 – 9/30/2022), 2301PATANF (10/01/2022 – 9/30/2023), 2401PATANF (10/01/2023 – 9/30/2024), 2301PASOSR (10/01/2022 – 9/30/2024), 2401PASOSR (10/01/2023 – 9/30/2025), 2301PATANF (10/01/2022 – 9/30/2024), 2401PATANF (10/01/2023 – 9/30/2025) Type of Finding: Significant Deficiency in Internal Control over Compliance, Other Matters for Abandoned Mine Land Reclamation (AMLR), Temporary Assistance for Needy Families, Coronavirus State and Local Fiscal Recovery Funds, and Social Services Block Grant Material Weakness in Internal Control over Compliance, Material Noncompliance for Food Distribution Cluster, Education Stabilization Fund, and Aging Cluster Compliance Requirement: Subrecipient Monitoring Condition: Under the Commonwealth of Pennsylvania's (Commonwealth) implementation of the Single Audit Act, review and resolution of subrecipient Single Audit reports is split into two stages. The Office of the Budget’s Bureau of Accounting and Financial Management (OB-BAFM) ensures the reports meet technical standards through a centralized desk review process. The various funding agencies in the Commonwealth are responsible for making a management decision on each finding within six months of the Federal Audit Clearinghouse’s (FAC) Acceptance date for audits subject to Uniform Guidance and to ensure appropriate corrective action is taken by the subrecipient (except for Uniform Guidance Finding 2024 ¬– 015: (continued) audits under U.S. Department of Labor programs which are permitted 12 months for management decisions in accordance with 2 CFR Section 2900.21). Each Commonwealth agency is also responsible for reviewing financial information in each audit report to determine whether the audit included all pass-through funding provided by the agency to ensure pass-through funds were subject to audit. Most agencies meet this requirement by performing Schedule of Expenditures of Federal Awards (SEFA) reconciliations. The agency is also required to adjust Commonwealth records, if necessary. Our fiscal year ended June 30, 2024 audit of the Commonwealth’s process for review and resolution of subrecipient Single Audits included an evaluation of the Commonwealth’s fiscal year ended June 30, 2023 subrecipient audit universe for audits due for submission to the FAC during the fiscal year ended June 30, 2024. We also evaluated the Commonwealth’s review of 45 subrecipient audit reports with findings in major programs/clusters which were identified on the Commonwealth agencies’ tracking lists during the fiscal year ended June 30, 2024 and required management decisions by Commonwealth agencies. Our testing disclosed the following audit exceptions regarding the Commonwealth agencies’ review of subrecipient audit reports: • Pennsylvania Department of Aging (PDOA): Our testing disclosed that PDOA did not have procedures in place to track audit reports including having an audit tracking list. The time period for making a management decision on findings was approximately 17.6 months to over 18 months after the FAC Acceptance date for two out of two audit reports with findings. There was also a delay in PDOA’s procedures to ensure the subrecipient SEFAs were accurate so that major programs were properly determined and subjected to audit. • Department of Agriculture (PDA): Our testing disclosed that PDA did not have procedures in place to track audit reports including having an audit tracking list. The time period for making a management decision on findings was approximately 8.7 months to over 16 months after the FAC Acceptance date for four out of four audit reports with findings. • Department of Education (PDE): The time period for making a management decision on findings was approximately 7.8 months to over 12 months after the FAC Acceptance date for seven out of 22 audit reports with findings. There were additional audit reports with findings listed on PDE’s audit tracking list where management decisions were not made timely. • Department of Environmental Protection (DEP): The time period for making a management decision on findings was approximately 11.6 months to over 12 months after the FAC Acceptance date for two out of two audit reports with findings. Our testing disclosed for the two late audit reports, DEP made management decisions timely. However, DEP did not notify the subrecipients of the management decisions within the required six month time period after the audit reports FAC Acceptance date. • Department of Human Services (DHS): The time period for making a management decision on findings was approximately 7.2 months after the FAC Acceptance date for one out of two audit reports with findings. Our testing disclosed for the one late audit report DHS made a management decision timely. However, DHS did not notify the subrecipient of the management decision within the required six month time period after the audit reports FAC Acceptance date. Criteria: 2 CFR §200.332, Requirements for pass-through entities, states in part: All pass-through entities must: (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward, and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: Finding 2024 ¬– 015: (continued) (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. (3) Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by §200.521 [Management decision]. (f) Verify that every subrecipient is audited as required by Subpart F [Audit Requirements] of this part when it is expected that the subrecipient’s Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in §200.501 [Audit requirements]. (g) Consider whether the results of the subrecipient’s audit, on-site review, or other monitoring indicate conditions that necessitate adjustments to the pass-through entity’s own records. (h) Consider taking enforcement action against noncompliant subrecipients as described in §200.339 [Remedies for noncompliance] of this part and in program regulations. In order to carry out these responsibilities properly, good internal control dictates that state pass-through agencies ensure subrecipient Single Audit SEFAs are representative of state payment records each year, and that the related federal programs have been properly subjected to Single Audit procedures. 2 CFR §200.512, Report submission, states in part: (a) General. (1) The audit must be completed and the data collection form described in paragraph (b) of this section and reporting package described in paragraph (c) of this section must be submitted within the earlier of 30 calendar days after receipt of the auditor’s report(s), or nine months after the end of the audit period. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day. 2 CFR §200.521, Management decision, states in part: (a) General. The management decision must clearly state whether or not the finding is sustained, the reasons for the decision, and the expected auditee action to repay disallowed costs, make financial adjustments, or take other action. (d) Time requirements. The Federal awarding agency or pass-through entity responsible for issuing a management decision must do so within six months of acceptance of the audit report by the FAC. The auditee must initiate and proceed with corrective action as rapidly as possible and corrective action should begin no later than upon receipt of the audit report. 2 CFR §200.505, Sanctions, states: In cases of continued inability or unwillingness to have an audit conducted in accordance with this part, Federal agencies and pass-through entities must take appropriate action as provided in §200.339 [Remedies for noncompliance]. 2 CFR §200.339, Remedies for noncompliance, states in part: If a non-Federal entity fails to comply with the U.S. Constitution, Federal statutes, regulations or the terms and conditions of a Federal award, the Federal awarding agency or pass-through entity may impose additional conditions, as described in §200.208 [Specific conditions]. If the Federal awarding agency or pass-through entity determines that noncompliance cannot be remedied by imposing additional conditions, the federal awarding agency or pass-through entity may take one or more of the following actions, as appropriate in the circumstances. Finding 2024 ¬– 015: (continued) (a) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency or pass-through entity. (b) Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost of the activity or action not in compliance. (c) Wholly or partly suspend or terminate the Federal award. (d) Initiate suspension or debarment proceedings as authorized under 2 CFR Part 180 and Federal awarding agency regulations (or in the case of a pass-through entity, recommend such a proceeding be initiated by a Federal awarding agency). (e) Withhold further Federal awards for the project or program. (f) Take other remedies that may be legally available. To ensure Commonwealth enforcement of federal regulations for subrecipient noncompliance with audit requirements, Commonwealth Management Directive 325.08, Amended – Remedies for Recipient Noncompliance with Audit Requirements, Section 5 related to policy, states in part: (a) Agencies must develop and implement remedial action that reflects the unique requirements of each program… (b) The remedial action should be implemented within six months from the date the first remedial action is initiated. At the end of the six-month period, the recipient should take the appropriate corrective action or the final stage of remedial action should be imposed on the recipient. Examples of remedial action include, but are not limited to: (1) Meeting or calling the recipient to explain the importance and benefits of the audit and audit resolution processes, emphasizing the value of the audit as an administrative tool and the Commonwealth’s reliance on an acceptable audit and prompt resolution as evidence of the recipient’s ability to properly administer the program. (2) Encouraging the entity to establish an audit committee or designate an individual as the single point of contact to: (a) Communicate regarding the audit. (b) Arrange for and oversee the audit. (c) Direct and monitor audit resolution. (3) Providing technical assistance to the recipient in devising and implementing an appropriate plan to remedy the noncompliance. (4) Withholding a portion of assistance payments until the noncompliance is resolved. (5) Withholding or disallowing overhead costs until the noncompliance is resolved. (6) Suspending the assistance agreement until the noncompliance is resolved. (7) Terminating the assistance agreement with the recipient and, if necessary, seeking alternative entities to administer the program. Finding 2024 ¬– 015: (continued) Management Directive 325.09, Amended – Processing Subrecipient Single Audits of Federal Pass-Through Funds, Section 7 related to procedures, states in part: c. Agencies. (2) Evaluate single audit report submissions received from BAFM to determine program purpose acceptability by verifying, at a minimum, that all agency-funded programs are properly included on the applicable financial schedules; that findings affecting the agency contain sufficient information to facilitate a management decision; and that the subrecipient has submitted an adequate corrective action plan. (5) Issue management decisions relative to audit findings and crosscutting findings assigned to the agency for resolution, as required by 2 CFR §200.521. If responsible for the resolution of crosscutting findings, notify the affected agency or agencies upon resolution of such findings. (6) Impose or coordinate the imposition of remedial action in accordance with 2 CFR Part 200.339 and Management Directive 325.08 Amended, Remedies for Recipient Noncompliance with Audit Requirements, when subrecipients fail to comply with the provisions of Subpart F. Management Directive 325.12, Amended – Standards for Enterprise Risk Management in Commonwealth Agencies, adopted the internal control framework outlined in the United States Government Accountability Office’s, Standards for Internal Control in the Federal Government (Green Book). The Green Book states in part: Management should establish and operate monitoring activities to monitor the internal control system and evaluate the results. Management should remediate identified internal control deficiencies on a timely basis. Cause: One reason provided by Commonwealth management for untimely audit resolution in the various agencies, including making management decisions, approving corrective action, and performing procedures to ensure the accuracy of subrecipient SEFAs, was either a change in staff or a lack of staff to follow up and process subrecipient audit reports more timely. Effect: Since required management decisions were not made within six months to ensure appropriate corrective action was taken on audits received from subrecipients, the Commonwealth did not comply with federal regulations, and subrecipients were not made aware of acceptance or rejection of corrective action plans in a timely manner. Further, noncompliance may recur in future periods if control deficiencies are not corrected on a timely basis, and there is an increased risk of unallowable charges being made to federal programs if corrective action and recovery of questioned costs is not timely. Regarding the SEFA reviews or alternate procedures which are not being performed timely, there is an increased risk that subrecipients could be misspending and/or inappropriately tracking and reporting federal funds over multiple year periods, and these discrepancies may not be properly monitored, detected, and corrected by agency personnel on a timely basis as required. Recommendation: We recommend that the above weaknesses that cause untimely subrecipient Single Audit resolution, including untimely management decisions on findings, and untimely review of the SEFA or alternate procedures be corrected to ensure compliance with federal requirements and Commonwealth Management Directives, and to better ensure timelier subrecipient compliance with program requirements. PDOA Response: PDOA agrees with the finding. PDA Response: PDA agrees with the finding. PDE Response: PDE agrees with the finding. DEP Response: DEP agrees with the finding. Finding 2024 ¬– 015: (continued) DHS Response: DHS agrees that there was an exception where human error caused a management decision on one single audit report to be issued untimely; in this instance, the decision itself was made timely but was not communicated in a timely manner. DHS disagrees that an isolated incident due to human error signifies a weakness in internal controls. This was not a systemic issue and therefore should not have been considered a significant deficiency in internal controls, and DHS should not have been included in this finding. Auditors’ Conclusion: The agency responses from PDOA, PDA, PDE, and DEP indicate agreement with the finding. DHS agrees that an error occurred resulting in untimely submission of one management decision, DHS disagrees that the error represents a significant deficiency. We acknowledge the error occurred due to an oversight and is not a systemic error, however, the error resulted in noncompliance with one of two audit reports that required timely management decisions. We will evaluate corrective action in the subsequent audit. The finding remains as stated. Questioned Costs: The amount of questioned costs cannot be determined.
Various Agencies Finding 2024 ¬– 015: ALN 10.565, 10.568, 10.569 – Food Distribution Cluster ALN 15.252 – Abandoned Mine Land Reclamation (AMLR) ALN 21.027 – COVID 19 – Coronavirus State and Local Fiscal Recovery Funds ALN 84.425C – COVID 19 – Education Stabilization Fund – GEER Fund ALN 84.425D – COVID 19 – Education Stabilization Fund – ESSER Fund ALN 84.425R – COVID 19 – Education Stabilization Fund – CRRSA EANS Program ALN 84.425U – COVID 19 – Education Stabilization Fund – ARP ESSER ALN 84.425V – COVID 19 – Education Stabilization Fund – ARP EANS Program ALN 84.425W – COVID 19 – Education Stabilization Fund – ARP ESSER HCY ALN 93.044, 93.045, 93.053 – Aging Cluster (including COVID-19) ALN 93.558 – Temporary Assistance for Needy Families ALN 93.667 – Social Services Block Grant A Material Weakness and Material Noncompliance Exist in the Commonwealth’s Subrecipient Audit Resolution Process (A Similar Condition Was Noted in Prior Year Finding 2023-024) Federal Grant Number(s) and Year(s): 228PA100I1003 (6/13/2022 – 6/30/2025), 231PA445Q2204 (10/01/2022 – 9/30/2023), 231PA825Y8005 (10/01/2022 – 9/30/2023), 231PA825Y8105 (10/01/2022 – 9/30/2023), 241PA825Y8005 (10/01/2023 – 9/30/2024), 241PA825Y8105 (10/01/2023 – 9/30/2024), S18AF20004 (11/01/2017 – 10/31/2025), S19AF20004 (12/01/2018 – 11/30/2025), S21AF10015 (1/01/2021 – 12/31/2023), S22AF00017 (1/01/2022 – 12/31/2024), S23AF00002 (11/01/2022 – 10/31/2027), TN75GJE1S7G3 (3/03/2021 – 12/31/2024), S425W210039 (4/23/2021 – 9/30/2024), S425U210028 (3/24/2021– 9/30/2024), S425D210028 (1/05/2021 – 9/30/2024), S425C200013 (5/18/2020 – 4/01/2024), S425R210037 (3/13/2020 – 9/30/2024), S425V210037 (11/16/2021 – 9/30/2024), S425C210013 (3/13/2020 – 9/30/2024), 2101PACMC6 (4/01/2021 – 9/30/2024), 2101PAHDC6 (4/01/2021 – 9/30/2024), 2101PAPHC6 (4/01/2021 – 9/30/2024), 2101PASSC6 (4/01/2021 – 9/30/2024), 2201PAOASS (10/01/2021 – 9/30/2023), 2201PASTPH (1/01/2022 – 9/30/2024), 2301PAOACM (10/01/2022 – 9/30/2024), 2301PAOAHD (10/01/2022 – 9/30/2024), 2301PAOANS (10/01/2022 – 9/30/2024), 2301PAOASS (10/01/2022 – 9/30/2024), 2401PAOACM (10/01/2023 – 9/30/2025), 2401PAOAHD (10/01/2023 – 9/30/2025), 2401PAOANS (10/01/2023 – 9/30/2025), 2401PAOASS (10/01/2023 – 9/30/2025), 2101PATANF (10/01/2020 – 9/30/2021), 2201PATANF (10/01/2021 – 9/30/2022), 2301PATANF (10/01/2022 – 9/30/2023), 2401PATANF (10/01/2023 – 9/30/2024), 2301PASOSR (10/01/2022 – 9/30/2024), 2401PASOSR (10/01/2023 – 9/30/2025), 2301PATANF (10/01/2022 – 9/30/2024), 2401PATANF (10/01/2023 – 9/30/2025) Type of Finding: Significant Deficiency in Internal Control over Compliance, Other Matters for Abandoned Mine Land Reclamation (AMLR), Temporary Assistance for Needy Families, Coronavirus State and Local Fiscal Recovery Funds, and Social Services Block Grant Material Weakness in Internal Control over Compliance, Material Noncompliance for Food Distribution Cluster, Education Stabilization Fund, and Aging Cluster Compliance Requirement: Subrecipient Monitoring Condition: Under the Commonwealth of Pennsylvania's (Commonwealth) implementation of the Single Audit Act, review and resolution of subrecipient Single Audit reports is split into two stages. The Office of the Budget’s Bureau of Accounting and Financial Management (OB-BAFM) ensures the reports meet technical standards through a centralized desk review process. The various funding agencies in the Commonwealth are responsible for making a management decision on each finding within six months of the Federal Audit Clearinghouse’s (FAC) Acceptance date for audits subject to Uniform Guidance and to ensure appropriate corrective action is taken by the subrecipient (except for Uniform Guidance Finding 2024 ¬– 015: (continued) audits under U.S. Department of Labor programs which are permitted 12 months for management decisions in accordance with 2 CFR Section 2900.21). Each Commonwealth agency is also responsible for reviewing financial information in each audit report to determine whether the audit included all pass-through funding provided by the agency to ensure pass-through funds were subject to audit. Most agencies meet this requirement by performing Schedule of Expenditures of Federal Awards (SEFA) reconciliations. The agency is also required to adjust Commonwealth records, if necessary. Our fiscal year ended June 30, 2024 audit of the Commonwealth’s process for review and resolution of subrecipient Single Audits included an evaluation of the Commonwealth’s fiscal year ended June 30, 2023 subrecipient audit universe for audits due for submission to the FAC during the fiscal year ended June 30, 2024. We also evaluated the Commonwealth’s review of 45 subrecipient audit reports with findings in major programs/clusters which were identified on the Commonwealth agencies’ tracking lists during the fiscal year ended June 30, 2024 and required management decisions by Commonwealth agencies. Our testing disclosed the following audit exceptions regarding the Commonwealth agencies’ review of subrecipient audit reports: • Pennsylvania Department of Aging (PDOA): Our testing disclosed that PDOA did not have procedures in place to track audit reports including having an audit tracking list. The time period for making a management decision on findings was approximately 17.6 months to over 18 months after the FAC Acceptance date for two out of two audit reports with findings. There was also a delay in PDOA’s procedures to ensure the subrecipient SEFAs were accurate so that major programs were properly determined and subjected to audit. • Department of Agriculture (PDA): Our testing disclosed that PDA did not have procedures in place to track audit reports including having an audit tracking list. The time period for making a management decision on findings was approximately 8.7 months to over 16 months after the FAC Acceptance date for four out of four audit reports with findings. • Department of Education (PDE): The time period for making a management decision on findings was approximately 7.8 months to over 12 months after the FAC Acceptance date for seven out of 22 audit reports with findings. There were additional audit reports with findings listed on PDE’s audit tracking list where management decisions were not made timely. • Department of Environmental Protection (DEP): The time period for making a management decision on findings was approximately 11.6 months to over 12 months after the FAC Acceptance date for two out of two audit reports with findings. Our testing disclosed for the two late audit reports, DEP made management decisions timely. However, DEP did not notify the subrecipients of the management decisions within the required six month time period after the audit reports FAC Acceptance date. • Department of Human Services (DHS): The time period for making a management decision on findings was approximately 7.2 months after the FAC Acceptance date for one out of two audit reports with findings. Our testing disclosed for the one late audit report DHS made a management decision timely. However, DHS did not notify the subrecipient of the management decision within the required six month time period after the audit reports FAC Acceptance date. Criteria: 2 CFR §200.332, Requirements for pass-through entities, states in part: All pass-through entities must: (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward, and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: Finding 2024 ¬– 015: (continued) (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. (3) Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by §200.521 [Management decision]. (f) Verify that every subrecipient is audited as required by Subpart F [Audit Requirements] of this part when it is expected that the subrecipient’s Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in §200.501 [Audit requirements]. (g) Consider whether the results of the subrecipient’s audit, on-site review, or other monitoring indicate conditions that necessitate adjustments to the pass-through entity’s own records. (h) Consider taking enforcement action against noncompliant subrecipients as described in §200.339 [Remedies for noncompliance] of this part and in program regulations. In order to carry out these responsibilities properly, good internal control dictates that state pass-through agencies ensure subrecipient Single Audit SEFAs are representative of state payment records each year, and that the related federal programs have been properly subjected to Single Audit procedures. 2 CFR §200.512, Report submission, states in part: (a) General. (1) The audit must be completed and the data collection form described in paragraph (b) of this section and reporting package described in paragraph (c) of this section must be submitted within the earlier of 30 calendar days after receipt of the auditor’s report(s), or nine months after the end of the audit period. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day. 2 CFR §200.521, Management decision, states in part: (a) General. The management decision must clearly state whether or not the finding is sustained, the reasons for the decision, and the expected auditee action to repay disallowed costs, make financial adjustments, or take other action. (d) Time requirements. The Federal awarding agency or pass-through entity responsible for issuing a management decision must do so within six months of acceptance of the audit report by the FAC. The auditee must initiate and proceed with corrective action as rapidly as possible and corrective action should begin no later than upon receipt of the audit report. 2 CFR §200.505, Sanctions, states: In cases of continued inability or unwillingness to have an audit conducted in accordance with this part, Federal agencies and pass-through entities must take appropriate action as provided in §200.339 [Remedies for noncompliance]. 2 CFR §200.339, Remedies for noncompliance, states in part: If a non-Federal entity fails to comply with the U.S. Constitution, Federal statutes, regulations or the terms and conditions of a Federal award, the Federal awarding agency or pass-through entity may impose additional conditions, as described in §200.208 [Specific conditions]. If the Federal awarding agency or pass-through entity determines that noncompliance cannot be remedied by imposing additional conditions, the federal awarding agency or pass-through entity may take one or more of the following actions, as appropriate in the circumstances. Finding 2024 ¬– 015: (continued) (a) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency or pass-through entity. (b) Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost of the activity or action not in compliance. (c) Wholly or partly suspend or terminate the Federal award. (d) Initiate suspension or debarment proceedings as authorized under 2 CFR Part 180 and Federal awarding agency regulations (or in the case of a pass-through entity, recommend such a proceeding be initiated by a Federal awarding agency). (e) Withhold further Federal awards for the project or program. (f) Take other remedies that may be legally available. To ensure Commonwealth enforcement of federal regulations for subrecipient noncompliance with audit requirements, Commonwealth Management Directive 325.08, Amended – Remedies for Recipient Noncompliance with Audit Requirements, Section 5 related to policy, states in part: (a) Agencies must develop and implement remedial action that reflects the unique requirements of each program… (b) The remedial action should be implemented within six months from the date the first remedial action is initiated. At the end of the six-month period, the recipient should take the appropriate corrective action or the final stage of remedial action should be imposed on the recipient. Examples of remedial action include, but are not limited to: (1) Meeting or calling the recipient to explain the importance and benefits of the audit and audit resolution processes, emphasizing the value of the audit as an administrative tool and the Commonwealth’s reliance on an acceptable audit and prompt resolution as evidence of the recipient’s ability to properly administer the program. (2) Encouraging the entity to establish an audit committee or designate an individual as the single point of contact to: (a) Communicate regarding the audit. (b) Arrange for and oversee the audit. (c) Direct and monitor audit resolution. (3) Providing technical assistance to the recipient in devising and implementing an appropriate plan to remedy the noncompliance. (4) Withholding a portion of assistance payments until the noncompliance is resolved. (5) Withholding or disallowing overhead costs until the noncompliance is resolved. (6) Suspending the assistance agreement until the noncompliance is resolved. (7) Terminating the assistance agreement with the recipient and, if necessary, seeking alternative entities to administer the program. Finding 2024 ¬– 015: (continued) Management Directive 325.09, Amended – Processing Subrecipient Single Audits of Federal Pass-Through Funds, Section 7 related to procedures, states in part: c. Agencies. (2) Evaluate single audit report submissions received from BAFM to determine program purpose acceptability by verifying, at a minimum, that all agency-funded programs are properly included on the applicable financial schedules; that findings affecting the agency contain sufficient information to facilitate a management decision; and that the subrecipient has submitted an adequate corrective action plan. (5) Issue management decisions relative to audit findings and crosscutting findings assigned to the agency for resolution, as required by 2 CFR §200.521. If responsible for the resolution of crosscutting findings, notify the affected agency or agencies upon resolution of such findings. (6) Impose or coordinate the imposition of remedial action in accordance with 2 CFR Part 200.339 and Management Directive 325.08 Amended, Remedies for Recipient Noncompliance with Audit Requirements, when subrecipients fail to comply with the provisions of Subpart F. Management Directive 325.12, Amended – Standards for Enterprise Risk Management in Commonwealth Agencies, adopted the internal control framework outlined in the United States Government Accountability Office’s, Standards for Internal Control in the Federal Government (Green Book). The Green Book states in part: Management should establish and operate monitoring activities to monitor the internal control system and evaluate the results. Management should remediate identified internal control deficiencies on a timely basis. Cause: One reason provided by Commonwealth management for untimely audit resolution in the various agencies, including making management decisions, approving corrective action, and performing procedures to ensure the accuracy of subrecipient SEFAs, was either a change in staff or a lack of staff to follow up and process subrecipient audit reports more timely. Effect: Since required management decisions were not made within six months to ensure appropriate corrective action was taken on audits received from subrecipients, the Commonwealth did not comply with federal regulations, and subrecipients were not made aware of acceptance or rejection of corrective action plans in a timely manner. Further, noncompliance may recur in future periods if control deficiencies are not corrected on a timely basis, and there is an increased risk of unallowable charges being made to federal programs if corrective action and recovery of questioned costs is not timely. Regarding the SEFA reviews or alternate procedures which are not being performed timely, there is an increased risk that subrecipients could be misspending and/or inappropriately tracking and reporting federal funds over multiple year periods, and these discrepancies may not be properly monitored, detected, and corrected by agency personnel on a timely basis as required. Recommendation: We recommend that the above weaknesses that cause untimely subrecipient Single Audit resolution, including untimely management decisions on findings, and untimely review of the SEFA or alternate procedures be corrected to ensure compliance with federal requirements and Commonwealth Management Directives, and to better ensure timelier subrecipient compliance with program requirements. PDOA Response: PDOA agrees with the finding. PDA Response: PDA agrees with the finding. PDE Response: PDE agrees with the finding. DEP Response: DEP agrees with the finding. Finding 2024 ¬– 015: (continued) DHS Response: DHS agrees that there was an exception where human error caused a management decision on one single audit report to be issued untimely; in this instance, the decision itself was made timely but was not communicated in a timely manner. DHS disagrees that an isolated incident due to human error signifies a weakness in internal controls. This was not a systemic issue and therefore should not have been considered a significant deficiency in internal controls, and DHS should not have been included in this finding. Auditors’ Conclusion: The agency responses from PDOA, PDA, PDE, and DEP indicate agreement with the finding. DHS agrees that an error occurred resulting in untimely submission of one management decision, DHS disagrees that the error represents a significant deficiency. We acknowledge the error occurred due to an oversight and is not a systemic error, however, the error resulted in noncompliance with one of two audit reports that required timely management decisions. We will evaluate corrective action in the subsequent audit. The finding remains as stated. Questioned Costs: The amount of questioned costs cannot be determined.
Various Agencies Finding 2024 ¬– 015: ALN 10.565, 10.568, 10.569 – Food Distribution Cluster ALN 15.252 – Abandoned Mine Land Reclamation (AMLR) ALN 21.027 – COVID 19 – Coronavirus State and Local Fiscal Recovery Funds ALN 84.425C – COVID 19 – Education Stabilization Fund – GEER Fund ALN 84.425D – COVID 19 – Education Stabilization Fund – ESSER Fund ALN 84.425R – COVID 19 – Education Stabilization Fund – CRRSA EANS Program ALN 84.425U – COVID 19 – Education Stabilization Fund – ARP ESSER ALN 84.425V – COVID 19 – Education Stabilization Fund – ARP EANS Program ALN 84.425W – COVID 19 – Education Stabilization Fund – ARP ESSER HCY ALN 93.044, 93.045, 93.053 – Aging Cluster (including COVID-19) ALN 93.558 – Temporary Assistance for Needy Families ALN 93.667 – Social Services Block Grant A Material Weakness and Material Noncompliance Exist in the Commonwealth’s Subrecipient Audit Resolution Process (A Similar Condition Was Noted in Prior Year Finding 2023-024) Federal Grant Number(s) and Year(s): 228PA100I1003 (6/13/2022 – 6/30/2025), 231PA445Q2204 (10/01/2022 – 9/30/2023), 231PA825Y8005 (10/01/2022 – 9/30/2023), 231PA825Y8105 (10/01/2022 – 9/30/2023), 241PA825Y8005 (10/01/2023 – 9/30/2024), 241PA825Y8105 (10/01/2023 – 9/30/2024), S18AF20004 (11/01/2017 – 10/31/2025), S19AF20004 (12/01/2018 – 11/30/2025), S21AF10015 (1/01/2021 – 12/31/2023), S22AF00017 (1/01/2022 – 12/31/2024), S23AF00002 (11/01/2022 – 10/31/2027), TN75GJE1S7G3 (3/03/2021 – 12/31/2024), S425W210039 (4/23/2021 – 9/30/2024), S425U210028 (3/24/2021– 9/30/2024), S425D210028 (1/05/2021 – 9/30/2024), S425C200013 (5/18/2020 – 4/01/2024), S425R210037 (3/13/2020 – 9/30/2024), S425V210037 (11/16/2021 – 9/30/2024), S425C210013 (3/13/2020 – 9/30/2024), 2101PACMC6 (4/01/2021 – 9/30/2024), 2101PAHDC6 (4/01/2021 – 9/30/2024), 2101PAPHC6 (4/01/2021 – 9/30/2024), 2101PASSC6 (4/01/2021 – 9/30/2024), 2201PAOASS (10/01/2021 – 9/30/2023), 2201PASTPH (1/01/2022 – 9/30/2024), 2301PAOACM (10/01/2022 – 9/30/2024), 2301PAOAHD (10/01/2022 – 9/30/2024), 2301PAOANS (10/01/2022 – 9/30/2024), 2301PAOASS (10/01/2022 – 9/30/2024), 2401PAOACM (10/01/2023 – 9/30/2025), 2401PAOAHD (10/01/2023 – 9/30/2025), 2401PAOANS (10/01/2023 – 9/30/2025), 2401PAOASS (10/01/2023 – 9/30/2025), 2101PATANF (10/01/2020 – 9/30/2021), 2201PATANF (10/01/2021 – 9/30/2022), 2301PATANF (10/01/2022 – 9/30/2023), 2401PATANF (10/01/2023 – 9/30/2024), 2301PASOSR (10/01/2022 – 9/30/2024), 2401PASOSR (10/01/2023 – 9/30/2025), 2301PATANF (10/01/2022 – 9/30/2024), 2401PATANF (10/01/2023 – 9/30/2025) Type of Finding: Significant Deficiency in Internal Control over Compliance, Other Matters for Abandoned Mine Land Reclamation (AMLR), Temporary Assistance for Needy Families, Coronavirus State and Local Fiscal Recovery Funds, and Social Services Block Grant Material Weakness in Internal Control over Compliance, Material Noncompliance for Food Distribution Cluster, Education Stabilization Fund, and Aging Cluster Compliance Requirement: Subrecipient Monitoring Condition: Under the Commonwealth of Pennsylvania's (Commonwealth) implementation of the Single Audit Act, review and resolution of subrecipient Single Audit reports is split into two stages. The Office of the Budget’s Bureau of Accounting and Financial Management (OB-BAFM) ensures the reports meet technical standards through a centralized desk review process. The various funding agencies in the Commonwealth are responsible for making a management decision on each finding within six months of the Federal Audit Clearinghouse’s (FAC) Acceptance date for audits subject to Uniform Guidance and to ensure appropriate corrective action is taken by the subrecipient (except for Uniform Guidance Finding 2024 ¬– 015: (continued) audits under U.S. Department of Labor programs which are permitted 12 months for management decisions in accordance with 2 CFR Section 2900.21). Each Commonwealth agency is also responsible for reviewing financial information in each audit report to determine whether the audit included all pass-through funding provided by the agency to ensure pass-through funds were subject to audit. Most agencies meet this requirement by performing Schedule of Expenditures of Federal Awards (SEFA) reconciliations. The agency is also required to adjust Commonwealth records, if necessary. Our fiscal year ended June 30, 2024 audit of the Commonwealth’s process for review and resolution of subrecipient Single Audits included an evaluation of the Commonwealth’s fiscal year ended June 30, 2023 subrecipient audit universe for audits due for submission to the FAC during the fiscal year ended June 30, 2024. We also evaluated the Commonwealth’s review of 45 subrecipient audit reports with findings in major programs/clusters which were identified on the Commonwealth agencies’ tracking lists during the fiscal year ended June 30, 2024 and required management decisions by Commonwealth agencies. Our testing disclosed the following audit exceptions regarding the Commonwealth agencies’ review of subrecipient audit reports: • Pennsylvania Department of Aging (PDOA): Our testing disclosed that PDOA did not have procedures in place to track audit reports including having an audit tracking list. The time period for making a management decision on findings was approximately 17.6 months to over 18 months after the FAC Acceptance date for two out of two audit reports with findings. There was also a delay in PDOA’s procedures to ensure the subrecipient SEFAs were accurate so that major programs were properly determined and subjected to audit. • Department of Agriculture (PDA): Our testing disclosed that PDA did not have procedures in place to track audit reports including having an audit tracking list. The time period for making a management decision on findings was approximately 8.7 months to over 16 months after the FAC Acceptance date for four out of four audit reports with findings. • Department of Education (PDE): The time period for making a management decision on findings was approximately 7.8 months to over 12 months after the FAC Acceptance date for seven out of 22 audit reports with findings. There were additional audit reports with findings listed on PDE’s audit tracking list where management decisions were not made timely. • Department of Environmental Protection (DEP): The time period for making a management decision on findings was approximately 11.6 months to over 12 months after the FAC Acceptance date for two out of two audit reports with findings. Our testing disclosed for the two late audit reports, DEP made management decisions timely. However, DEP did not notify the subrecipients of the management decisions within the required six month time period after the audit reports FAC Acceptance date. • Department of Human Services (DHS): The time period for making a management decision on findings was approximately 7.2 months after the FAC Acceptance date for one out of two audit reports with findings. Our testing disclosed for the one late audit report DHS made a management decision timely. However, DHS did not notify the subrecipient of the management decision within the required six month time period after the audit reports FAC Acceptance date. Criteria: 2 CFR §200.332, Requirements for pass-through entities, states in part: All pass-through entities must: (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward, and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: Finding 2024 ¬– 015: (continued) (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. (3) Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by §200.521 [Management decision]. (f) Verify that every subrecipient is audited as required by Subpart F [Audit Requirements] of this part when it is expected that the subrecipient’s Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in §200.501 [Audit requirements]. (g) Consider whether the results of the subrecipient’s audit, on-site review, or other monitoring indicate conditions that necessitate adjustments to the pass-through entity’s own records. (h) Consider taking enforcement action against noncompliant subrecipients as described in §200.339 [Remedies for noncompliance] of this part and in program regulations. In order to carry out these responsibilities properly, good internal control dictates that state pass-through agencies ensure subrecipient Single Audit SEFAs are representative of state payment records each year, and that the related federal programs have been properly subjected to Single Audit procedures. 2 CFR §200.512, Report submission, states in part: (a) General. (1) The audit must be completed and the data collection form described in paragraph (b) of this section and reporting package described in paragraph (c) of this section must be submitted within the earlier of 30 calendar days after receipt of the auditor’s report(s), or nine months after the end of the audit period. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day. 2 CFR §200.521, Management decision, states in part: (a) General. The management decision must clearly state whether or not the finding is sustained, the reasons for the decision, and the expected auditee action to repay disallowed costs, make financial adjustments, or take other action. (d) Time requirements. The Federal awarding agency or pass-through entity responsible for issuing a management decision must do so within six months of acceptance of the audit report by the FAC. The auditee must initiate and proceed with corrective action as rapidly as possible and corrective action should begin no later than upon receipt of the audit report. 2 CFR §200.505, Sanctions, states: In cases of continued inability or unwillingness to have an audit conducted in accordance with this part, Federal agencies and pass-through entities must take appropriate action as provided in §200.339 [Remedies for noncompliance]. 2 CFR §200.339, Remedies for noncompliance, states in part: If a non-Federal entity fails to comply with the U.S. Constitution, Federal statutes, regulations or the terms and conditions of a Federal award, the Federal awarding agency or pass-through entity may impose additional conditions, as described in §200.208 [Specific conditions]. If the Federal awarding agency or pass-through entity determines that noncompliance cannot be remedied by imposing additional conditions, the federal awarding agency or pass-through entity may take one or more of the following actions, as appropriate in the circumstances. Finding 2024 ¬– 015: (continued) (a) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency or pass-through entity. (b) Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost of the activity or action not in compliance. (c) Wholly or partly suspend or terminate the Federal award. (d) Initiate suspension or debarment proceedings as authorized under 2 CFR Part 180 and Federal awarding agency regulations (or in the case of a pass-through entity, recommend such a proceeding be initiated by a Federal awarding agency). (e) Withhold further Federal awards for the project or program. (f) Take other remedies that may be legally available. To ensure Commonwealth enforcement of federal regulations for subrecipient noncompliance with audit requirements, Commonwealth Management Directive 325.08, Amended – Remedies for Recipient Noncompliance with Audit Requirements, Section 5 related to policy, states in part: (a) Agencies must develop and implement remedial action that reflects the unique requirements of each program… (b) The remedial action should be implemented within six months from the date the first remedial action is initiated. At the end of the six-month period, the recipient should take the appropriate corrective action or the final stage of remedial action should be imposed on the recipient. Examples of remedial action include, but are not limited to: (1) Meeting or calling the recipient to explain the importance and benefits of the audit and audit resolution processes, emphasizing the value of the audit as an administrative tool and the Commonwealth’s reliance on an acceptable audit and prompt resolution as evidence of the recipient’s ability to properly administer the program. (2) Encouraging the entity to establish an audit committee or designate an individual as the single point of contact to: (a) Communicate regarding the audit. (b) Arrange for and oversee the audit. (c) Direct and monitor audit resolution. (3) Providing technical assistance to the recipient in devising and implementing an appropriate plan to remedy the noncompliance. (4) Withholding a portion of assistance payments until the noncompliance is resolved. (5) Withholding or disallowing overhead costs until the noncompliance is resolved. (6) Suspending the assistance agreement until the noncompliance is resolved. (7) Terminating the assistance agreement with the recipient and, if necessary, seeking alternative entities to administer the program. Finding 2024 ¬– 015: (continued) Management Directive 325.09, Amended – Processing Subrecipient Single Audits of Federal Pass-Through Funds, Section 7 related to procedures, states in part: c. Agencies. (2) Evaluate single audit report submissions received from BAFM to determine program purpose acceptability by verifying, at a minimum, that all agency-funded programs are properly included on the applicable financial schedules; that findings affecting the agency contain sufficient information to facilitate a management decision; and that the subrecipient has submitted an adequate corrective action plan. (5) Issue management decisions relative to audit findings and crosscutting findings assigned to the agency for resolution, as required by 2 CFR §200.521. If responsible for the resolution of crosscutting findings, notify the affected agency or agencies upon resolution of such findings. (6) Impose or coordinate the imposition of remedial action in accordance with 2 CFR Part 200.339 and Management Directive 325.08 Amended, Remedies for Recipient Noncompliance with Audit Requirements, when subrecipients fail to comply with the provisions of Subpart F. Management Directive 325.12, Amended – Standards for Enterprise Risk Management in Commonwealth Agencies, adopted the internal control framework outlined in the United States Government Accountability Office’s, Standards for Internal Control in the Federal Government (Green Book). The Green Book states in part: Management should establish and operate monitoring activities to monitor the internal control system and evaluate the results. Management should remediate identified internal control deficiencies on a timely basis. Cause: One reason provided by Commonwealth management for untimely audit resolution in the various agencies, including making management decisions, approving corrective action, and performing procedures to ensure the accuracy of subrecipient SEFAs, was either a change in staff or a lack of staff to follow up and process subrecipient audit reports more timely. Effect: Since required management decisions were not made within six months to ensure appropriate corrective action was taken on audits received from subrecipients, the Commonwealth did not comply with federal regulations, and subrecipients were not made aware of acceptance or rejection of corrective action plans in a timely manner. Further, noncompliance may recur in future periods if control deficiencies are not corrected on a timely basis, and there is an increased risk of unallowable charges being made to federal programs if corrective action and recovery of questioned costs is not timely. Regarding the SEFA reviews or alternate procedures which are not being performed timely, there is an increased risk that subrecipients could be misspending and/or inappropriately tracking and reporting federal funds over multiple year periods, and these discrepancies may not be properly monitored, detected, and corrected by agency personnel on a timely basis as required. Recommendation: We recommend that the above weaknesses that cause untimely subrecipient Single Audit resolution, including untimely management decisions on findings, and untimely review of the SEFA or alternate procedures be corrected to ensure compliance with federal requirements and Commonwealth Management Directives, and to better ensure timelier subrecipient compliance with program requirements. PDOA Response: PDOA agrees with the finding. PDA Response: PDA agrees with the finding. PDE Response: PDE agrees with the finding. DEP Response: DEP agrees with the finding. Finding 2024 ¬– 015: (continued) DHS Response: DHS agrees that there was an exception where human error caused a management decision on one single audit report to be issued untimely; in this instance, the decision itself was made timely but was not communicated in a timely manner. DHS disagrees that an isolated incident due to human error signifies a weakness in internal controls. This was not a systemic issue and therefore should not have been considered a significant deficiency in internal controls, and DHS should not have been included in this finding. Auditors’ Conclusion: The agency responses from PDOA, PDA, PDE, and DEP indicate agreement with the finding. DHS agrees that an error occurred resulting in untimely submission of one management decision, DHS disagrees that the error represents a significant deficiency. We acknowledge the error occurred due to an oversight and is not a systemic error, however, the error resulted in noncompliance with one of two audit reports that required timely management decisions. We will evaluate corrective action in the subsequent audit. The finding remains as stated. Questioned Costs: The amount of questioned costs cannot be determined.
Various Agencies Finding 2024 ¬– 015: ALN 10.565, 10.568, 10.569 – Food Distribution Cluster ALN 15.252 – Abandoned Mine Land Reclamation (AMLR) ALN 21.027 – COVID 19 – Coronavirus State and Local Fiscal Recovery Funds ALN 84.425C – COVID 19 – Education Stabilization Fund – GEER Fund ALN 84.425D – COVID 19 – Education Stabilization Fund – ESSER Fund ALN 84.425R – COVID 19 – Education Stabilization Fund – CRRSA EANS Program ALN 84.425U – COVID 19 – Education Stabilization Fund – ARP ESSER ALN 84.425V – COVID 19 – Education Stabilization Fund – ARP EANS Program ALN 84.425W – COVID 19 – Education Stabilization Fund – ARP ESSER HCY ALN 93.044, 93.045, 93.053 – Aging Cluster (including COVID-19) ALN 93.558 – Temporary Assistance for Needy Families ALN 93.667 – Social Services Block Grant A Material Weakness and Material Noncompliance Exist in the Commonwealth’s Subrecipient Audit Resolution Process (A Similar Condition Was Noted in Prior Year Finding 2023-024) Federal Grant Number(s) and Year(s): 228PA100I1003 (6/13/2022 – 6/30/2025), 231PA445Q2204 (10/01/2022 – 9/30/2023), 231PA825Y8005 (10/01/2022 – 9/30/2023), 231PA825Y8105 (10/01/2022 – 9/30/2023), 241PA825Y8005 (10/01/2023 – 9/30/2024), 241PA825Y8105 (10/01/2023 – 9/30/2024), S18AF20004 (11/01/2017 – 10/31/2025), S19AF20004 (12/01/2018 – 11/30/2025), S21AF10015 (1/01/2021 – 12/31/2023), S22AF00017 (1/01/2022 – 12/31/2024), S23AF00002 (11/01/2022 – 10/31/2027), TN75GJE1S7G3 (3/03/2021 – 12/31/2024), S425W210039 (4/23/2021 – 9/30/2024), S425U210028 (3/24/2021– 9/30/2024), S425D210028 (1/05/2021 – 9/30/2024), S425C200013 (5/18/2020 – 4/01/2024), S425R210037 (3/13/2020 – 9/30/2024), S425V210037 (11/16/2021 – 9/30/2024), S425C210013 (3/13/2020 – 9/30/2024), 2101PACMC6 (4/01/2021 – 9/30/2024), 2101PAHDC6 (4/01/2021 – 9/30/2024), 2101PAPHC6 (4/01/2021 – 9/30/2024), 2101PASSC6 (4/01/2021 – 9/30/2024), 2201PAOASS (10/01/2021 – 9/30/2023), 2201PASTPH (1/01/2022 – 9/30/2024), 2301PAOACM (10/01/2022 – 9/30/2024), 2301PAOAHD (10/01/2022 – 9/30/2024), 2301PAOANS (10/01/2022 – 9/30/2024), 2301PAOASS (10/01/2022 – 9/30/2024), 2401PAOACM (10/01/2023 – 9/30/2025), 2401PAOAHD (10/01/2023 – 9/30/2025), 2401PAOANS (10/01/2023 – 9/30/2025), 2401PAOASS (10/01/2023 – 9/30/2025), 2101PATANF (10/01/2020 – 9/30/2021), 2201PATANF (10/01/2021 – 9/30/2022), 2301PATANF (10/01/2022 – 9/30/2023), 2401PATANF (10/01/2023 – 9/30/2024), 2301PASOSR (10/01/2022 – 9/30/2024), 2401PASOSR (10/01/2023 – 9/30/2025), 2301PATANF (10/01/2022 – 9/30/2024), 2401PATANF (10/01/2023 – 9/30/2025) Type of Finding: Significant Deficiency in Internal Control over Compliance, Other Matters for Abandoned Mine Land Reclamation (AMLR), Temporary Assistance for Needy Families, Coronavirus State and Local Fiscal Recovery Funds, and Social Services Block Grant Material Weakness in Internal Control over Compliance, Material Noncompliance for Food Distribution Cluster, Education Stabilization Fund, and Aging Cluster Compliance Requirement: Subrecipient Monitoring Condition: Under the Commonwealth of Pennsylvania's (Commonwealth) implementation of the Single Audit Act, review and resolution of subrecipient Single Audit reports is split into two stages. The Office of the Budget’s Bureau of Accounting and Financial Management (OB-BAFM) ensures the reports meet technical standards through a centralized desk review process. The various funding agencies in the Commonwealth are responsible for making a management decision on each finding within six months of the Federal Audit Clearinghouse’s (FAC) Acceptance date for audits subject to Uniform Guidance and to ensure appropriate corrective action is taken by the subrecipient (except for Uniform Guidance Finding 2024 ¬– 015: (continued) audits under U.S. Department of Labor programs which are permitted 12 months for management decisions in accordance with 2 CFR Section 2900.21). Each Commonwealth agency is also responsible for reviewing financial information in each audit report to determine whether the audit included all pass-through funding provided by the agency to ensure pass-through funds were subject to audit. Most agencies meet this requirement by performing Schedule of Expenditures of Federal Awards (SEFA) reconciliations. The agency is also required to adjust Commonwealth records, if necessary. Our fiscal year ended June 30, 2024 audit of the Commonwealth’s process for review and resolution of subrecipient Single Audits included an evaluation of the Commonwealth’s fiscal year ended June 30, 2023 subrecipient audit universe for audits due for submission to the FAC during the fiscal year ended June 30, 2024. We also evaluated the Commonwealth’s review of 45 subrecipient audit reports with findings in major programs/clusters which were identified on the Commonwealth agencies’ tracking lists during the fiscal year ended June 30, 2024 and required management decisions by Commonwealth agencies. Our testing disclosed the following audit exceptions regarding the Commonwealth agencies’ review of subrecipient audit reports: • Pennsylvania Department of Aging (PDOA): Our testing disclosed that PDOA did not have procedures in place to track audit reports including having an audit tracking list. The time period for making a management decision on findings was approximately 17.6 months to over 18 months after the FAC Acceptance date for two out of two audit reports with findings. There was also a delay in PDOA’s procedures to ensure the subrecipient SEFAs were accurate so that major programs were properly determined and subjected to audit. • Department of Agriculture (PDA): Our testing disclosed that PDA did not have procedures in place to track audit reports including having an audit tracking list. The time period for making a management decision on findings was approximately 8.7 months to over 16 months after the FAC Acceptance date for four out of four audit reports with findings. • Department of Education (PDE): The time period for making a management decision on findings was approximately 7.8 months to over 12 months after the FAC Acceptance date for seven out of 22 audit reports with findings. There were additional audit reports with findings listed on PDE’s audit tracking list where management decisions were not made timely. • Department of Environmental Protection (DEP): The time period for making a management decision on findings was approximately 11.6 months to over 12 months after the FAC Acceptance date for two out of two audit reports with findings. Our testing disclosed for the two late audit reports, DEP made management decisions timely. However, DEP did not notify the subrecipients of the management decisions within the required six month time period after the audit reports FAC Acceptance date. • Department of Human Services (DHS): The time period for making a management decision on findings was approximately 7.2 months after the FAC Acceptance date for one out of two audit reports with findings. Our testing disclosed for the one late audit report DHS made a management decision timely. However, DHS did not notify the subrecipient of the management decision within the required six month time period after the audit reports FAC Acceptance date. Criteria: 2 CFR §200.332, Requirements for pass-through entities, states in part: All pass-through entities must: (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward, and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: Finding 2024 ¬– 015: (continued) (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. (3) Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by §200.521 [Management decision]. (f) Verify that every subrecipient is audited as required by Subpart F [Audit Requirements] of this part when it is expected that the subrecipient’s Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in §200.501 [Audit requirements]. (g) Consider whether the results of the subrecipient’s audit, on-site review, or other monitoring indicate conditions that necessitate adjustments to the pass-through entity’s own records. (h) Consider taking enforcement action against noncompliant subrecipients as described in §200.339 [Remedies for noncompliance] of this part and in program regulations. In order to carry out these responsibilities properly, good internal control dictates that state pass-through agencies ensure subrecipient Single Audit SEFAs are representative of state payment records each year, and that the related federal programs have been properly subjected to Single Audit procedures. 2 CFR §200.512, Report submission, states in part: (a) General. (1) The audit must be completed and the data collection form described in paragraph (b) of this section and reporting package described in paragraph (c) of this section must be submitted within the earlier of 30 calendar days after receipt of the auditor’s report(s), or nine months after the end of the audit period. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day. 2 CFR §200.521, Management decision, states in part: (a) General. The management decision must clearly state whether or not the finding is sustained, the reasons for the decision, and the expected auditee action to repay disallowed costs, make financial adjustments, or take other action. (d) Time requirements. The Federal awarding agency or pass-through entity responsible for issuing a management decision must do so within six months of acceptance of the audit report by the FAC. The auditee must initiate and proceed with corrective action as rapidly as possible and corrective action should begin no later than upon receipt of the audit report. 2 CFR §200.505, Sanctions, states: In cases of continued inability or unwillingness to have an audit conducted in accordance with this part, Federal agencies and pass-through entities must take appropriate action as provided in §200.339 [Remedies for noncompliance]. 2 CFR §200.339, Remedies for noncompliance, states in part: If a non-Federal entity fails to comply with the U.S. Constitution, Federal statutes, regulations or the terms and conditions of a Federal award, the Federal awarding agency or pass-through entity may impose additional conditions, as described in §200.208 [Specific conditions]. If the Federal awarding agency or pass-through entity determines that noncompliance cannot be remedied by imposing additional conditions, the federal awarding agency or pass-through entity may take one or more of the following actions, as appropriate in the circumstances. Finding 2024 ¬– 015: (continued) (a) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency or pass-through entity. (b) Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost of the activity or action not in compliance. (c) Wholly or partly suspend or terminate the Federal award. (d) Initiate suspension or debarment proceedings as authorized under 2 CFR Part 180 and Federal awarding agency regulations (or in the case of a pass-through entity, recommend such a proceeding be initiated by a Federal awarding agency). (e) Withhold further Federal awards for the project or program. (f) Take other remedies that may be legally available. To ensure Commonwealth enforcement of federal regulations for subrecipient noncompliance with audit requirements, Commonwealth Management Directive 325.08, Amended – Remedies for Recipient Noncompliance with Audit Requirements, Section 5 related to policy, states in part: (a) Agencies must develop and implement remedial action that reflects the unique requirements of each program… (b) The remedial action should be implemented within six months from the date the first remedial action is initiated. At the end of the six-month period, the recipient should take the appropriate corrective action or the final stage of remedial action should be imposed on the recipient. Examples of remedial action include, but are not limited to: (1) Meeting or calling the recipient to explain the importance and benefits of the audit and audit resolution processes, emphasizing the value of the audit as an administrative tool and the Commonwealth’s reliance on an acceptable audit and prompt resolution as evidence of the recipient’s ability to properly administer the program. (2) Encouraging the entity to establish an audit committee or designate an individual as the single point of contact to: (a) Communicate regarding the audit. (b) Arrange for and oversee the audit. (c) Direct and monitor audit resolution. (3) Providing technical assistance to the recipient in devising and implementing an appropriate plan to remedy the noncompliance. (4) Withholding a portion of assistance payments until the noncompliance is resolved. (5) Withholding or disallowing overhead costs until the noncompliance is resolved. (6) Suspending the assistance agreement until the noncompliance is resolved. (7) Terminating the assistance agreement with the recipient and, if necessary, seeking alternative entities to administer the program. Finding 2024 ¬– 015: (continued) Management Directive 325.09, Amended – Processing Subrecipient Single Audits of Federal Pass-Through Funds, Section 7 related to procedures, states in part: c. Agencies. (2) Evaluate single audit report submissions received from BAFM to determine program purpose acceptability by verifying, at a minimum, that all agency-funded programs are properly included on the applicable financial schedules; that findings affecting the agency contain sufficient information to facilitate a management decision; and that the subrecipient has submitted an adequate corrective action plan. (5) Issue management decisions relative to audit findings and crosscutting findings assigned to the agency for resolution, as required by 2 CFR §200.521. If responsible for the resolution of crosscutting findings, notify the affected agency or agencies upon resolution of such findings. (6) Impose or coordinate the imposition of remedial action in accordance with 2 CFR Part 200.339 and Management Directive 325.08 Amended, Remedies for Recipient Noncompliance with Audit Requirements, when subrecipients fail to comply with the provisions of Subpart F. Management Directive 325.12, Amended – Standards for Enterprise Risk Management in Commonwealth Agencies, adopted the internal control framework outlined in the United States Government Accountability Office’s, Standards for Internal Control in the Federal Government (Green Book). The Green Book states in part: Management should establish and operate monitoring activities to monitor the internal control system and evaluate the results. Management should remediate identified internal control deficiencies on a timely basis. Cause: One reason provided by Commonwealth management for untimely audit resolution in the various agencies, including making management decisions, approving corrective action, and performing procedures to ensure the accuracy of subrecipient SEFAs, was either a change in staff or a lack of staff to follow up and process subrecipient audit reports more timely. Effect: Since required management decisions were not made within six months to ensure appropriate corrective action was taken on audits received from subrecipients, the Commonwealth did not comply with federal regulations, and subrecipients were not made aware of acceptance or rejection of corrective action plans in a timely manner. Further, noncompliance may recur in future periods if control deficiencies are not corrected on a timely basis, and there is an increased risk of unallowable charges being made to federal programs if corrective action and recovery of questioned costs is not timely. Regarding the SEFA reviews or alternate procedures which are not being performed timely, there is an increased risk that subrecipients could be misspending and/or inappropriately tracking and reporting federal funds over multiple year periods, and these discrepancies may not be properly monitored, detected, and corrected by agency personnel on a timely basis as required. Recommendation: We recommend that the above weaknesses that cause untimely subrecipient Single Audit resolution, including untimely management decisions on findings, and untimely review of the SEFA or alternate procedures be corrected to ensure compliance with federal requirements and Commonwealth Management Directives, and to better ensure timelier subrecipient compliance with program requirements. PDOA Response: PDOA agrees with the finding. PDA Response: PDA agrees with the finding. PDE Response: PDE agrees with the finding. DEP Response: DEP agrees with the finding. Finding 2024 ¬– 015: (continued) DHS Response: DHS agrees that there was an exception where human error caused a management decision on one single audit report to be issued untimely; in this instance, the decision itself was made timely but was not communicated in a timely manner. DHS disagrees that an isolated incident due to human error signifies a weakness in internal controls. This was not a systemic issue and therefore should not have been considered a significant deficiency in internal controls, and DHS should not have been included in this finding. Auditors’ Conclusion: The agency responses from PDOA, PDA, PDE, and DEP indicate agreement with the finding. DHS agrees that an error occurred resulting in untimely submission of one management decision, DHS disagrees that the error represents a significant deficiency. We acknowledge the error occurred due to an oversight and is not a systemic error, however, the error resulted in noncompliance with one of two audit reports that required timely management decisions. We will evaluate corrective action in the subsequent audit. The finding remains as stated. Questioned Costs: The amount of questioned costs cannot be determined.
Various Agencies Finding 2024 ¬– 015: ALN 10.565, 10.568, 10.569 – Food Distribution Cluster ALN 15.252 – Abandoned Mine Land Reclamation (AMLR) ALN 21.027 – COVID 19 – Coronavirus State and Local Fiscal Recovery Funds ALN 84.425C – COVID 19 – Education Stabilization Fund – GEER Fund ALN 84.425D – COVID 19 – Education Stabilization Fund – ESSER Fund ALN 84.425R – COVID 19 – Education Stabilization Fund – CRRSA EANS Program ALN 84.425U – COVID 19 – Education Stabilization Fund – ARP ESSER ALN 84.425V – COVID 19 – Education Stabilization Fund – ARP EANS Program ALN 84.425W – COVID 19 – Education Stabilization Fund – ARP ESSER HCY ALN 93.044, 93.045, 93.053 – Aging Cluster (including COVID-19) ALN 93.558 – Temporary Assistance for Needy Families ALN 93.667 – Social Services Block Grant A Material Weakness and Material Noncompliance Exist in the Commonwealth’s Subrecipient Audit Resolution Process (A Similar Condition Was Noted in Prior Year Finding 2023-024) Federal Grant Number(s) and Year(s): 228PA100I1003 (6/13/2022 – 6/30/2025), 231PA445Q2204 (10/01/2022 – 9/30/2023), 231PA825Y8005 (10/01/2022 – 9/30/2023), 231PA825Y8105 (10/01/2022 – 9/30/2023), 241PA825Y8005 (10/01/2023 – 9/30/2024), 241PA825Y8105 (10/01/2023 – 9/30/2024), S18AF20004 (11/01/2017 – 10/31/2025), S19AF20004 (12/01/2018 – 11/30/2025), S21AF10015 (1/01/2021 – 12/31/2023), S22AF00017 (1/01/2022 – 12/31/2024), S23AF00002 (11/01/2022 – 10/31/2027), TN75GJE1S7G3 (3/03/2021 – 12/31/2024), S425W210039 (4/23/2021 – 9/30/2024), S425U210028 (3/24/2021– 9/30/2024), S425D210028 (1/05/2021 – 9/30/2024), S425C200013 (5/18/2020 – 4/01/2024), S425R210037 (3/13/2020 – 9/30/2024), S425V210037 (11/16/2021 – 9/30/2024), S425C210013 (3/13/2020 – 9/30/2024), 2101PACMC6 (4/01/2021 – 9/30/2024), 2101PAHDC6 (4/01/2021 – 9/30/2024), 2101PAPHC6 (4/01/2021 – 9/30/2024), 2101PASSC6 (4/01/2021 – 9/30/2024), 2201PAOASS (10/01/2021 – 9/30/2023), 2201PASTPH (1/01/2022 – 9/30/2024), 2301PAOACM (10/01/2022 – 9/30/2024), 2301PAOAHD (10/01/2022 – 9/30/2024), 2301PAOANS (10/01/2022 – 9/30/2024), 2301PAOASS (10/01/2022 – 9/30/2024), 2401PAOACM (10/01/2023 – 9/30/2025), 2401PAOAHD (10/01/2023 – 9/30/2025), 2401PAOANS (10/01/2023 – 9/30/2025), 2401PAOASS (10/01/2023 – 9/30/2025), 2101PATANF (10/01/2020 – 9/30/2021), 2201PATANF (10/01/2021 – 9/30/2022), 2301PATANF (10/01/2022 – 9/30/2023), 2401PATANF (10/01/2023 – 9/30/2024), 2301PASOSR (10/01/2022 – 9/30/2024), 2401PASOSR (10/01/2023 – 9/30/2025), 2301PATANF (10/01/2022 – 9/30/2024), 2401PATANF (10/01/2023 – 9/30/2025) Type of Finding: Significant Deficiency in Internal Control over Compliance, Other Matters for Abandoned Mine Land Reclamation (AMLR), Temporary Assistance for Needy Families, Coronavirus State and Local Fiscal Recovery Funds, and Social Services Block Grant Material Weakness in Internal Control over Compliance, Material Noncompliance for Food Distribution Cluster, Education Stabilization Fund, and Aging Cluster Compliance Requirement: Subrecipient Monitoring Condition: Under the Commonwealth of Pennsylvania's (Commonwealth) implementation of the Single Audit Act, review and resolution of subrecipient Single Audit reports is split into two stages. The Office of the Budget’s Bureau of Accounting and Financial Management (OB-BAFM) ensures the reports meet technical standards through a centralized desk review process. The various funding agencies in the Commonwealth are responsible for making a management decision on each finding within six months of the Federal Audit Clearinghouse’s (FAC) Acceptance date for audits subject to Uniform Guidance and to ensure appropriate corrective action is taken by the subrecipient (except for Uniform Guidance Finding 2024 ¬– 015: (continued) audits under U.S. Department of Labor programs which are permitted 12 months for management decisions in accordance with 2 CFR Section 2900.21). Each Commonwealth agency is also responsible for reviewing financial information in each audit report to determine whether the audit included all pass-through funding provided by the agency to ensure pass-through funds were subject to audit. Most agencies meet this requirement by performing Schedule of Expenditures of Federal Awards (SEFA) reconciliations. The agency is also required to adjust Commonwealth records, if necessary. Our fiscal year ended June 30, 2024 audit of the Commonwealth’s process for review and resolution of subrecipient Single Audits included an evaluation of the Commonwealth’s fiscal year ended June 30, 2023 subrecipient audit universe for audits due for submission to the FAC during the fiscal year ended June 30, 2024. We also evaluated the Commonwealth’s review of 45 subrecipient audit reports with findings in major programs/clusters which were identified on the Commonwealth agencies’ tracking lists during the fiscal year ended June 30, 2024 and required management decisions by Commonwealth agencies. Our testing disclosed the following audit exceptions regarding the Commonwealth agencies’ review of subrecipient audit reports: • Pennsylvania Department of Aging (PDOA): Our testing disclosed that PDOA did not have procedures in place to track audit reports including having an audit tracking list. The time period for making a management decision on findings was approximately 17.6 months to over 18 months after the FAC Acceptance date for two out of two audit reports with findings. There was also a delay in PDOA’s procedures to ensure the subrecipient SEFAs were accurate so that major programs were properly determined and subjected to audit. • Department of Agriculture (PDA): Our testing disclosed that PDA did not have procedures in place to track audit reports including having an audit tracking list. The time period for making a management decision on findings was approximately 8.7 months to over 16 months after the FAC Acceptance date for four out of four audit reports with findings. • Department of Education (PDE): The time period for making a management decision on findings was approximately 7.8 months to over 12 months after the FAC Acceptance date for seven out of 22 audit reports with findings. There were additional audit reports with findings listed on PDE’s audit tracking list where management decisions were not made timely. • Department of Environmental Protection (DEP): The time period for making a management decision on findings was approximately 11.6 months to over 12 months after the FAC Acceptance date for two out of two audit reports with findings. Our testing disclosed for the two late audit reports, DEP made management decisions timely. However, DEP did not notify the subrecipients of the management decisions within the required six month time period after the audit reports FAC Acceptance date. • Department of Human Services (DHS): The time period for making a management decision on findings was approximately 7.2 months after the FAC Acceptance date for one out of two audit reports with findings. Our testing disclosed for the one late audit report DHS made a management decision timely. However, DHS did not notify the subrecipient of the management decision within the required six month time period after the audit reports FAC Acceptance date. Criteria: 2 CFR §200.332, Requirements for pass-through entities, states in part: All pass-through entities must: (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward, and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: Finding 2024 ¬– 015: (continued) (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. (3) Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by §200.521 [Management decision]. (f) Verify that every subrecipient is audited as required by Subpart F [Audit Requirements] of this part when it is expected that the subrecipient’s Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in §200.501 [Audit requirements]. (g) Consider whether the results of the subrecipient’s audit, on-site review, or other monitoring indicate conditions that necessitate adjustments to the pass-through entity’s own records. (h) Consider taking enforcement action against noncompliant subrecipients as described in §200.339 [Remedies for noncompliance] of this part and in program regulations. In order to carry out these responsibilities properly, good internal control dictates that state pass-through agencies ensure subrecipient Single Audit SEFAs are representative of state payment records each year, and that the related federal programs have been properly subjected to Single Audit procedures. 2 CFR §200.512, Report submission, states in part: (a) General. (1) The audit must be completed and the data collection form described in paragraph (b) of this section and reporting package described in paragraph (c) of this section must be submitted within the earlier of 30 calendar days after receipt of the auditor’s report(s), or nine months after the end of the audit period. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day. 2 CFR §200.521, Management decision, states in part: (a) General. The management decision must clearly state whether or not the finding is sustained, the reasons for the decision, and the expected auditee action to repay disallowed costs, make financial adjustments, or take other action. (d) Time requirements. The Federal awarding agency or pass-through entity responsible for issuing a management decision must do so within six months of acceptance of the audit report by the FAC. The auditee must initiate and proceed with corrective action as rapidly as possible and corrective action should begin no later than upon receipt of the audit report. 2 CFR §200.505, Sanctions, states: In cases of continued inability or unwillingness to have an audit conducted in accordance with this part, Federal agencies and pass-through entities must take appropriate action as provided in §200.339 [Remedies for noncompliance]. 2 CFR §200.339, Remedies for noncompliance, states in part: If a non-Federal entity fails to comply with the U.S. Constitution, Federal statutes, regulations or the terms and conditions of a Federal award, the Federal awarding agency or pass-through entity may impose additional conditions, as described in §200.208 [Specific conditions]. If the Federal awarding agency or pass-through entity determines that noncompliance cannot be remedied by imposing additional conditions, the federal awarding agency or pass-through entity may take one or more of the following actions, as appropriate in the circumstances. Finding 2024 ¬– 015: (continued) (a) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency or pass-through entity. (b) Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost of the activity or action not in compliance. (c) Wholly or partly suspend or terminate the Federal award. (d) Initiate suspension or debarment proceedings as authorized under 2 CFR Part 180 and Federal awarding agency regulations (or in the case of a pass-through entity, recommend such a proceeding be initiated by a Federal awarding agency). (e) Withhold further Federal awards for the project or program. (f) Take other remedies that may be legally available. To ensure Commonwealth enforcement of federal regulations for subrecipient noncompliance with audit requirements, Commonwealth Management Directive 325.08, Amended – Remedies for Recipient Noncompliance with Audit Requirements, Section 5 related to policy, states in part: (a) Agencies must develop and implement remedial action that reflects the unique requirements of each program… (b) The remedial action should be implemented within six months from the date the first remedial action is initiated. At the end of the six-month period, the recipient should take the appropriate corrective action or the final stage of remedial action should be imposed on the recipient. Examples of remedial action include, but are not limited to: (1) Meeting or calling the recipient to explain the importance and benefits of the audit and audit resolution processes, emphasizing the value of the audit as an administrative tool and the Commonwealth’s reliance on an acceptable audit and prompt resolution as evidence of the recipient’s ability to properly administer the program. (2) Encouraging the entity to establish an audit committee or designate an individual as the single point of contact to: (a) Communicate regarding the audit. (b) Arrange for and oversee the audit. (c) Direct and monitor audit resolution. (3) Providing technical assistance to the recipient in devising and implementing an appropriate plan to remedy the noncompliance. (4) Withholding a portion of assistance payments until the noncompliance is resolved. (5) Withholding or disallowing overhead costs until the noncompliance is resolved. (6) Suspending the assistance agreement until the noncompliance is resolved. (7) Terminating the assistance agreement with the recipient and, if necessary, seeking alternative entities to administer the program. Finding 2024 ¬– 015: (continued) Management Directive 325.09, Amended – Processing Subrecipient Single Audits of Federal Pass-Through Funds, Section 7 related to procedures, states in part: c. Agencies. (2) Evaluate single audit report submissions received from BAFM to determine program purpose acceptability by verifying, at a minimum, that all agency-funded programs are properly included on the applicable financial schedules; that findings affecting the agency contain sufficient information to facilitate a management decision; and that the subrecipient has submitted an adequate corrective action plan. (5) Issue management decisions relative to audit findings and crosscutting findings assigned to the agency for resolution, as required by 2 CFR §200.521. If responsible for the resolution of crosscutting findings, notify the affected agency or agencies upon resolution of such findings. (6) Impose or coordinate the imposition of remedial action in accordance with 2 CFR Part 200.339 and Management Directive 325.08 Amended, Remedies for Recipient Noncompliance with Audit Requirements, when subrecipients fail to comply with the provisions of Subpart F. Management Directive 325.12, Amended – Standards for Enterprise Risk Management in Commonwealth Agencies, adopted the internal control framework outlined in the United States Government Accountability Office’s, Standards for Internal Control in the Federal Government (Green Book). The Green Book states in part: Management should establish and operate monitoring activities to monitor the internal control system and evaluate the results. Management should remediate identified internal control deficiencies on a timely basis. Cause: One reason provided by Commonwealth management for untimely audit resolution in the various agencies, including making management decisions, approving corrective action, and performing procedures to ensure the accuracy of subrecipient SEFAs, was either a change in staff or a lack of staff to follow up and process subrecipient audit reports more timely. Effect: Since required management decisions were not made within six months to ensure appropriate corrective action was taken on audits received from subrecipients, the Commonwealth did not comply with federal regulations, and subrecipients were not made aware of acceptance or rejection of corrective action plans in a timely manner. Further, noncompliance may recur in future periods if control deficiencies are not corrected on a timely basis, and there is an increased risk of unallowable charges being made to federal programs if corrective action and recovery of questioned costs is not timely. Regarding the SEFA reviews or alternate procedures which are not being performed timely, there is an increased risk that subrecipients could be misspending and/or inappropriately tracking and reporting federal funds over multiple year periods, and these discrepancies may not be properly monitored, detected, and corrected by agency personnel on a timely basis as required. Recommendation: We recommend that the above weaknesses that cause untimely subrecipient Single Audit resolution, including untimely management decisions on findings, and untimely review of the SEFA or alternate procedures be corrected to ensure compliance with federal requirements and Commonwealth Management Directives, and to better ensure timelier subrecipient compliance with program requirements. PDOA Response: PDOA agrees with the finding. PDA Response: PDA agrees with the finding. PDE Response: PDE agrees with the finding. DEP Response: DEP agrees with the finding. Finding 2024 ¬– 015: (continued) DHS Response: DHS agrees that there was an exception where human error caused a management decision on one single audit report to be issued untimely; in this instance, the decision itself was made timely but was not communicated in a timely manner. DHS disagrees that an isolated incident due to human error signifies a weakness in internal controls. This was not a systemic issue and therefore should not have been considered a significant deficiency in internal controls, and DHS should not have been included in this finding. Auditors’ Conclusion: The agency responses from PDOA, PDA, PDE, and DEP indicate agreement with the finding. DHS agrees that an error occurred resulting in untimely submission of one management decision, DHS disagrees that the error represents a significant deficiency. We acknowledge the error occurred due to an oversight and is not a systemic error, however, the error resulted in noncompliance with one of two audit reports that required timely management decisions. We will evaluate corrective action in the subsequent audit. The finding remains as stated. Questioned Costs: The amount of questioned costs cannot be determined.
Various Agencies Finding 2024 ¬– 015: ALN 10.565, 10.568, 10.569 – Food Distribution Cluster ALN 15.252 – Abandoned Mine Land Reclamation (AMLR) ALN 21.027 – COVID 19 – Coronavirus State and Local Fiscal Recovery Funds ALN 84.425C – COVID 19 – Education Stabilization Fund – GEER Fund ALN 84.425D – COVID 19 – Education Stabilization Fund – ESSER Fund ALN 84.425R – COVID 19 – Education Stabilization Fund – CRRSA EANS Program ALN 84.425U – COVID 19 – Education Stabilization Fund – ARP ESSER ALN 84.425V – COVID 19 – Education Stabilization Fund – ARP EANS Program ALN 84.425W – COVID 19 – Education Stabilization Fund – ARP ESSER HCY ALN 93.044, 93.045, 93.053 – Aging Cluster (including COVID-19) ALN 93.558 – Temporary Assistance for Needy Families ALN 93.667 – Social Services Block Grant A Material Weakness and Material Noncompliance Exist in the Commonwealth’s Subrecipient Audit Resolution Process (A Similar Condition Was Noted in Prior Year Finding 2023-024) Federal Grant Number(s) and Year(s): 228PA100I1003 (6/13/2022 – 6/30/2025), 231PA445Q2204 (10/01/2022 – 9/30/2023), 231PA825Y8005 (10/01/2022 – 9/30/2023), 231PA825Y8105 (10/01/2022 – 9/30/2023), 241PA825Y8005 (10/01/2023 – 9/30/2024), 241PA825Y8105 (10/01/2023 – 9/30/2024), S18AF20004 (11/01/2017 – 10/31/2025), S19AF20004 (12/01/2018 – 11/30/2025), S21AF10015 (1/01/2021 – 12/31/2023), S22AF00017 (1/01/2022 – 12/31/2024), S23AF00002 (11/01/2022 – 10/31/2027), TN75GJE1S7G3 (3/03/2021 – 12/31/2024), S425W210039 (4/23/2021 – 9/30/2024), S425U210028 (3/24/2021– 9/30/2024), S425D210028 (1/05/2021 – 9/30/2024), S425C200013 (5/18/2020 – 4/01/2024), S425R210037 (3/13/2020 – 9/30/2024), S425V210037 (11/16/2021 – 9/30/2024), S425C210013 (3/13/2020 – 9/30/2024), 2101PACMC6 (4/01/2021 – 9/30/2024), 2101PAHDC6 (4/01/2021 – 9/30/2024), 2101PAPHC6 (4/01/2021 – 9/30/2024), 2101PASSC6 (4/01/2021 – 9/30/2024), 2201PAOASS (10/01/2021 – 9/30/2023), 2201PASTPH (1/01/2022 – 9/30/2024), 2301PAOACM (10/01/2022 – 9/30/2024), 2301PAOAHD (10/01/2022 – 9/30/2024), 2301PAOANS (10/01/2022 – 9/30/2024), 2301PAOASS (10/01/2022 – 9/30/2024), 2401PAOACM (10/01/2023 – 9/30/2025), 2401PAOAHD (10/01/2023 – 9/30/2025), 2401PAOANS (10/01/2023 – 9/30/2025), 2401PAOASS (10/01/2023 – 9/30/2025), 2101PATANF (10/01/2020 – 9/30/2021), 2201PATANF (10/01/2021 – 9/30/2022), 2301PATANF (10/01/2022 – 9/30/2023), 2401PATANF (10/01/2023 – 9/30/2024), 2301PASOSR (10/01/2022 – 9/30/2024), 2401PASOSR (10/01/2023 – 9/30/2025), 2301PATANF (10/01/2022 – 9/30/2024), 2401PATANF (10/01/2023 – 9/30/2025) Type of Finding: Significant Deficiency in Internal Control over Compliance, Other Matters for Abandoned Mine Land Reclamation (AMLR), Temporary Assistance for Needy Families, Coronavirus State and Local Fiscal Recovery Funds, and Social Services Block Grant Material Weakness in Internal Control over Compliance, Material Noncompliance for Food Distribution Cluster, Education Stabilization Fund, and Aging Cluster Compliance Requirement: Subrecipient Monitoring Condition: Under the Commonwealth of Pennsylvania's (Commonwealth) implementation of the Single Audit Act, review and resolution of subrecipient Single Audit reports is split into two stages. The Office of the Budget’s Bureau of Accounting and Financial Management (OB-BAFM) ensures the reports meet technical standards through a centralized desk review process. The various funding agencies in the Commonwealth are responsible for making a management decision on each finding within six months of the Federal Audit Clearinghouse’s (FAC) Acceptance date for audits subject to Uniform Guidance and to ensure appropriate corrective action is taken by the subrecipient (except for Uniform Guidance Finding 2024 ¬– 015: (continued) audits under U.S. Department of Labor programs which are permitted 12 months for management decisions in accordance with 2 CFR Section 2900.21). Each Commonwealth agency is also responsible for reviewing financial information in each audit report to determine whether the audit included all pass-through funding provided by the agency to ensure pass-through funds were subject to audit. Most agencies meet this requirement by performing Schedule of Expenditures of Federal Awards (SEFA) reconciliations. The agency is also required to adjust Commonwealth records, if necessary. Our fiscal year ended June 30, 2024 audit of the Commonwealth’s process for review and resolution of subrecipient Single Audits included an evaluation of the Commonwealth’s fiscal year ended June 30, 2023 subrecipient audit universe for audits due for submission to the FAC during the fiscal year ended June 30, 2024. We also evaluated the Commonwealth’s review of 45 subrecipient audit reports with findings in major programs/clusters which were identified on the Commonwealth agencies’ tracking lists during the fiscal year ended June 30, 2024 and required management decisions by Commonwealth agencies. Our testing disclosed the following audit exceptions regarding the Commonwealth agencies’ review of subrecipient audit reports: • Pennsylvania Department of Aging (PDOA): Our testing disclosed that PDOA did not have procedures in place to track audit reports including having an audit tracking list. The time period for making a management decision on findings was approximately 17.6 months to over 18 months after the FAC Acceptance date for two out of two audit reports with findings. There was also a delay in PDOA’s procedures to ensure the subrecipient SEFAs were accurate so that major programs were properly determined and subjected to audit. • Department of Agriculture (PDA): Our testing disclosed that PDA did not have procedures in place to track audit reports including having an audit tracking list. The time period for making a management decision on findings was approximately 8.7 months to over 16 months after the FAC Acceptance date for four out of four audit reports with findings. • Department of Education (PDE): The time period for making a management decision on findings was approximately 7.8 months to over 12 months after the FAC Acceptance date for seven out of 22 audit reports with findings. There were additional audit reports with findings listed on PDE’s audit tracking list where management decisions were not made timely. • Department of Environmental Protection (DEP): The time period for making a management decision on findings was approximately 11.6 months to over 12 months after the FAC Acceptance date for two out of two audit reports with findings. Our testing disclosed for the two late audit reports, DEP made management decisions timely. However, DEP did not notify the subrecipients of the management decisions within the required six month time period after the audit reports FAC Acceptance date. • Department of Human Services (DHS): The time period for making a management decision on findings was approximately 7.2 months after the FAC Acceptance date for one out of two audit reports with findings. Our testing disclosed for the one late audit report DHS made a management decision timely. However, DHS did not notify the subrecipient of the management decision within the required six month time period after the audit reports FAC Acceptance date. Criteria: 2 CFR §200.332, Requirements for pass-through entities, states in part: All pass-through entities must: (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward, and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: Finding 2024 ¬– 015: (continued) (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. (3) Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by §200.521 [Management decision]. (f) Verify that every subrecipient is audited as required by Subpart F [Audit Requirements] of this part when it is expected that the subrecipient’s Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in §200.501 [Audit requirements]. (g) Consider whether the results of the subrecipient’s audit, on-site review, or other monitoring indicate conditions that necessitate adjustments to the pass-through entity’s own records. (h) Consider taking enforcement action against noncompliant subrecipients as described in §200.339 [Remedies for noncompliance] of this part and in program regulations. In order to carry out these responsibilities properly, good internal control dictates that state pass-through agencies ensure subrecipient Single Audit SEFAs are representative of state payment records each year, and that the related federal programs have been properly subjected to Single Audit procedures. 2 CFR §200.512, Report submission, states in part: (a) General. (1) The audit must be completed and the data collection form described in paragraph (b) of this section and reporting package described in paragraph (c) of this section must be submitted within the earlier of 30 calendar days after receipt of the auditor’s report(s), or nine months after the end of the audit period. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day. 2 CFR §200.521, Management decision, states in part: (a) General. The management decision must clearly state whether or not the finding is sustained, the reasons for the decision, and the expected auditee action to repay disallowed costs, make financial adjustments, or take other action. (d) Time requirements. The Federal awarding agency or pass-through entity responsible for issuing a management decision must do so within six months of acceptance of the audit report by the FAC. The auditee must initiate and proceed with corrective action as rapidly as possible and corrective action should begin no later than upon receipt of the audit report. 2 CFR §200.505, Sanctions, states: In cases of continued inability or unwillingness to have an audit conducted in accordance with this part, Federal agencies and pass-through entities must take appropriate action as provided in §200.339 [Remedies for noncompliance]. 2 CFR §200.339, Remedies for noncompliance, states in part: If a non-Federal entity fails to comply with the U.S. Constitution, Federal statutes, regulations or the terms and conditions of a Federal award, the Federal awarding agency or pass-through entity may impose additional conditions, as described in §200.208 [Specific conditions]. If the Federal awarding agency or pass-through entity determines that noncompliance cannot be remedied by imposing additional conditions, the federal awarding agency or pass-through entity may take one or more of the following actions, as appropriate in the circumstances. Finding 2024 ¬– 015: (continued) (a) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency or pass-through entity. (b) Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost of the activity or action not in compliance. (c) Wholly or partly suspend or terminate the Federal award. (d) Initiate suspension or debarment proceedings as authorized under 2 CFR Part 180 and Federal awarding agency regulations (or in the case of a pass-through entity, recommend such a proceeding be initiated by a Federal awarding agency). (e) Withhold further Federal awards for the project or program. (f) Take other remedies that may be legally available. To ensure Commonwealth enforcement of federal regulations for subrecipient noncompliance with audit requirements, Commonwealth Management Directive 325.08, Amended – Remedies for Recipient Noncompliance with Audit Requirements, Section 5 related to policy, states in part: (a) Agencies must develop and implement remedial action that reflects the unique requirements of each program… (b) The remedial action should be implemented within six months from the date the first remedial action is initiated. At the end of the six-month period, the recipient should take the appropriate corrective action or the final stage of remedial action should be imposed on the recipient. Examples of remedial action include, but are not limited to: (1) Meeting or calling the recipient to explain the importance and benefits of the audit and audit resolution processes, emphasizing the value of the audit as an administrative tool and the Commonwealth’s reliance on an acceptable audit and prompt resolution as evidence of the recipient’s ability to properly administer the program. (2) Encouraging the entity to establish an audit committee or designate an individual as the single point of contact to: (a) Communicate regarding the audit. (b) Arrange for and oversee the audit. (c) Direct and monitor audit resolution. (3) Providing technical assistance to the recipient in devising and implementing an appropriate plan to remedy the noncompliance. (4) Withholding a portion of assistance payments until the noncompliance is resolved. (5) Withholding or disallowing overhead costs until the noncompliance is resolved. (6) Suspending the assistance agreement until the noncompliance is resolved. (7) Terminating the assistance agreement with the recipient and, if necessary, seeking alternative entities to administer the program. Finding 2024 ¬– 015: (continued) Management Directive 325.09, Amended – Processing Subrecipient Single Audits of Federal Pass-Through Funds, Section 7 related to procedures, states in part: c. Agencies. (2) Evaluate single audit report submissions received from BAFM to determine program purpose acceptability by verifying, at a minimum, that all agency-funded programs are properly included on the applicable financial schedules; that findings affecting the agency contain sufficient information to facilitate a management decision; and that the subrecipient has submitted an adequate corrective action plan. (5) Issue management decisions relative to audit findings and crosscutting findings assigned to the agency for resolution, as required by 2 CFR §200.521. If responsible for the resolution of crosscutting findings, notify the affected agency or agencies upon resolution of such findings. (6) Impose or coordinate the imposition of remedial action in accordance with 2 CFR Part 200.339 and Management Directive 325.08 Amended, Remedies for Recipient Noncompliance with Audit Requirements, when subrecipients fail to comply with the provisions of Subpart F. Management Directive 325.12, Amended – Standards for Enterprise Risk Management in Commonwealth Agencies, adopted the internal control framework outlined in the United States Government Accountability Office’s, Standards for Internal Control in the Federal Government (Green Book). The Green Book states in part: Management should establish and operate monitoring activities to monitor the internal control system and evaluate the results. Management should remediate identified internal control deficiencies on a timely basis. Cause: One reason provided by Commonwealth management for untimely audit resolution in the various agencies, including making management decisions, approving corrective action, and performing procedures to ensure the accuracy of subrecipient SEFAs, was either a change in staff or a lack of staff to follow up and process subrecipient audit reports more timely. Effect: Since required management decisions were not made within six months to ensure appropriate corrective action was taken on audits received from subrecipients, the Commonwealth did not comply with federal regulations, and subrecipients were not made aware of acceptance or rejection of corrective action plans in a timely manner. Further, noncompliance may recur in future periods if control deficiencies are not corrected on a timely basis, and there is an increased risk of unallowable charges being made to federal programs if corrective action and recovery of questioned costs is not timely. Regarding the SEFA reviews or alternate procedures which are not being performed timely, there is an increased risk that subrecipients could be misspending and/or inappropriately tracking and reporting federal funds over multiple year periods, and these discrepancies may not be properly monitored, detected, and corrected by agency personnel on a timely basis as required. Recommendation: We recommend that the above weaknesses that cause untimely subrecipient Single Audit resolution, including untimely management decisions on findings, and untimely review of the SEFA or alternate procedures be corrected to ensure compliance with federal requirements and Commonwealth Management Directives, and to better ensure timelier subrecipient compliance with program requirements. PDOA Response: PDOA agrees with the finding. PDA Response: PDA agrees with the finding. PDE Response: PDE agrees with the finding. DEP Response: DEP agrees with the finding. Finding 2024 ¬– 015: (continued) DHS Response: DHS agrees that there was an exception where human error caused a management decision on one single audit report to be issued untimely; in this instance, the decision itself was made timely but was not communicated in a timely manner. DHS disagrees that an isolated incident due to human error signifies a weakness in internal controls. This was not a systemic issue and therefore should not have been considered a significant deficiency in internal controls, and DHS should not have been included in this finding. Auditors’ Conclusion: The agency responses from PDOA, PDA, PDE, and DEP indicate agreement with the finding. DHS agrees that an error occurred resulting in untimely submission of one management decision, DHS disagrees that the error represents a significant deficiency. We acknowledge the error occurred due to an oversight and is not a systemic error, however, the error resulted in noncompliance with one of two audit reports that required timely management decisions. We will evaluate corrective action in the subsequent audit. The finding remains as stated. Questioned Costs: The amount of questioned costs cannot be determined.
Various Agencies Finding 2024 ¬– 015: ALN 10.565, 10.568, 10.569 – Food Distribution Cluster ALN 15.252 – Abandoned Mine Land Reclamation (AMLR) ALN 21.027 – COVID 19 – Coronavirus State and Local Fiscal Recovery Funds ALN 84.425C – COVID 19 – Education Stabilization Fund – GEER Fund ALN 84.425D – COVID 19 – Education Stabilization Fund – ESSER Fund ALN 84.425R – COVID 19 – Education Stabilization Fund – CRRSA EANS Program ALN 84.425U – COVID 19 – Education Stabilization Fund – ARP ESSER ALN 84.425V – COVID 19 – Education Stabilization Fund – ARP EANS Program ALN 84.425W – COVID 19 – Education Stabilization Fund – ARP ESSER HCY ALN 93.044, 93.045, 93.053 – Aging Cluster (including COVID-19) ALN 93.558 – Temporary Assistance for Needy Families ALN 93.667 – Social Services Block Grant A Material Weakness and Material Noncompliance Exist in the Commonwealth’s Subrecipient Audit Resolution Process (A Similar Condition Was Noted in Prior Year Finding 2023-024) Federal Grant Number(s) and Year(s): 228PA100I1003 (6/13/2022 – 6/30/2025), 231PA445Q2204 (10/01/2022 – 9/30/2023), 231PA825Y8005 (10/01/2022 – 9/30/2023), 231PA825Y8105 (10/01/2022 – 9/30/2023), 241PA825Y8005 (10/01/2023 – 9/30/2024), 241PA825Y8105 (10/01/2023 – 9/30/2024), S18AF20004 (11/01/2017 – 10/31/2025), S19AF20004 (12/01/2018 – 11/30/2025), S21AF10015 (1/01/2021 – 12/31/2023), S22AF00017 (1/01/2022 – 12/31/2024), S23AF00002 (11/01/2022 – 10/31/2027), TN75GJE1S7G3 (3/03/2021 – 12/31/2024), S425W210039 (4/23/2021 – 9/30/2024), S425U210028 (3/24/2021– 9/30/2024), S425D210028 (1/05/2021 – 9/30/2024), S425C200013 (5/18/2020 – 4/01/2024), S425R210037 (3/13/2020 – 9/30/2024), S425V210037 (11/16/2021 – 9/30/2024), S425C210013 (3/13/2020 – 9/30/2024), 2101PACMC6 (4/01/2021 – 9/30/2024), 2101PAHDC6 (4/01/2021 – 9/30/2024), 2101PAPHC6 (4/01/2021 – 9/30/2024), 2101PASSC6 (4/01/2021 – 9/30/2024), 2201PAOASS (10/01/2021 – 9/30/2023), 2201PASTPH (1/01/2022 – 9/30/2024), 2301PAOACM (10/01/2022 – 9/30/2024), 2301PAOAHD (10/01/2022 – 9/30/2024), 2301PAOANS (10/01/2022 – 9/30/2024), 2301PAOASS (10/01/2022 – 9/30/2024), 2401PAOACM (10/01/2023 – 9/30/2025), 2401PAOAHD (10/01/2023 – 9/30/2025), 2401PAOANS (10/01/2023 – 9/30/2025), 2401PAOASS (10/01/2023 – 9/30/2025), 2101PATANF (10/01/2020 – 9/30/2021), 2201PATANF (10/01/2021 – 9/30/2022), 2301PATANF (10/01/2022 – 9/30/2023), 2401PATANF (10/01/2023 – 9/30/2024), 2301PASOSR (10/01/2022 – 9/30/2024), 2401PASOSR (10/01/2023 – 9/30/2025), 2301PATANF (10/01/2022 – 9/30/2024), 2401PATANF (10/01/2023 – 9/30/2025) Type of Finding: Significant Deficiency in Internal Control over Compliance, Other Matters for Abandoned Mine Land Reclamation (AMLR), Temporary Assistance for Needy Families, Coronavirus State and Local Fiscal Recovery Funds, and Social Services Block Grant Material Weakness in Internal Control over Compliance, Material Noncompliance for Food Distribution Cluster, Education Stabilization Fund, and Aging Cluster Compliance Requirement: Subrecipient Monitoring Condition: Under the Commonwealth of Pennsylvania's (Commonwealth) implementation of the Single Audit Act, review and resolution of subrecipient Single Audit reports is split into two stages. The Office of the Budget’s Bureau of Accounting and Financial Management (OB-BAFM) ensures the reports meet technical standards through a centralized desk review process. The various funding agencies in the Commonwealth are responsible for making a management decision on each finding within six months of the Federal Audit Clearinghouse’s (FAC) Acceptance date for audits subject to Uniform Guidance and to ensure appropriate corrective action is taken by the subrecipient (except for Uniform Guidance Finding 2024 ¬– 015: (continued) audits under U.S. Department of Labor programs which are permitted 12 months for management decisions in accordance with 2 CFR Section 2900.21). Each Commonwealth agency is also responsible for reviewing financial information in each audit report to determine whether the audit included all pass-through funding provided by the agency to ensure pass-through funds were subject to audit. Most agencies meet this requirement by performing Schedule of Expenditures of Federal Awards (SEFA) reconciliations. The agency is also required to adjust Commonwealth records, if necessary. Our fiscal year ended June 30, 2024 audit of the Commonwealth’s process for review and resolution of subrecipient Single Audits included an evaluation of the Commonwealth’s fiscal year ended June 30, 2023 subrecipient audit universe for audits due for submission to the FAC during the fiscal year ended June 30, 2024. We also evaluated the Commonwealth’s review of 45 subrecipient audit reports with findings in major programs/clusters which were identified on the Commonwealth agencies’ tracking lists during the fiscal year ended June 30, 2024 and required management decisions by Commonwealth agencies. Our testing disclosed the following audit exceptions regarding the Commonwealth agencies’ review of subrecipient audit reports: • Pennsylvania Department of Aging (PDOA): Our testing disclosed that PDOA did not have procedures in place to track audit reports including having an audit tracking list. The time period for making a management decision on findings was approximately 17.6 months to over 18 months after the FAC Acceptance date for two out of two audit reports with findings. There was also a delay in PDOA’s procedures to ensure the subrecipient SEFAs were accurate so that major programs were properly determined and subjected to audit. • Department of Agriculture (PDA): Our testing disclosed that PDA did not have procedures in place to track audit reports including having an audit tracking list. The time period for making a management decision on findings was approximately 8.7 months to over 16 months after the FAC Acceptance date for four out of four audit reports with findings. • Department of Education (PDE): The time period for making a management decision on findings was approximately 7.8 months to over 12 months after the FAC Acceptance date for seven out of 22 audit reports with findings. There were additional audit reports with findings listed on PDE’s audit tracking list where management decisions were not made timely. • Department of Environmental Protection (DEP): The time period for making a management decision on findings was approximately 11.6 months to over 12 months after the FAC Acceptance date for two out of two audit reports with findings. Our testing disclosed for the two late audit reports, DEP made management decisions timely. However, DEP did not notify the subrecipients of the management decisions within the required six month time period after the audit reports FAC Acceptance date. • Department of Human Services (DHS): The time period for making a management decision on findings was approximately 7.2 months after the FAC Acceptance date for one out of two audit reports with findings. Our testing disclosed for the one late audit report DHS made a management decision timely. However, DHS did not notify the subrecipient of the management decision within the required six month time period after the audit reports FAC Acceptance date. Criteria: 2 CFR §200.332, Requirements for pass-through entities, states in part: All pass-through entities must: (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward, and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: Finding 2024 ¬– 015: (continued) (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. (3) Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by §200.521 [Management decision]. (f) Verify that every subrecipient is audited as required by Subpart F [Audit Requirements] of this part when it is expected that the subrecipient’s Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in §200.501 [Audit requirements]. (g) Consider whether the results of the subrecipient’s audit, on-site review, or other monitoring indicate conditions that necessitate adjustments to the pass-through entity’s own records. (h) Consider taking enforcement action against noncompliant subrecipients as described in §200.339 [Remedies for noncompliance] of this part and in program regulations. In order to carry out these responsibilities properly, good internal control dictates that state pass-through agencies ensure subrecipient Single Audit SEFAs are representative of state payment records each year, and that the related federal programs have been properly subjected to Single Audit procedures. 2 CFR §200.512, Report submission, states in part: (a) General. (1) The audit must be completed and the data collection form described in paragraph (b) of this section and reporting package described in paragraph (c) of this section must be submitted within the earlier of 30 calendar days after receipt of the auditor’s report(s), or nine months after the end of the audit period. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day. 2 CFR §200.521, Management decision, states in part: (a) General. The management decision must clearly state whether or not the finding is sustained, the reasons for the decision, and the expected auditee action to repay disallowed costs, make financial adjustments, or take other action. (d) Time requirements. The Federal awarding agency or pass-through entity responsible for issuing a management decision must do so within six months of acceptance of the audit report by the FAC. The auditee must initiate and proceed with corrective action as rapidly as possible and corrective action should begin no later than upon receipt of the audit report. 2 CFR §200.505, Sanctions, states: In cases of continued inability or unwillingness to have an audit conducted in accordance with this part, Federal agencies and pass-through entities must take appropriate action as provided in §200.339 [Remedies for noncompliance]. 2 CFR §200.339, Remedies for noncompliance, states in part: If a non-Federal entity fails to comply with the U.S. Constitution, Federal statutes, regulations or the terms and conditions of a Federal award, the Federal awarding agency or pass-through entity may impose additional conditions, as described in §200.208 [Specific conditions]. If the Federal awarding agency or pass-through entity determines that noncompliance cannot be remedied by imposing additional conditions, the federal awarding agency or pass-through entity may take one or more of the following actions, as appropriate in the circumstances. Finding 2024 ¬– 015: (continued) (a) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency or pass-through entity. (b) Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost of the activity or action not in compliance. (c) Wholly or partly suspend or terminate the Federal award. (d) Initiate suspension or debarment proceedings as authorized under 2 CFR Part 180 and Federal awarding agency regulations (or in the case of a pass-through entity, recommend such a proceeding be initiated by a Federal awarding agency). (e) Withhold further Federal awards for the project or program. (f) Take other remedies that may be legally available. To ensure Commonwealth enforcement of federal regulations for subrecipient noncompliance with audit requirements, Commonwealth Management Directive 325.08, Amended – Remedies for Recipient Noncompliance with Audit Requirements, Section 5 related to policy, states in part: (a) Agencies must develop and implement remedial action that reflects the unique requirements of each program… (b) The remedial action should be implemented within six months from the date the first remedial action is initiated. At the end of the six-month period, the recipient should take the appropriate corrective action or the final stage of remedial action should be imposed on the recipient. Examples of remedial action include, but are not limited to: (1) Meeting or calling the recipient to explain the importance and benefits of the audit and audit resolution processes, emphasizing the value of the audit as an administrative tool and the Commonwealth’s reliance on an acceptable audit and prompt resolution as evidence of the recipient’s ability to properly administer the program. (2) Encouraging the entity to establish an audit committee or designate an individual as the single point of contact to: (a) Communicate regarding the audit. (b) Arrange for and oversee the audit. (c) Direct and monitor audit resolution. (3) Providing technical assistance to the recipient in devising and implementing an appropriate plan to remedy the noncompliance. (4) Withholding a portion of assistance payments until the noncompliance is resolved. (5) Withholding or disallowing overhead costs until the noncompliance is resolved. (6) Suspending the assistance agreement until the noncompliance is resolved. (7) Terminating the assistance agreement with the recipient and, if necessary, seeking alternative entities to administer the program. Finding 2024 ¬– 015: (continued) Management Directive 325.09, Amended – Processing Subrecipient Single Audits of Federal Pass-Through Funds, Section 7 related to procedures, states in part: c. Agencies. (2) Evaluate single audit report submissions received from BAFM to determine program purpose acceptability by verifying, at a minimum, that all agency-funded programs are properly included on the applicable financial schedules; that findings affecting the agency contain sufficient information to facilitate a management decision; and that the subrecipient has submitted an adequate corrective action plan. (5) Issue management decisions relative to audit findings and crosscutting findings assigned to the agency for resolution, as required by 2 CFR §200.521. If responsible for the resolution of crosscutting findings, notify the affected agency or agencies upon resolution of such findings. (6) Impose or coordinate the imposition of remedial action in accordance with 2 CFR Part 200.339 and Management Directive 325.08 Amended, Remedies for Recipient Noncompliance with Audit Requirements, when subrecipients fail to comply with the provisions of Subpart F. Management Directive 325.12, Amended – Standards for Enterprise Risk Management in Commonwealth Agencies, adopted the internal control framework outlined in the United States Government Accountability Office’s, Standards for Internal Control in the Federal Government (Green Book). The Green Book states in part: Management should establish and operate monitoring activities to monitor the internal control system and evaluate the results. Management should remediate identified internal control deficiencies on a timely basis. Cause: One reason provided by Commonwealth management for untimely audit resolution in the various agencies, including making management decisions, approving corrective action, and performing procedures to ensure the accuracy of subrecipient SEFAs, was either a change in staff or a lack of staff to follow up and process subrecipient audit reports more timely. Effect: Since required management decisions were not made within six months to ensure appropriate corrective action was taken on audits received from subrecipients, the Commonwealth did not comply with federal regulations, and subrecipients were not made aware of acceptance or rejection of corrective action plans in a timely manner. Further, noncompliance may recur in future periods if control deficiencies are not corrected on a timely basis, and there is an increased risk of unallowable charges being made to federal programs if corrective action and recovery of questioned costs is not timely. Regarding the SEFA reviews or alternate procedures which are not being performed timely, there is an increased risk that subrecipients could be misspending and/or inappropriately tracking and reporting federal funds over multiple year periods, and these discrepancies may not be properly monitored, detected, and corrected by agency personnel on a timely basis as required. Recommendation: We recommend that the above weaknesses that cause untimely subrecipient Single Audit resolution, including untimely management decisions on findings, and untimely review of the SEFA or alternate procedures be corrected to ensure compliance with federal requirements and Commonwealth Management Directives, and to better ensure timelier subrecipient compliance with program requirements. PDOA Response: PDOA agrees with the finding. PDA Response: PDA agrees with the finding. PDE Response: PDE agrees with the finding. DEP Response: DEP agrees with the finding. Finding 2024 ¬– 015: (continued) DHS Response: DHS agrees that there was an exception where human error caused a management decision on one single audit report to be issued untimely; in this instance, the decision itself was made timely but was not communicated in a timely manner. DHS disagrees that an isolated incident due to human error signifies a weakness in internal controls. This was not a systemic issue and therefore should not have been considered a significant deficiency in internal controls, and DHS should not have been included in this finding. Auditors’ Conclusion: The agency responses from PDOA, PDA, PDE, and DEP indicate agreement with the finding. DHS agrees that an error occurred resulting in untimely submission of one management decision, DHS disagrees that the error represents a significant deficiency. We acknowledge the error occurred due to an oversight and is not a systemic error, however, the error resulted in noncompliance with one of two audit reports that required timely management decisions. We will evaluate corrective action in the subsequent audit. The finding remains as stated. Questioned Costs: The amount of questioned costs cannot be determined.
Various Agencies Finding 2024 ¬– 015: ALN 10.565, 10.568, 10.569 – Food Distribution Cluster ALN 15.252 – Abandoned Mine Land Reclamation (AMLR) ALN 21.027 – COVID 19 – Coronavirus State and Local Fiscal Recovery Funds ALN 84.425C – COVID 19 – Education Stabilization Fund – GEER Fund ALN 84.425D – COVID 19 – Education Stabilization Fund – ESSER Fund ALN 84.425R – COVID 19 – Education Stabilization Fund – CRRSA EANS Program ALN 84.425U – COVID 19 – Education Stabilization Fund – ARP ESSER ALN 84.425V – COVID 19 – Education Stabilization Fund – ARP EANS Program ALN 84.425W – COVID 19 – Education Stabilization Fund – ARP ESSER HCY ALN 93.044, 93.045, 93.053 – Aging Cluster (including COVID-19) ALN 93.558 – Temporary Assistance for Needy Families ALN 93.667 – Social Services Block Grant A Material Weakness and Material Noncompliance Exist in the Commonwealth’s Subrecipient Audit Resolution Process (A Similar Condition Was Noted in Prior Year Finding 2023-024) Federal Grant Number(s) and Year(s): 228PA100I1003 (6/13/2022 – 6/30/2025), 231PA445Q2204 (10/01/2022 – 9/30/2023), 231PA825Y8005 (10/01/2022 – 9/30/2023), 231PA825Y8105 (10/01/2022 – 9/30/2023), 241PA825Y8005 (10/01/2023 – 9/30/2024), 241PA825Y8105 (10/01/2023 – 9/30/2024), S18AF20004 (11/01/2017 – 10/31/2025), S19AF20004 (12/01/2018 – 11/30/2025), S21AF10015 (1/01/2021 – 12/31/2023), S22AF00017 (1/01/2022 – 12/31/2024), S23AF00002 (11/01/2022 – 10/31/2027), TN75GJE1S7G3 (3/03/2021 – 12/31/2024), S425W210039 (4/23/2021 – 9/30/2024), S425U210028 (3/24/2021– 9/30/2024), S425D210028 (1/05/2021 – 9/30/2024), S425C200013 (5/18/2020 – 4/01/2024), S425R210037 (3/13/2020 – 9/30/2024), S425V210037 (11/16/2021 – 9/30/2024), S425C210013 (3/13/2020 – 9/30/2024), 2101PACMC6 (4/01/2021 – 9/30/2024), 2101PAHDC6 (4/01/2021 – 9/30/2024), 2101PAPHC6 (4/01/2021 – 9/30/2024), 2101PASSC6 (4/01/2021 – 9/30/2024), 2201PAOASS (10/01/2021 – 9/30/2023), 2201PASTPH (1/01/2022 – 9/30/2024), 2301PAOACM (10/01/2022 – 9/30/2024), 2301PAOAHD (10/01/2022 – 9/30/2024), 2301PAOANS (10/01/2022 – 9/30/2024), 2301PAOASS (10/01/2022 – 9/30/2024), 2401PAOACM (10/01/2023 – 9/30/2025), 2401PAOAHD (10/01/2023 – 9/30/2025), 2401PAOANS (10/01/2023 – 9/30/2025), 2401PAOASS (10/01/2023 – 9/30/2025), 2101PATANF (10/01/2020 – 9/30/2021), 2201PATANF (10/01/2021 – 9/30/2022), 2301PATANF (10/01/2022 – 9/30/2023), 2401PATANF (10/01/2023 – 9/30/2024), 2301PASOSR (10/01/2022 – 9/30/2024), 2401PASOSR (10/01/2023 – 9/30/2025), 2301PATANF (10/01/2022 – 9/30/2024), 2401PATANF (10/01/2023 – 9/30/2025) Type of Finding: Significant Deficiency in Internal Control over Compliance, Other Matters for Abandoned Mine Land Reclamation (AMLR), Temporary Assistance for Needy Families, Coronavirus State and Local Fiscal Recovery Funds, and Social Services Block Grant Material Weakness in Internal Control over Compliance, Material Noncompliance for Food Distribution Cluster, Education Stabilization Fund, and Aging Cluster Compliance Requirement: Subrecipient Monitoring Condition: Under the Commonwealth of Pennsylvania's (Commonwealth) implementation of the Single Audit Act, review and resolution of subrecipient Single Audit reports is split into two stages. The Office of the Budget’s Bureau of Accounting and Financial Management (OB-BAFM) ensures the reports meet technical standards through a centralized desk review process. The various funding agencies in the Commonwealth are responsible for making a management decision on each finding within six months of the Federal Audit Clearinghouse’s (FAC) Acceptance date for audits subject to Uniform Guidance and to ensure appropriate corrective action is taken by the subrecipient (except for Uniform Guidance Finding 2024 ¬– 015: (continued) audits under U.S. Department of Labor programs which are permitted 12 months for management decisions in accordance with 2 CFR Section 2900.21). Each Commonwealth agency is also responsible for reviewing financial information in each audit report to determine whether the audit included all pass-through funding provided by the agency to ensure pass-through funds were subject to audit. Most agencies meet this requirement by performing Schedule of Expenditures of Federal Awards (SEFA) reconciliations. The agency is also required to adjust Commonwealth records, if necessary. Our fiscal year ended June 30, 2024 audit of the Commonwealth’s process for review and resolution of subrecipient Single Audits included an evaluation of the Commonwealth’s fiscal year ended June 30, 2023 subrecipient audit universe for audits due for submission to the FAC during the fiscal year ended June 30, 2024. We also evaluated the Commonwealth’s review of 45 subrecipient audit reports with findings in major programs/clusters which were identified on the Commonwealth agencies’ tracking lists during the fiscal year ended June 30, 2024 and required management decisions by Commonwealth agencies. Our testing disclosed the following audit exceptions regarding the Commonwealth agencies’ review of subrecipient audit reports: • Pennsylvania Department of Aging (PDOA): Our testing disclosed that PDOA did not have procedures in place to track audit reports including having an audit tracking list. The time period for making a management decision on findings was approximately 17.6 months to over 18 months after the FAC Acceptance date for two out of two audit reports with findings. There was also a delay in PDOA’s procedures to ensure the subrecipient SEFAs were accurate so that major programs were properly determined and subjected to audit. • Department of Agriculture (PDA): Our testing disclosed that PDA did not have procedures in place to track audit reports including having an audit tracking list. The time period for making a management decision on findings was approximately 8.7 months to over 16 months after the FAC Acceptance date for four out of four audit reports with findings. • Department of Education (PDE): The time period for making a management decision on findings was approximately 7.8 months to over 12 months after the FAC Acceptance date for seven out of 22 audit reports with findings. There were additional audit reports with findings listed on PDE’s audit tracking list where management decisions were not made timely. • Department of Environmental Protection (DEP): The time period for making a management decision on findings was approximately 11.6 months to over 12 months after the FAC Acceptance date for two out of two audit reports with findings. Our testing disclosed for the two late audit reports, DEP made management decisions timely. However, DEP did not notify the subrecipients of the management decisions within the required six month time period after the audit reports FAC Acceptance date. • Department of Human Services (DHS): The time period for making a management decision on findings was approximately 7.2 months after the FAC Acceptance date for one out of two audit reports with findings. Our testing disclosed for the one late audit report DHS made a management decision timely. However, DHS did not notify the subrecipient of the management decision within the required six month time period after the audit reports FAC Acceptance date. Criteria: 2 CFR §200.332, Requirements for pass-through entities, states in part: All pass-through entities must: (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward, and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: Finding 2024 ¬– 015: (continued) (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. (3) Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by §200.521 [Management decision]. (f) Verify that every subrecipient is audited as required by Subpart F [Audit Requirements] of this part when it is expected that the subrecipient’s Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in §200.501 [Audit requirements]. (g) Consider whether the results of the subrecipient’s audit, on-site review, or other monitoring indicate conditions that necessitate adjustments to the pass-through entity’s own records. (h) Consider taking enforcement action against noncompliant subrecipients as described in §200.339 [Remedies for noncompliance] of this part and in program regulations. In order to carry out these responsibilities properly, good internal control dictates that state pass-through agencies ensure subrecipient Single Audit SEFAs are representative of state payment records each year, and that the related federal programs have been properly subjected to Single Audit procedures. 2 CFR §200.512, Report submission, states in part: (a) General. (1) The audit must be completed and the data collection form described in paragraph (b) of this section and reporting package described in paragraph (c) of this section must be submitted within the earlier of 30 calendar days after receipt of the auditor’s report(s), or nine months after the end of the audit period. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day. 2 CFR §200.521, Management decision, states in part: (a) General. The management decision must clearly state whether or not the finding is sustained, the reasons for the decision, and the expected auditee action to repay disallowed costs, make financial adjustments, or take other action. (d) Time requirements. The Federal awarding agency or pass-through entity responsible for issuing a management decision must do so within six months of acceptance of the audit report by the FAC. The auditee must initiate and proceed with corrective action as rapidly as possible and corrective action should begin no later than upon receipt of the audit report. 2 CFR §200.505, Sanctions, states: In cases of continued inability or unwillingness to have an audit conducted in accordance with this part, Federal agencies and pass-through entities must take appropriate action as provided in §200.339 [Remedies for noncompliance]. 2 CFR §200.339, Remedies for noncompliance, states in part: If a non-Federal entity fails to comply with the U.S. Constitution, Federal statutes, regulations or the terms and conditions of a Federal award, the Federal awarding agency or pass-through entity may impose additional conditions, as described in §200.208 [Specific conditions]. If the Federal awarding agency or pass-through entity determines that noncompliance cannot be remedied by imposing additional conditions, the federal awarding agency or pass-through entity may take one or more of the following actions, as appropriate in the circumstances. Finding 2024 ¬– 015: (continued) (a) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency or pass-through entity. (b) Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost of the activity or action not in compliance. (c) Wholly or partly suspend or terminate the Federal award. (d) Initiate suspension or debarment proceedings as authorized under 2 CFR Part 180 and Federal awarding agency regulations (or in the case of a pass-through entity, recommend such a proceeding be initiated by a Federal awarding agency). (e) Withhold further Federal awards for the project or program. (f) Take other remedies that may be legally available. To ensure Commonwealth enforcement of federal regulations for subrecipient noncompliance with audit requirements, Commonwealth Management Directive 325.08, Amended – Remedies for Recipient Noncompliance with Audit Requirements, Section 5 related to policy, states in part: (a) Agencies must develop and implement remedial action that reflects the unique requirements of each program… (b) The remedial action should be implemented within six months from the date the first remedial action is initiated. At the end of the six-month period, the recipient should take the appropriate corrective action or the final stage of remedial action should be imposed on the recipient. Examples of remedial action include, but are not limited to: (1) Meeting or calling the recipient to explain the importance and benefits of the audit and audit resolution processes, emphasizing the value of the audit as an administrative tool and the Commonwealth’s reliance on an acceptable audit and prompt resolution as evidence of the recipient’s ability to properly administer the program. (2) Encouraging the entity to establish an audit committee or designate an individual as the single point of contact to: (a) Communicate regarding the audit. (b) Arrange for and oversee the audit. (c) Direct and monitor audit resolution. (3) Providing technical assistance to the recipient in devising and implementing an appropriate plan to remedy the noncompliance. (4) Withholding a portion of assistance payments until the noncompliance is resolved. (5) Withholding or disallowing overhead costs until the noncompliance is resolved. (6) Suspending the assistance agreement until the noncompliance is resolved. (7) Terminating the assistance agreement with the recipient and, if necessary, seeking alternative entities to administer the program. Finding 2024 ¬– 015: (continued) Management Directive 325.09, Amended – Processing Subrecipient Single Audits of Federal Pass-Through Funds, Section 7 related to procedures, states in part: c. Agencies. (2) Evaluate single audit report submissions received from BAFM to determine program purpose acceptability by verifying, at a minimum, that all agency-funded programs are properly included on the applicable financial schedules; that findings affecting the agency contain sufficient information to facilitate a management decision; and that the subrecipient has submitted an adequate corrective action plan. (5) Issue management decisions relative to audit findings and crosscutting findings assigned to the agency for resolution, as required by 2 CFR §200.521. If responsible for the resolution of crosscutting findings, notify the affected agency or agencies upon resolution of such findings. (6) Impose or coordinate the imposition of remedial action in accordance with 2 CFR Part 200.339 and Management Directive 325.08 Amended, Remedies for Recipient Noncompliance with Audit Requirements, when subrecipients fail to comply with the provisions of Subpart F. Management Directive 325.12, Amended – Standards for Enterprise Risk Management in Commonwealth Agencies, adopted the internal control framework outlined in the United States Government Accountability Office’s, Standards for Internal Control in the Federal Government (Green Book). The Green Book states in part: Management should establish and operate monitoring activities to monitor the internal control system and evaluate the results. Management should remediate identified internal control deficiencies on a timely basis. Cause: One reason provided by Commonwealth management for untimely audit resolution in the various agencies, including making management decisions, approving corrective action, and performing procedures to ensure the accuracy of subrecipient SEFAs, was either a change in staff or a lack of staff to follow up and process subrecipient audit reports more timely. Effect: Since required management decisions were not made within six months to ensure appropriate corrective action was taken on audits received from subrecipients, the Commonwealth did not comply with federal regulations, and subrecipients were not made aware of acceptance or rejection of corrective action plans in a timely manner. Further, noncompliance may recur in future periods if control deficiencies are not corrected on a timely basis, and there is an increased risk of unallowable charges being made to federal programs if corrective action and recovery of questioned costs is not timely. Regarding the SEFA reviews or alternate procedures which are not being performed timely, there is an increased risk that subrecipients could be misspending and/or inappropriately tracking and reporting federal funds over multiple year periods, and these discrepancies may not be properly monitored, detected, and corrected by agency personnel on a timely basis as required. Recommendation: We recommend that the above weaknesses that cause untimely subrecipient Single Audit resolution, including untimely management decisions on findings, and untimely review of the SEFA or alternate procedures be corrected to ensure compliance with federal requirements and Commonwealth Management Directives, and to better ensure timelier subrecipient compliance with program requirements. PDOA Response: PDOA agrees with the finding. PDA Response: PDA agrees with the finding. PDE Response: PDE agrees with the finding. DEP Response: DEP agrees with the finding. Finding 2024 ¬– 015: (continued) DHS Response: DHS agrees that there was an exception where human error caused a management decision on one single audit report to be issued untimely; in this instance, the decision itself was made timely but was not communicated in a timely manner. DHS disagrees that an isolated incident due to human error signifies a weakness in internal controls. This was not a systemic issue and therefore should not have been considered a significant deficiency in internal controls, and DHS should not have been included in this finding. Auditors’ Conclusion: The agency responses from PDOA, PDA, PDE, and DEP indicate agreement with the finding. DHS agrees that an error occurred resulting in untimely submission of one management decision, DHS disagrees that the error represents a significant deficiency. We acknowledge the error occurred due to an oversight and is not a systemic error, however, the error resulted in noncompliance with one of two audit reports that required timely management decisions. We will evaluate corrective action in the subsequent audit. The finding remains as stated. Questioned Costs: The amount of questioned costs cannot be determined.
Various Agencies Finding 2024 ¬– 015: ALN 10.565, 10.568, 10.569 – Food Distribution Cluster ALN 15.252 – Abandoned Mine Land Reclamation (AMLR) ALN 21.027 – COVID 19 – Coronavirus State and Local Fiscal Recovery Funds ALN 84.425C – COVID 19 – Education Stabilization Fund – GEER Fund ALN 84.425D – COVID 19 – Education Stabilization Fund – ESSER Fund ALN 84.425R – COVID 19 – Education Stabilization Fund – CRRSA EANS Program ALN 84.425U – COVID 19 – Education Stabilization Fund – ARP ESSER ALN 84.425V – COVID 19 – Education Stabilization Fund – ARP EANS Program ALN 84.425W – COVID 19 – Education Stabilization Fund – ARP ESSER HCY ALN 93.044, 93.045, 93.053 – Aging Cluster (including COVID-19) ALN 93.558 – Temporary Assistance for Needy Families ALN 93.667 – Social Services Block Grant A Material Weakness and Material Noncompliance Exist in the Commonwealth’s Subrecipient Audit Resolution Process (A Similar Condition Was Noted in Prior Year Finding 2023-024) Federal Grant Number(s) and Year(s): 228PA100I1003 (6/13/2022 – 6/30/2025), 231PA445Q2204 (10/01/2022 – 9/30/2023), 231PA825Y8005 (10/01/2022 – 9/30/2023), 231PA825Y8105 (10/01/2022 – 9/30/2023), 241PA825Y8005 (10/01/2023 – 9/30/2024), 241PA825Y8105 (10/01/2023 – 9/30/2024), S18AF20004 (11/01/2017 – 10/31/2025), S19AF20004 (12/01/2018 – 11/30/2025), S21AF10015 (1/01/2021 – 12/31/2023), S22AF00017 (1/01/2022 – 12/31/2024), S23AF00002 (11/01/2022 – 10/31/2027), TN75GJE1S7G3 (3/03/2021 – 12/31/2024), S425W210039 (4/23/2021 – 9/30/2024), S425U210028 (3/24/2021– 9/30/2024), S425D210028 (1/05/2021 – 9/30/2024), S425C200013 (5/18/2020 – 4/01/2024), S425R210037 (3/13/2020 – 9/30/2024), S425V210037 (11/16/2021 – 9/30/2024), S425C210013 (3/13/2020 – 9/30/2024), 2101PACMC6 (4/01/2021 – 9/30/2024), 2101PAHDC6 (4/01/2021 – 9/30/2024), 2101PAPHC6 (4/01/2021 – 9/30/2024), 2101PASSC6 (4/01/2021 – 9/30/2024), 2201PAOASS (10/01/2021 – 9/30/2023), 2201PASTPH (1/01/2022 – 9/30/2024), 2301PAOACM (10/01/2022 – 9/30/2024), 2301PAOAHD (10/01/2022 – 9/30/2024), 2301PAOANS (10/01/2022 – 9/30/2024), 2301PAOASS (10/01/2022 – 9/30/2024), 2401PAOACM (10/01/2023 – 9/30/2025), 2401PAOAHD (10/01/2023 – 9/30/2025), 2401PAOANS (10/01/2023 – 9/30/2025), 2401PAOASS (10/01/2023 – 9/30/2025), 2101PATANF (10/01/2020 – 9/30/2021), 2201PATANF (10/01/2021 – 9/30/2022), 2301PATANF (10/01/2022 – 9/30/2023), 2401PATANF (10/01/2023 – 9/30/2024), 2301PASOSR (10/01/2022 – 9/30/2024), 2401PASOSR (10/01/2023 – 9/30/2025), 2301PATANF (10/01/2022 – 9/30/2024), 2401PATANF (10/01/2023 – 9/30/2025) Type of Finding: Significant Deficiency in Internal Control over Compliance, Other Matters for Abandoned Mine Land Reclamation (AMLR), Temporary Assistance for Needy Families, Coronavirus State and Local Fiscal Recovery Funds, and Social Services Block Grant Material Weakness in Internal Control over Compliance, Material Noncompliance for Food Distribution Cluster, Education Stabilization Fund, and Aging Cluster Compliance Requirement: Subrecipient Monitoring Condition: Under the Commonwealth of Pennsylvania's (Commonwealth) implementation of the Single Audit Act, review and resolution of subrecipient Single Audit reports is split into two stages. The Office of the Budget’s Bureau of Accounting and Financial Management (OB-BAFM) ensures the reports meet technical standards through a centralized desk review process. The various funding agencies in the Commonwealth are responsible for making a management decision on each finding within six months of the Federal Audit Clearinghouse’s (FAC) Acceptance date for audits subject to Uniform Guidance and to ensure appropriate corrective action is taken by the subrecipient (except for Uniform Guidance Finding 2024 ¬– 015: (continued) audits under U.S. Department of Labor programs which are permitted 12 months for management decisions in accordance with 2 CFR Section 2900.21). Each Commonwealth agency is also responsible for reviewing financial information in each audit report to determine whether the audit included all pass-through funding provided by the agency to ensure pass-through funds were subject to audit. Most agencies meet this requirement by performing Schedule of Expenditures of Federal Awards (SEFA) reconciliations. The agency is also required to adjust Commonwealth records, if necessary. Our fiscal year ended June 30, 2024 audit of the Commonwealth’s process for review and resolution of subrecipient Single Audits included an evaluation of the Commonwealth’s fiscal year ended June 30, 2023 subrecipient audit universe for audits due for submission to the FAC during the fiscal year ended June 30, 2024. We also evaluated the Commonwealth’s review of 45 subrecipient audit reports with findings in major programs/clusters which were identified on the Commonwealth agencies’ tracking lists during the fiscal year ended June 30, 2024 and required management decisions by Commonwealth agencies. Our testing disclosed the following audit exceptions regarding the Commonwealth agencies’ review of subrecipient audit reports: • Pennsylvania Department of Aging (PDOA): Our testing disclosed that PDOA did not have procedures in place to track audit reports including having an audit tracking list. The time period for making a management decision on findings was approximately 17.6 months to over 18 months after the FAC Acceptance date for two out of two audit reports with findings. There was also a delay in PDOA’s procedures to ensure the subrecipient SEFAs were accurate so that major programs were properly determined and subjected to audit. • Department of Agriculture (PDA): Our testing disclosed that PDA did not have procedures in place to track audit reports including having an audit tracking list. The time period for making a management decision on findings was approximately 8.7 months to over 16 months after the FAC Acceptance date for four out of four audit reports with findings. • Department of Education (PDE): The time period for making a management decision on findings was approximately 7.8 months to over 12 months after the FAC Acceptance date for seven out of 22 audit reports with findings. There were additional audit reports with findings listed on PDE’s audit tracking list where management decisions were not made timely. • Department of Environmental Protection (DEP): The time period for making a management decision on findings was approximately 11.6 months to over 12 months after the FAC Acceptance date for two out of two audit reports with findings. Our testing disclosed for the two late audit reports, DEP made management decisions timely. However, DEP did not notify the subrecipients of the management decisions within the required six month time period after the audit reports FAC Acceptance date. • Department of Human Services (DHS): The time period for making a management decision on findings was approximately 7.2 months after the FAC Acceptance date for one out of two audit reports with findings. Our testing disclosed for the one late audit report DHS made a management decision timely. However, DHS did not notify the subrecipient of the management decision within the required six month time period after the audit reports FAC Acceptance date. Criteria: 2 CFR §200.332, Requirements for pass-through entities, states in part: All pass-through entities must: (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward, and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: Finding 2024 ¬– 015: (continued) (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. (3) Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by §200.521 [Management decision]. (f) Verify that every subrecipient is audited as required by Subpart F [Audit Requirements] of this part when it is expected that the subrecipient’s Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in §200.501 [Audit requirements]. (g) Consider whether the results of the subrecipient’s audit, on-site review, or other monitoring indicate conditions that necessitate adjustments to the pass-through entity’s own records. (h) Consider taking enforcement action against noncompliant subrecipients as described in §200.339 [Remedies for noncompliance] of this part and in program regulations. In order to carry out these responsibilities properly, good internal control dictates that state pass-through agencies ensure subrecipient Single Audit SEFAs are representative of state payment records each year, and that the related federal programs have been properly subjected to Single Audit procedures. 2 CFR §200.512, Report submission, states in part: (a) General. (1) The audit must be completed and the data collection form described in paragraph (b) of this section and reporting package described in paragraph (c) of this section must be submitted within the earlier of 30 calendar days after receipt of the auditor’s report(s), or nine months after the end of the audit period. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day. 2 CFR §200.521, Management decision, states in part: (a) General. The management decision must clearly state whether or not the finding is sustained, the reasons for the decision, and the expected auditee action to repay disallowed costs, make financial adjustments, or take other action. (d) Time requirements. The Federal awarding agency or pass-through entity responsible for issuing a management decision must do so within six months of acceptance of the audit report by the FAC. The auditee must initiate and proceed with corrective action as rapidly as possible and corrective action should begin no later than upon receipt of the audit report. 2 CFR §200.505, Sanctions, states: In cases of continued inability or unwillingness to have an audit conducted in accordance with this part, Federal agencies and pass-through entities must take appropriate action as provided in §200.339 [Remedies for noncompliance]. 2 CFR §200.339, Remedies for noncompliance, states in part: If a non-Federal entity fails to comply with the U.S. Constitution, Federal statutes, regulations or the terms and conditions of a Federal award, the Federal awarding agency or pass-through entity may impose additional conditions, as described in §200.208 [Specific conditions]. If the Federal awarding agency or pass-through entity determines that noncompliance cannot be remedied by imposing additional conditions, the federal awarding agency or pass-through entity may take one or more of the following actions, as appropriate in the circumstances. Finding 2024 ¬– 015: (continued) (a) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency or pass-through entity. (b) Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost of the activity or action not in compliance. (c) Wholly or partly suspend or terminate the Federal award. (d) Initiate suspension or debarment proceedings as authorized under 2 CFR Part 180 and Federal awarding agency regulations (or in the case of a pass-through entity, recommend such a proceeding be initiated by a Federal awarding agency). (e) Withhold further Federal awards for the project or program. (f) Take other remedies that may be legally available. To ensure Commonwealth enforcement of federal regulations for subrecipient noncompliance with audit requirements, Commonwealth Management Directive 325.08, Amended – Remedies for Recipient Noncompliance with Audit Requirements, Section 5 related to policy, states in part: (a) Agencies must develop and implement remedial action that reflects the unique requirements of each program… (b) The remedial action should be implemented within six months from the date the first remedial action is initiated. At the end of the six-month period, the recipient should take the appropriate corrective action or the final stage of remedial action should be imposed on the recipient. Examples of remedial action include, but are not limited to: (1) Meeting or calling the recipient to explain the importance and benefits of the audit and audit resolution processes, emphasizing the value of the audit as an administrative tool and the Commonwealth’s reliance on an acceptable audit and prompt resolution as evidence of the recipient’s ability to properly administer the program. (2) Encouraging the entity to establish an audit committee or designate an individual as the single point of contact to: (a) Communicate regarding the audit. (b) Arrange for and oversee the audit. (c) Direct and monitor audit resolution. (3) Providing technical assistance to the recipient in devising and implementing an appropriate plan to remedy the noncompliance. (4) Withholding a portion of assistance payments until the noncompliance is resolved. (5) Withholding or disallowing overhead costs until the noncompliance is resolved. (6) Suspending the assistance agreement until the noncompliance is resolved. (7) Terminating the assistance agreement with the recipient and, if necessary, seeking alternative entities to administer the program. Finding 2024 ¬– 015: (continued) Management Directive 325.09, Amended – Processing Subrecipient Single Audits of Federal Pass-Through Funds, Section 7 related to procedures, states in part: c. Agencies. (2) Evaluate single audit report submissions received from BAFM to determine program purpose acceptability by verifying, at a minimum, that all agency-funded programs are properly included on the applicable financial schedules; that findings affecting the agency contain sufficient information to facilitate a management decision; and that the subrecipient has submitted an adequate corrective action plan. (5) Issue management decisions relative to audit findings and crosscutting findings assigned to the agency for resolution, as required by 2 CFR §200.521. If responsible for the resolution of crosscutting findings, notify the affected agency or agencies upon resolution of such findings. (6) Impose or coordinate the imposition of remedial action in accordance with 2 CFR Part 200.339 and Management Directive 325.08 Amended, Remedies for Recipient Noncompliance with Audit Requirements, when subrecipients fail to comply with the provisions of Subpart F. Management Directive 325.12, Amended – Standards for Enterprise Risk Management in Commonwealth Agencies, adopted the internal control framework outlined in the United States Government Accountability Office’s, Standards for Internal Control in the Federal Government (Green Book). The Green Book states in part: Management should establish and operate monitoring activities to monitor the internal control system and evaluate the results. Management should remediate identified internal control deficiencies on a timely basis. Cause: One reason provided by Commonwealth management for untimely audit resolution in the various agencies, including making management decisions, approving corrective action, and performing procedures to ensure the accuracy of subrecipient SEFAs, was either a change in staff or a lack of staff to follow up and process subrecipient audit reports more timely. Effect: Since required management decisions were not made within six months to ensure appropriate corrective action was taken on audits received from subrecipients, the Commonwealth did not comply with federal regulations, and subrecipients were not made aware of acceptance or rejection of corrective action plans in a timely manner. Further, noncompliance may recur in future periods if control deficiencies are not corrected on a timely basis, and there is an increased risk of unallowable charges being made to federal programs if corrective action and recovery of questioned costs is not timely. Regarding the SEFA reviews or alternate procedures which are not being performed timely, there is an increased risk that subrecipients could be misspending and/or inappropriately tracking and reporting federal funds over multiple year periods, and these discrepancies may not be properly monitored, detected, and corrected by agency personnel on a timely basis as required. Recommendation: We recommend that the above weaknesses that cause untimely subrecipient Single Audit resolution, including untimely management decisions on findings, and untimely review of the SEFA or alternate procedures be corrected to ensure compliance with federal requirements and Commonwealth Management Directives, and to better ensure timelier subrecipient compliance with program requirements. PDOA Response: PDOA agrees with the finding. PDA Response: PDA agrees with the finding. PDE Response: PDE agrees with the finding. DEP Response: DEP agrees with the finding. Finding 2024 ¬– 015: (continued) DHS Response: DHS agrees that there was an exception where human error caused a management decision on one single audit report to be issued untimely; in this instance, the decision itself was made timely but was not communicated in a timely manner. DHS disagrees that an isolated incident due to human error signifies a weakness in internal controls. This was not a systemic issue and therefore should not have been considered a significant deficiency in internal controls, and DHS should not have been included in this finding. Auditors’ Conclusion: The agency responses from PDOA, PDA, PDE, and DEP indicate agreement with the finding. DHS agrees that an error occurred resulting in untimely submission of one management decision, DHS disagrees that the error represents a significant deficiency. We acknowledge the error occurred due to an oversight and is not a systemic error, however, the error resulted in noncompliance with one of two audit reports that required timely management decisions. We will evaluate corrective action in the subsequent audit. The finding remains as stated. Questioned Costs: The amount of questioned costs cannot be determined.
Various Agencies Finding 2024 ¬– 015: ALN 10.565, 10.568, 10.569 – Food Distribution Cluster ALN 15.252 – Abandoned Mine Land Reclamation (AMLR) ALN 21.027 – COVID 19 – Coronavirus State and Local Fiscal Recovery Funds ALN 84.425C – COVID 19 – Education Stabilization Fund – GEER Fund ALN 84.425D – COVID 19 – Education Stabilization Fund – ESSER Fund ALN 84.425R – COVID 19 – Education Stabilization Fund – CRRSA EANS Program ALN 84.425U – COVID 19 – Education Stabilization Fund – ARP ESSER ALN 84.425V – COVID 19 – Education Stabilization Fund – ARP EANS Program ALN 84.425W – COVID 19 – Education Stabilization Fund – ARP ESSER HCY ALN 93.044, 93.045, 93.053 – Aging Cluster (including COVID-19) ALN 93.558 – Temporary Assistance for Needy Families ALN 93.667 – Social Services Block Grant A Material Weakness and Material Noncompliance Exist in the Commonwealth’s Subrecipient Audit Resolution Process (A Similar Condition Was Noted in Prior Year Finding 2023-024) Federal Grant Number(s) and Year(s): 228PA100I1003 (6/13/2022 – 6/30/2025), 231PA445Q2204 (10/01/2022 – 9/30/2023), 231PA825Y8005 (10/01/2022 – 9/30/2023), 231PA825Y8105 (10/01/2022 – 9/30/2023), 241PA825Y8005 (10/01/2023 – 9/30/2024), 241PA825Y8105 (10/01/2023 – 9/30/2024), S18AF20004 (11/01/2017 – 10/31/2025), S19AF20004 (12/01/2018 – 11/30/2025), S21AF10015 (1/01/2021 – 12/31/2023), S22AF00017 (1/01/2022 – 12/31/2024), S23AF00002 (11/01/2022 – 10/31/2027), TN75GJE1S7G3 (3/03/2021 – 12/31/2024), S425W210039 (4/23/2021 – 9/30/2024), S425U210028 (3/24/2021– 9/30/2024), S425D210028 (1/05/2021 – 9/30/2024), S425C200013 (5/18/2020 – 4/01/2024), S425R210037 (3/13/2020 – 9/30/2024), S425V210037 (11/16/2021 – 9/30/2024), S425C210013 (3/13/2020 – 9/30/2024), 2101PACMC6 (4/01/2021 – 9/30/2024), 2101PAHDC6 (4/01/2021 – 9/30/2024), 2101PAPHC6 (4/01/2021 – 9/30/2024), 2101PASSC6 (4/01/2021 – 9/30/2024), 2201PAOASS (10/01/2021 – 9/30/2023), 2201PASTPH (1/01/2022 – 9/30/2024), 2301PAOACM (10/01/2022 – 9/30/2024), 2301PAOAHD (10/01/2022 – 9/30/2024), 2301PAOANS (10/01/2022 – 9/30/2024), 2301PAOASS (10/01/2022 – 9/30/2024), 2401PAOACM (10/01/2023 – 9/30/2025), 2401PAOAHD (10/01/2023 – 9/30/2025), 2401PAOANS (10/01/2023 – 9/30/2025), 2401PAOASS (10/01/2023 – 9/30/2025), 2101PATANF (10/01/2020 – 9/30/2021), 2201PATANF (10/01/2021 – 9/30/2022), 2301PATANF (10/01/2022 – 9/30/2023), 2401PATANF (10/01/2023 – 9/30/2024), 2301PASOSR (10/01/2022 – 9/30/2024), 2401PASOSR (10/01/2023 – 9/30/2025), 2301PATANF (10/01/2022 – 9/30/2024), 2401PATANF (10/01/2023 – 9/30/2025) Type of Finding: Significant Deficiency in Internal Control over Compliance, Other Matters for Abandoned Mine Land Reclamation (AMLR), Temporary Assistance for Needy Families, Coronavirus State and Local Fiscal Recovery Funds, and Social Services Block Grant Material Weakness in Internal Control over Compliance, Material Noncompliance for Food Distribution Cluster, Education Stabilization Fund, and Aging Cluster Compliance Requirement: Subrecipient Monitoring Condition: Under the Commonwealth of Pennsylvania's (Commonwealth) implementation of the Single Audit Act, review and resolution of subrecipient Single Audit reports is split into two stages. The Office of the Budget’s Bureau of Accounting and Financial Management (OB-BAFM) ensures the reports meet technical standards through a centralized desk review process. The various funding agencies in the Commonwealth are responsible for making a management decision on each finding within six months of the Federal Audit Clearinghouse’s (FAC) Acceptance date for audits subject to Uniform Guidance and to ensure appropriate corrective action is taken by the subrecipient (except for Uniform Guidance Finding 2024 ¬– 015: (continued) audits under U.S. Department of Labor programs which are permitted 12 months for management decisions in accordance with 2 CFR Section 2900.21). Each Commonwealth agency is also responsible for reviewing financial information in each audit report to determine whether the audit included all pass-through funding provided by the agency to ensure pass-through funds were subject to audit. Most agencies meet this requirement by performing Schedule of Expenditures of Federal Awards (SEFA) reconciliations. The agency is also required to adjust Commonwealth records, if necessary. Our fiscal year ended June 30, 2024 audit of the Commonwealth’s process for review and resolution of subrecipient Single Audits included an evaluation of the Commonwealth’s fiscal year ended June 30, 2023 subrecipient audit universe for audits due for submission to the FAC during the fiscal year ended June 30, 2024. We also evaluated the Commonwealth’s review of 45 subrecipient audit reports with findings in major programs/clusters which were identified on the Commonwealth agencies’ tracking lists during the fiscal year ended June 30, 2024 and required management decisions by Commonwealth agencies. Our testing disclosed the following audit exceptions regarding the Commonwealth agencies’ review of subrecipient audit reports: • Pennsylvania Department of Aging (PDOA): Our testing disclosed that PDOA did not have procedures in place to track audit reports including having an audit tracking list. The time period for making a management decision on findings was approximately 17.6 months to over 18 months after the FAC Acceptance date for two out of two audit reports with findings. There was also a delay in PDOA’s procedures to ensure the subrecipient SEFAs were accurate so that major programs were properly determined and subjected to audit. • Department of Agriculture (PDA): Our testing disclosed that PDA did not have procedures in place to track audit reports including having an audit tracking list. The time period for making a management decision on findings was approximately 8.7 months to over 16 months after the FAC Acceptance date for four out of four audit reports with findings. • Department of Education (PDE): The time period for making a management decision on findings was approximately 7.8 months to over 12 months after the FAC Acceptance date for seven out of 22 audit reports with findings. There were additional audit reports with findings listed on PDE’s audit tracking list where management decisions were not made timely. • Department of Environmental Protection (DEP): The time period for making a management decision on findings was approximately 11.6 months to over 12 months after the FAC Acceptance date for two out of two audit reports with findings. Our testing disclosed for the two late audit reports, DEP made management decisions timely. However, DEP did not notify the subrecipients of the management decisions within the required six month time period after the audit reports FAC Acceptance date. • Department of Human Services (DHS): The time period for making a management decision on findings was approximately 7.2 months after the FAC Acceptance date for one out of two audit reports with findings. Our testing disclosed for the one late audit report DHS made a management decision timely. However, DHS did not notify the subrecipient of the management decision within the required six month time period after the audit reports FAC Acceptance date. Criteria: 2 CFR §200.332, Requirements for pass-through entities, states in part: All pass-through entities must: (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward, and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: Finding 2024 ¬– 015: (continued) (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. (3) Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by §200.521 [Management decision]. (f) Verify that every subrecipient is audited as required by Subpart F [Audit Requirements] of this part when it is expected that the subrecipient’s Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in §200.501 [Audit requirements]. (g) Consider whether the results of the subrecipient’s audit, on-site review, or other monitoring indicate conditions that necessitate adjustments to the pass-through entity’s own records. (h) Consider taking enforcement action against noncompliant subrecipients as described in §200.339 [Remedies for noncompliance] of this part and in program regulations. In order to carry out these responsibilities properly, good internal control dictates that state pass-through agencies ensure subrecipient Single Audit SEFAs are representative of state payment records each year, and that the related federal programs have been properly subjected to Single Audit procedures. 2 CFR §200.512, Report submission, states in part: (a) General. (1) The audit must be completed and the data collection form described in paragraph (b) of this section and reporting package described in paragraph (c) of this section must be submitted within the earlier of 30 calendar days after receipt of the auditor’s report(s), or nine months after the end of the audit period. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day. 2 CFR §200.521, Management decision, states in part: (a) General. The management decision must clearly state whether or not the finding is sustained, the reasons for the decision, and the expected auditee action to repay disallowed costs, make financial adjustments, or take other action. (d) Time requirements. The Federal awarding agency or pass-through entity responsible for issuing a management decision must do so within six months of acceptance of the audit report by the FAC. The auditee must initiate and proceed with corrective action as rapidly as possible and corrective action should begin no later than upon receipt of the audit report. 2 CFR §200.505, Sanctions, states: In cases of continued inability or unwillingness to have an audit conducted in accordance with this part, Federal agencies and pass-through entities must take appropriate action as provided in §200.339 [Remedies for noncompliance]. 2 CFR §200.339, Remedies for noncompliance, states in part: If a non-Federal entity fails to comply with the U.S. Constitution, Federal statutes, regulations or the terms and conditions of a Federal award, the Federal awarding agency or pass-through entity may impose additional conditions, as described in §200.208 [Specific conditions]. If the Federal awarding agency or pass-through entity determines that noncompliance cannot be remedied by imposing additional conditions, the federal awarding agency or pass-through entity may take one or more of the following actions, as appropriate in the circumstances. Finding 2024 ¬– 015: (continued) (a) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency or pass-through entity. (b) Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost of the activity or action not in compliance. (c) Wholly or partly suspend or terminate the Federal award. (d) Initiate suspension or debarment proceedings as authorized under 2 CFR Part 180 and Federal awarding agency regulations (or in the case of a pass-through entity, recommend such a proceeding be initiated by a Federal awarding agency). (e) Withhold further Federal awards for the project or program. (f) Take other remedies that may be legally available. To ensure Commonwealth enforcement of federal regulations for subrecipient noncompliance with audit requirements, Commonwealth Management Directive 325.08, Amended – Remedies for Recipient Noncompliance with Audit Requirements, Section 5 related to policy, states in part: (a) Agencies must develop and implement remedial action that reflects the unique requirements of each program… (b) The remedial action should be implemented within six months from the date the first remedial action is initiated. At the end of the six-month period, the recipient should take the appropriate corrective action or the final stage of remedial action should be imposed on the recipient. Examples of remedial action include, but are not limited to: (1) Meeting or calling the recipient to explain the importance and benefits of the audit and audit resolution processes, emphasizing the value of the audit as an administrative tool and the Commonwealth’s reliance on an acceptable audit and prompt resolution as evidence of the recipient’s ability to properly administer the program. (2) Encouraging the entity to establish an audit committee or designate an individual as the single point of contact to: (a) Communicate regarding the audit. (b) Arrange for and oversee the audit. (c) Direct and monitor audit resolution. (3) Providing technical assistance to the recipient in devising and implementing an appropriate plan to remedy the noncompliance. (4) Withholding a portion of assistance payments until the noncompliance is resolved. (5) Withholding or disallowing overhead costs until the noncompliance is resolved. (6) Suspending the assistance agreement until the noncompliance is resolved. (7) Terminating the assistance agreement with the recipient and, if necessary, seeking alternative entities to administer the program. Finding 2024 ¬– 015: (continued) Management Directive 325.09, Amended – Processing Subrecipient Single Audits of Federal Pass-Through Funds, Section 7 related to procedures, states in part: c. Agencies. (2) Evaluate single audit report submissions received from BAFM to determine program purpose acceptability by verifying, at a minimum, that all agency-funded programs are properly included on the applicable financial schedules; that findings affecting the agency contain sufficient information to facilitate a management decision; and that the subrecipient has submitted an adequate corrective action plan. (5) Issue management decisions relative to audit findings and crosscutting findings assigned to the agency for resolution, as required by 2 CFR §200.521. If responsible for the resolution of crosscutting findings, notify the affected agency or agencies upon resolution of such findings. (6) Impose or coordinate the imposition of remedial action in accordance with 2 CFR Part 200.339 and Management Directive 325.08 Amended, Remedies for Recipient Noncompliance with Audit Requirements, when subrecipients fail to comply with the provisions of Subpart F. Management Directive 325.12, Amended – Standards for Enterprise Risk Management in Commonwealth Agencies, adopted the internal control framework outlined in the United States Government Accountability Office’s, Standards for Internal Control in the Federal Government (Green Book). The Green Book states in part: Management should establish and operate monitoring activities to monitor the internal control system and evaluate the results. Management should remediate identified internal control deficiencies on a timely basis. Cause: One reason provided by Commonwealth management for untimely audit resolution in the various agencies, including making management decisions, approving corrective action, and performing procedures to ensure the accuracy of subrecipient SEFAs, was either a change in staff or a lack of staff to follow up and process subrecipient audit reports more timely. Effect: Since required management decisions were not made within six months to ensure appropriate corrective action was taken on audits received from subrecipients, the Commonwealth did not comply with federal regulations, and subrecipients were not made aware of acceptance or rejection of corrective action plans in a timely manner. Further, noncompliance may recur in future periods if control deficiencies are not corrected on a timely basis, and there is an increased risk of unallowable charges being made to federal programs if corrective action and recovery of questioned costs is not timely. Regarding the SEFA reviews or alternate procedures which are not being performed timely, there is an increased risk that subrecipients could be misspending and/or inappropriately tracking and reporting federal funds over multiple year periods, and these discrepancies may not be properly monitored, detected, and corrected by agency personnel on a timely basis as required. Recommendation: We recommend that the above weaknesses that cause untimely subrecipient Single Audit resolution, including untimely management decisions on findings, and untimely review of the SEFA or alternate procedures be corrected to ensure compliance with federal requirements and Commonwealth Management Directives, and to better ensure timelier subrecipient compliance with program requirements. PDOA Response: PDOA agrees with the finding. PDA Response: PDA agrees with the finding. PDE Response: PDE agrees with the finding. DEP Response: DEP agrees with the finding. Finding 2024 ¬– 015: (continued) DHS Response: DHS agrees that there was an exception where human error caused a management decision on one single audit report to be issued untimely; in this instance, the decision itself was made timely but was not communicated in a timely manner. DHS disagrees that an isolated incident due to human error signifies a weakness in internal controls. This was not a systemic issue and therefore should not have been considered a significant deficiency in internal controls, and DHS should not have been included in this finding. Auditors’ Conclusion: The agency responses from PDOA, PDA, PDE, and DEP indicate agreement with the finding. DHS agrees that an error occurred resulting in untimely submission of one management decision, DHS disagrees that the error represents a significant deficiency. We acknowledge the error occurred due to an oversight and is not a systemic error, however, the error resulted in noncompliance with one of two audit reports that required timely management decisions. We will evaluate corrective action in the subsequent audit. The finding remains as stated. Questioned Costs: The amount of questioned costs cannot be determined.
Various Agencies Finding 2024 ¬– 015: ALN 10.565, 10.568, 10.569 – Food Distribution Cluster ALN 15.252 – Abandoned Mine Land Reclamation (AMLR) ALN 21.027 – COVID 19 – Coronavirus State and Local Fiscal Recovery Funds ALN 84.425C – COVID 19 – Education Stabilization Fund – GEER Fund ALN 84.425D – COVID 19 – Education Stabilization Fund – ESSER Fund ALN 84.425R – COVID 19 – Education Stabilization Fund – CRRSA EANS Program ALN 84.425U – COVID 19 – Education Stabilization Fund – ARP ESSER ALN 84.425V – COVID 19 – Education Stabilization Fund – ARP EANS Program ALN 84.425W – COVID 19 – Education Stabilization Fund – ARP ESSER HCY ALN 93.044, 93.045, 93.053 – Aging Cluster (including COVID-19) ALN 93.558 – Temporary Assistance for Needy Families ALN 93.667 – Social Services Block Grant A Material Weakness and Material Noncompliance Exist in the Commonwealth’s Subrecipient Audit Resolution Process (A Similar Condition Was Noted in Prior Year Finding 2023-024) Federal Grant Number(s) and Year(s): 228PA100I1003 (6/13/2022 – 6/30/2025), 231PA445Q2204 (10/01/2022 – 9/30/2023), 231PA825Y8005 (10/01/2022 – 9/30/2023), 231PA825Y8105 (10/01/2022 – 9/30/2023), 241PA825Y8005 (10/01/2023 – 9/30/2024), 241PA825Y8105 (10/01/2023 – 9/30/2024), S18AF20004 (11/01/2017 – 10/31/2025), S19AF20004 (12/01/2018 – 11/30/2025), S21AF10015 (1/01/2021 – 12/31/2023), S22AF00017 (1/01/2022 – 12/31/2024), S23AF00002 (11/01/2022 – 10/31/2027), TN75GJE1S7G3 (3/03/2021 – 12/31/2024), S425W210039 (4/23/2021 – 9/30/2024), S425U210028 (3/24/2021– 9/30/2024), S425D210028 (1/05/2021 – 9/30/2024), S425C200013 (5/18/2020 – 4/01/2024), S425R210037 (3/13/2020 – 9/30/2024), S425V210037 (11/16/2021 – 9/30/2024), S425C210013 (3/13/2020 – 9/30/2024), 2101PACMC6 (4/01/2021 – 9/30/2024), 2101PAHDC6 (4/01/2021 – 9/30/2024), 2101PAPHC6 (4/01/2021 – 9/30/2024), 2101PASSC6 (4/01/2021 – 9/30/2024), 2201PAOASS (10/01/2021 – 9/30/2023), 2201PASTPH (1/01/2022 – 9/30/2024), 2301PAOACM (10/01/2022 – 9/30/2024), 2301PAOAHD (10/01/2022 – 9/30/2024), 2301PAOANS (10/01/2022 – 9/30/2024), 2301PAOASS (10/01/2022 – 9/30/2024), 2401PAOACM (10/01/2023 – 9/30/2025), 2401PAOAHD (10/01/2023 – 9/30/2025), 2401PAOANS (10/01/2023 – 9/30/2025), 2401PAOASS (10/01/2023 – 9/30/2025), 2101PATANF (10/01/2020 – 9/30/2021), 2201PATANF (10/01/2021 – 9/30/2022), 2301PATANF (10/01/2022 – 9/30/2023), 2401PATANF (10/01/2023 – 9/30/2024), 2301PASOSR (10/01/2022 – 9/30/2024), 2401PASOSR (10/01/2023 – 9/30/2025), 2301PATANF (10/01/2022 – 9/30/2024), 2401PATANF (10/01/2023 – 9/30/2025) Type of Finding: Significant Deficiency in Internal Control over Compliance, Other Matters for Abandoned Mine Land Reclamation (AMLR), Temporary Assistance for Needy Families, Coronavirus State and Local Fiscal Recovery Funds, and Social Services Block Grant Material Weakness in Internal Control over Compliance, Material Noncompliance for Food Distribution Cluster, Education Stabilization Fund, and Aging Cluster Compliance Requirement: Subrecipient Monitoring Condition: Under the Commonwealth of Pennsylvania's (Commonwealth) implementation of the Single Audit Act, review and resolution of subrecipient Single Audit reports is split into two stages. The Office of the Budget’s Bureau of Accounting and Financial Management (OB-BAFM) ensures the reports meet technical standards through a centralized desk review process. The various funding agencies in the Commonwealth are responsible for making a management decision on each finding within six months of the Federal Audit Clearinghouse’s (FAC) Acceptance date for audits subject to Uniform Guidance and to ensure appropriate corrective action is taken by the subrecipient (except for Uniform Guidance Finding 2024 ¬– 015: (continued) audits under U.S. Department of Labor programs which are permitted 12 months for management decisions in accordance with 2 CFR Section 2900.21). Each Commonwealth agency is also responsible for reviewing financial information in each audit report to determine whether the audit included all pass-through funding provided by the agency to ensure pass-through funds were subject to audit. Most agencies meet this requirement by performing Schedule of Expenditures of Federal Awards (SEFA) reconciliations. The agency is also required to adjust Commonwealth records, if necessary. Our fiscal year ended June 30, 2024 audit of the Commonwealth’s process for review and resolution of subrecipient Single Audits included an evaluation of the Commonwealth’s fiscal year ended June 30, 2023 subrecipient audit universe for audits due for submission to the FAC during the fiscal year ended June 30, 2024. We also evaluated the Commonwealth’s review of 45 subrecipient audit reports with findings in major programs/clusters which were identified on the Commonwealth agencies’ tracking lists during the fiscal year ended June 30, 2024 and required management decisions by Commonwealth agencies. Our testing disclosed the following audit exceptions regarding the Commonwealth agencies’ review of subrecipient audit reports: • Pennsylvania Department of Aging (PDOA): Our testing disclosed that PDOA did not have procedures in place to track audit reports including having an audit tracking list. The time period for making a management decision on findings was approximately 17.6 months to over 18 months after the FAC Acceptance date for two out of two audit reports with findings. There was also a delay in PDOA’s procedures to ensure the subrecipient SEFAs were accurate so that major programs were properly determined and subjected to audit. • Department of Agriculture (PDA): Our testing disclosed that PDA did not have procedures in place to track audit reports including having an audit tracking list. The time period for making a management decision on findings was approximately 8.7 months to over 16 months after the FAC Acceptance date for four out of four audit reports with findings. • Department of Education (PDE): The time period for making a management decision on findings was approximately 7.8 months to over 12 months after the FAC Acceptance date for seven out of 22 audit reports with findings. There were additional audit reports with findings listed on PDE’s audit tracking list where management decisions were not made timely. • Department of Environmental Protection (DEP): The time period for making a management decision on findings was approximately 11.6 months to over 12 months after the FAC Acceptance date for two out of two audit reports with findings. Our testing disclosed for the two late audit reports, DEP made management decisions timely. However, DEP did not notify the subrecipients of the management decisions within the required six month time period after the audit reports FAC Acceptance date. • Department of Human Services (DHS): The time period for making a management decision on findings was approximately 7.2 months after the FAC Acceptance date for one out of two audit reports with findings. Our testing disclosed for the one late audit report DHS made a management decision timely. However, DHS did not notify the subrecipient of the management decision within the required six month time period after the audit reports FAC Acceptance date. Criteria: 2 CFR §200.332, Requirements for pass-through entities, states in part: All pass-through entities must: (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward, and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: Finding 2024 ¬– 015: (continued) (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. (3) Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by §200.521 [Management decision]. (f) Verify that every subrecipient is audited as required by Subpart F [Audit Requirements] of this part when it is expected that the subrecipient’s Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in §200.501 [Audit requirements]. (g) Consider whether the results of the subrecipient’s audit, on-site review, or other monitoring indicate conditions that necessitate adjustments to the pass-through entity’s own records. (h) Consider taking enforcement action against noncompliant subrecipients as described in §200.339 [Remedies for noncompliance] of this part and in program regulations. In order to carry out these responsibilities properly, good internal control dictates that state pass-through agencies ensure subrecipient Single Audit SEFAs are representative of state payment records each year, and that the related federal programs have been properly subjected to Single Audit procedures. 2 CFR §200.512, Report submission, states in part: (a) General. (1) The audit must be completed and the data collection form described in paragraph (b) of this section and reporting package described in paragraph (c) of this section must be submitted within the earlier of 30 calendar days after receipt of the auditor’s report(s), or nine months after the end of the audit period. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day. 2 CFR §200.521, Management decision, states in part: (a) General. The management decision must clearly state whether or not the finding is sustained, the reasons for the decision, and the expected auditee action to repay disallowed costs, make financial adjustments, or take other action. (d) Time requirements. The Federal awarding agency or pass-through entity responsible for issuing a management decision must do so within six months of acceptance of the audit report by the FAC. The auditee must initiate and proceed with corrective action as rapidly as possible and corrective action should begin no later than upon receipt of the audit report. 2 CFR §200.505, Sanctions, states: In cases of continued inability or unwillingness to have an audit conducted in accordance with this part, Federal agencies and pass-through entities must take appropriate action as provided in §200.339 [Remedies for noncompliance]. 2 CFR §200.339, Remedies for noncompliance, states in part: If a non-Federal entity fails to comply with the U.S. Constitution, Federal statutes, regulations or the terms and conditions of a Federal award, the Federal awarding agency or pass-through entity may impose additional conditions, as described in §200.208 [Specific conditions]. If the Federal awarding agency or pass-through entity determines that noncompliance cannot be remedied by imposing additional conditions, the federal awarding agency or pass-through entity may take one or more of the following actions, as appropriate in the circumstances. Finding 2024 ¬– 015: (continued) (a) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency or pass-through entity. (b) Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost of the activity or action not in compliance. (c) Wholly or partly suspend or terminate the Federal award. (d) Initiate suspension or debarment proceedings as authorized under 2 CFR Part 180 and Federal awarding agency regulations (or in the case of a pass-through entity, recommend such a proceeding be initiated by a Federal awarding agency). (e) Withhold further Federal awards for the project or program. (f) Take other remedies that may be legally available. To ensure Commonwealth enforcement of federal regulations for subrecipient noncompliance with audit requirements, Commonwealth Management Directive 325.08, Amended – Remedies for Recipient Noncompliance with Audit Requirements, Section 5 related to policy, states in part: (a) Agencies must develop and implement remedial action that reflects the unique requirements of each program… (b) The remedial action should be implemented within six months from the date the first remedial action is initiated. At the end of the six-month period, the recipient should take the appropriate corrective action or the final stage of remedial action should be imposed on the recipient. Examples of remedial action include, but are not limited to: (1) Meeting or calling the recipient to explain the importance and benefits of the audit and audit resolution processes, emphasizing the value of the audit as an administrative tool and the Commonwealth’s reliance on an acceptable audit and prompt resolution as evidence of the recipient’s ability to properly administer the program. (2) Encouraging the entity to establish an audit committee or designate an individual as the single point of contact to: (a) Communicate regarding the audit. (b) Arrange for and oversee the audit. (c) Direct and monitor audit resolution. (3) Providing technical assistance to the recipient in devising and implementing an appropriate plan to remedy the noncompliance. (4) Withholding a portion of assistance payments until the noncompliance is resolved. (5) Withholding or disallowing overhead costs until the noncompliance is resolved. (6) Suspending the assistance agreement until the noncompliance is resolved. (7) Terminating the assistance agreement with the recipient and, if necessary, seeking alternative entities to administer the program. Finding 2024 ¬– 015: (continued) Management Directive 325.09, Amended – Processing Subrecipient Single Audits of Federal Pass-Through Funds, Section 7 related to procedures, states in part: c. Agencies. (2) Evaluate single audit report submissions received from BAFM to determine program purpose acceptability by verifying, at a minimum, that all agency-funded programs are properly included on the applicable financial schedules; that findings affecting the agency contain sufficient information to facilitate a management decision; and that the subrecipient has submitted an adequate corrective action plan. (5) Issue management decisions relative to audit findings and crosscutting findings assigned to the agency for resolution, as required by 2 CFR §200.521. If responsible for the resolution of crosscutting findings, notify the affected agency or agencies upon resolution of such findings. (6) Impose or coordinate the imposition of remedial action in accordance with 2 CFR Part 200.339 and Management Directive 325.08 Amended, Remedies for Recipient Noncompliance with Audit Requirements, when subrecipients fail to comply with the provisions of Subpart F. Management Directive 325.12, Amended – Standards for Enterprise Risk Management in Commonwealth Agencies, adopted the internal control framework outlined in the United States Government Accountability Office’s, Standards for Internal Control in the Federal Government (Green Book). The Green Book states in part: Management should establish and operate monitoring activities to monitor the internal control system and evaluate the results. Management should remediate identified internal control deficiencies on a timely basis. Cause: One reason provided by Commonwealth management for untimely audit resolution in the various agencies, including making management decisions, approving corrective action, and performing procedures to ensure the accuracy of subrecipient SEFAs, was either a change in staff or a lack of staff to follow up and process subrecipient audit reports more timely. Effect: Since required management decisions were not made within six months to ensure appropriate corrective action was taken on audits received from subrecipients, the Commonwealth did not comply with federal regulations, and subrecipients were not made aware of acceptance or rejection of corrective action plans in a timely manner. Further, noncompliance may recur in future periods if control deficiencies are not corrected on a timely basis, and there is an increased risk of unallowable charges being made to federal programs if corrective action and recovery of questioned costs is not timely. Regarding the SEFA reviews or alternate procedures which are not being performed timely, there is an increased risk that subrecipients could be misspending and/or inappropriately tracking and reporting federal funds over multiple year periods, and these discrepancies may not be properly monitored, detected, and corrected by agency personnel on a timely basis as required. Recommendation: We recommend that the above weaknesses that cause untimely subrecipient Single Audit resolution, including untimely management decisions on findings, and untimely review of the SEFA or alternate procedures be corrected to ensure compliance with federal requirements and Commonwealth Management Directives, and to better ensure timelier subrecipient compliance with program requirements. PDOA Response: PDOA agrees with the finding. PDA Response: PDA agrees with the finding. PDE Response: PDE agrees with the finding. DEP Response: DEP agrees with the finding. Finding 2024 ¬– 015: (continued) DHS Response: DHS agrees that there was an exception where human error caused a management decision on one single audit report to be issued untimely; in this instance, the decision itself was made timely but was not communicated in a timely manner. DHS disagrees that an isolated incident due to human error signifies a weakness in internal controls. This was not a systemic issue and therefore should not have been considered a significant deficiency in internal controls, and DHS should not have been included in this finding. Auditors’ Conclusion: The agency responses from PDOA, PDA, PDE, and DEP indicate agreement with the finding. DHS agrees that an error occurred resulting in untimely submission of one management decision, DHS disagrees that the error represents a significant deficiency. We acknowledge the error occurred due to an oversight and is not a systemic error, however, the error resulted in noncompliance with one of two audit reports that required timely management decisions. We will evaluate corrective action in the subsequent audit. The finding remains as stated. Questioned Costs: The amount of questioned costs cannot be determined.
Various Agencies Finding 2024 ¬– 015: ALN 10.565, 10.568, 10.569 – Food Distribution Cluster ALN 15.252 – Abandoned Mine Land Reclamation (AMLR) ALN 21.027 – COVID 19 – Coronavirus State and Local Fiscal Recovery Funds ALN 84.425C – COVID 19 – Education Stabilization Fund – GEER Fund ALN 84.425D – COVID 19 – Education Stabilization Fund – ESSER Fund ALN 84.425R – COVID 19 – Education Stabilization Fund – CRRSA EANS Program ALN 84.425U – COVID 19 – Education Stabilization Fund – ARP ESSER ALN 84.425V – COVID 19 – Education Stabilization Fund – ARP EANS Program ALN 84.425W – COVID 19 – Education Stabilization Fund – ARP ESSER HCY ALN 93.044, 93.045, 93.053 – Aging Cluster (including COVID-19) ALN 93.558 – Temporary Assistance for Needy Families ALN 93.667 – Social Services Block Grant A Material Weakness and Material Noncompliance Exist in the Commonwealth’s Subrecipient Audit Resolution Process (A Similar Condition Was Noted in Prior Year Finding 2023-024) Federal Grant Number(s) and Year(s): 228PA100I1003 (6/13/2022 – 6/30/2025), 231PA445Q2204 (10/01/2022 – 9/30/2023), 231PA825Y8005 (10/01/2022 – 9/30/2023), 231PA825Y8105 (10/01/2022 – 9/30/2023), 241PA825Y8005 (10/01/2023 – 9/30/2024), 241PA825Y8105 (10/01/2023 – 9/30/2024), S18AF20004 (11/01/2017 – 10/31/2025), S19AF20004 (12/01/2018 – 11/30/2025), S21AF10015 (1/01/2021 – 12/31/2023), S22AF00017 (1/01/2022 – 12/31/2024), S23AF00002 (11/01/2022 – 10/31/2027), TN75GJE1S7G3 (3/03/2021 – 12/31/2024), S425W210039 (4/23/2021 – 9/30/2024), S425U210028 (3/24/2021– 9/30/2024), S425D210028 (1/05/2021 – 9/30/2024), S425C200013 (5/18/2020 – 4/01/2024), S425R210037 (3/13/2020 – 9/30/2024), S425V210037 (11/16/2021 – 9/30/2024), S425C210013 (3/13/2020 – 9/30/2024), 2101PACMC6 (4/01/2021 – 9/30/2024), 2101PAHDC6 (4/01/2021 – 9/30/2024), 2101PAPHC6 (4/01/2021 – 9/30/2024), 2101PASSC6 (4/01/2021 – 9/30/2024), 2201PAOASS (10/01/2021 – 9/30/2023), 2201PASTPH (1/01/2022 – 9/30/2024), 2301PAOACM (10/01/2022 – 9/30/2024), 2301PAOAHD (10/01/2022 – 9/30/2024), 2301PAOANS (10/01/2022 – 9/30/2024), 2301PAOASS (10/01/2022 – 9/30/2024), 2401PAOACM (10/01/2023 – 9/30/2025), 2401PAOAHD (10/01/2023 – 9/30/2025), 2401PAOANS (10/01/2023 – 9/30/2025), 2401PAOASS (10/01/2023 – 9/30/2025), 2101PATANF (10/01/2020 – 9/30/2021), 2201PATANF (10/01/2021 – 9/30/2022), 2301PATANF (10/01/2022 – 9/30/2023), 2401PATANF (10/01/2023 – 9/30/2024), 2301PASOSR (10/01/2022 – 9/30/2024), 2401PASOSR (10/01/2023 – 9/30/2025), 2301PATANF (10/01/2022 – 9/30/2024), 2401PATANF (10/01/2023 – 9/30/2025) Type of Finding: Significant Deficiency in Internal Control over Compliance, Other Matters for Abandoned Mine Land Reclamation (AMLR), Temporary Assistance for Needy Families, Coronavirus State and Local Fiscal Recovery Funds, and Social Services Block Grant Material Weakness in Internal Control over Compliance, Material Noncompliance for Food Distribution Cluster, Education Stabilization Fund, and Aging Cluster Compliance Requirement: Subrecipient Monitoring Condition: Under the Commonwealth of Pennsylvania's (Commonwealth) implementation of the Single Audit Act, review and resolution of subrecipient Single Audit reports is split into two stages. The Office of the Budget’s Bureau of Accounting and Financial Management (OB-BAFM) ensures the reports meet technical standards through a centralized desk review process. The various funding agencies in the Commonwealth are responsible for making a management decision on each finding within six months of the Federal Audit Clearinghouse’s (FAC) Acceptance date for audits subject to Uniform Guidance and to ensure appropriate corrective action is taken by the subrecipient (except for Uniform Guidance Finding 2024 ¬– 015: (continued) audits under U.S. Department of Labor programs which are permitted 12 months for management decisions in accordance with 2 CFR Section 2900.21). Each Commonwealth agency is also responsible for reviewing financial information in each audit report to determine whether the audit included all pass-through funding provided by the agency to ensure pass-through funds were subject to audit. Most agencies meet this requirement by performing Schedule of Expenditures of Federal Awards (SEFA) reconciliations. The agency is also required to adjust Commonwealth records, if necessary. Our fiscal year ended June 30, 2024 audit of the Commonwealth’s process for review and resolution of subrecipient Single Audits included an evaluation of the Commonwealth’s fiscal year ended June 30, 2023 subrecipient audit universe for audits due for submission to the FAC during the fiscal year ended June 30, 2024. We also evaluated the Commonwealth’s review of 45 subrecipient audit reports with findings in major programs/clusters which were identified on the Commonwealth agencies’ tracking lists during the fiscal year ended June 30, 2024 and required management decisions by Commonwealth agencies. Our testing disclosed the following audit exceptions regarding the Commonwealth agencies’ review of subrecipient audit reports: • Pennsylvania Department of Aging (PDOA): Our testing disclosed that PDOA did not have procedures in place to track audit reports including having an audit tracking list. The time period for making a management decision on findings was approximately 17.6 months to over 18 months after the FAC Acceptance date for two out of two audit reports with findings. There was also a delay in PDOA’s procedures to ensure the subrecipient SEFAs were accurate so that major programs were properly determined and subjected to audit. • Department of Agriculture (PDA): Our testing disclosed that PDA did not have procedures in place to track audit reports including having an audit tracking list. The time period for making a management decision on findings was approximately 8.7 months to over 16 months after the FAC Acceptance date for four out of four audit reports with findings. • Department of Education (PDE): The time period for making a management decision on findings was approximately 7.8 months to over 12 months after the FAC Acceptance date for seven out of 22 audit reports with findings. There were additional audit reports with findings listed on PDE’s audit tracking list where management decisions were not made timely. • Department of Environmental Protection (DEP): The time period for making a management decision on findings was approximately 11.6 months to over 12 months after the FAC Acceptance date for two out of two audit reports with findings. Our testing disclosed for the two late audit reports, DEP made management decisions timely. However, DEP did not notify the subrecipients of the management decisions within the required six month time period after the audit reports FAC Acceptance date. • Department of Human Services (DHS): The time period for making a management decision on findings was approximately 7.2 months after the FAC Acceptance date for one out of two audit reports with findings. Our testing disclosed for the one late audit report DHS made a management decision timely. However, DHS did not notify the subrecipient of the management decision within the required six month time period after the audit reports FAC Acceptance date. Criteria: 2 CFR §200.332, Requirements for pass-through entities, states in part: All pass-through entities must: (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward, and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: Finding 2024 ¬– 015: (continued) (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. (3) Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by §200.521 [Management decision]. (f) Verify that every subrecipient is audited as required by Subpart F [Audit Requirements] of this part when it is expected that the subrecipient’s Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in §200.501 [Audit requirements]. (g) Consider whether the results of the subrecipient’s audit, on-site review, or other monitoring indicate conditions that necessitate adjustments to the pass-through entity’s own records. (h) Consider taking enforcement action against noncompliant subrecipients as described in §200.339 [Remedies for noncompliance] of this part and in program regulations. In order to carry out these responsibilities properly, good internal control dictates that state pass-through agencies ensure subrecipient Single Audit SEFAs are representative of state payment records each year, and that the related federal programs have been properly subjected to Single Audit procedures. 2 CFR §200.512, Report submission, states in part: (a) General. (1) The audit must be completed and the data collection form described in paragraph (b) of this section and reporting package described in paragraph (c) of this section must be submitted within the earlier of 30 calendar days after receipt of the auditor’s report(s), or nine months after the end of the audit period. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day. 2 CFR §200.521, Management decision, states in part: (a) General. The management decision must clearly state whether or not the finding is sustained, the reasons for the decision, and the expected auditee action to repay disallowed costs, make financial adjustments, or take other action. (d) Time requirements. The Federal awarding agency or pass-through entity responsible for issuing a management decision must do so within six months of acceptance of the audit report by the FAC. The auditee must initiate and proceed with corrective action as rapidly as possible and corrective action should begin no later than upon receipt of the audit report. 2 CFR §200.505, Sanctions, states: In cases of continued inability or unwillingness to have an audit conducted in accordance with this part, Federal agencies and pass-through entities must take appropriate action as provided in §200.339 [Remedies for noncompliance]. 2 CFR §200.339, Remedies for noncompliance, states in part: If a non-Federal entity fails to comply with the U.S. Constitution, Federal statutes, regulations or the terms and conditions of a Federal award, the Federal awarding agency or pass-through entity may impose additional conditions, as described in §200.208 [Specific conditions]. If the Federal awarding agency or pass-through entity determines that noncompliance cannot be remedied by imposing additional conditions, the federal awarding agency or pass-through entity may take one or more of the following actions, as appropriate in the circumstances. Finding 2024 ¬– 015: (continued) (a) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency or pass-through entity. (b) Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost of the activity or action not in compliance. (c) Wholly or partly suspend or terminate the Federal award. (d) Initiate suspension or debarment proceedings as authorized under 2 CFR Part 180 and Federal awarding agency regulations (or in the case of a pass-through entity, recommend such a proceeding be initiated by a Federal awarding agency). (e) Withhold further Federal awards for the project or program. (f) Take other remedies that may be legally available. To ensure Commonwealth enforcement of federal regulations for subrecipient noncompliance with audit requirements, Commonwealth Management Directive 325.08, Amended – Remedies for Recipient Noncompliance with Audit Requirements, Section 5 related to policy, states in part: (a) Agencies must develop and implement remedial action that reflects the unique requirements of each program… (b) The remedial action should be implemented within six months from the date the first remedial action is initiated. At the end of the six-month period, the recipient should take the appropriate corrective action or the final stage of remedial action should be imposed on the recipient. Examples of remedial action include, but are not limited to: (1) Meeting or calling the recipient to explain the importance and benefits of the audit and audit resolution processes, emphasizing the value of the audit as an administrative tool and the Commonwealth’s reliance on an acceptable audit and prompt resolution as evidence of the recipient’s ability to properly administer the program. (2) Encouraging the entity to establish an audit committee or designate an individual as the single point of contact to: (a) Communicate regarding the audit. (b) Arrange for and oversee the audit. (c) Direct and monitor audit resolution. (3) Providing technical assistance to the recipient in devising and implementing an appropriate plan to remedy the noncompliance. (4) Withholding a portion of assistance payments until the noncompliance is resolved. (5) Withholding or disallowing overhead costs until the noncompliance is resolved. (6) Suspending the assistance agreement until the noncompliance is resolved. (7) Terminating the assistance agreement with the recipient and, if necessary, seeking alternative entities to administer the program. Finding 2024 ¬– 015: (continued) Management Directive 325.09, Amended – Processing Subrecipient Single Audits of Federal Pass-Through Funds, Section 7 related to procedures, states in part: c. Agencies. (2) Evaluate single audit report submissions received from BAFM to determine program purpose acceptability by verifying, at a minimum, that all agency-funded programs are properly included on the applicable financial schedules; that findings affecting the agency contain sufficient information to facilitate a management decision; and that the subrecipient has submitted an adequate corrective action plan. (5) Issue management decisions relative to audit findings and crosscutting findings assigned to the agency for resolution, as required by 2 CFR §200.521. If responsible for the resolution of crosscutting findings, notify the affected agency or agencies upon resolution of such findings. (6) Impose or coordinate the imposition of remedial action in accordance with 2 CFR Part 200.339 and Management Directive 325.08 Amended, Remedies for Recipient Noncompliance with Audit Requirements, when subrecipients fail to comply with the provisions of Subpart F. Management Directive 325.12, Amended – Standards for Enterprise Risk Management in Commonwealth Agencies, adopted the internal control framework outlined in the United States Government Accountability Office’s, Standards for Internal Control in the Federal Government (Green Book). The Green Book states in part: Management should establish and operate monitoring activities to monitor the internal control system and evaluate the results. Management should remediate identified internal control deficiencies on a timely basis. Cause: One reason provided by Commonwealth management for untimely audit resolution in the various agencies, including making management decisions, approving corrective action, and performing procedures to ensure the accuracy of subrecipient SEFAs, was either a change in staff or a lack of staff to follow up and process subrecipient audit reports more timely. Effect: Since required management decisions were not made within six months to ensure appropriate corrective action was taken on audits received from subrecipients, the Commonwealth did not comply with federal regulations, and subrecipients were not made aware of acceptance or rejection of corrective action plans in a timely manner. Further, noncompliance may recur in future periods if control deficiencies are not corrected on a timely basis, and there is an increased risk of unallowable charges being made to federal programs if corrective action and recovery of questioned costs is not timely. Regarding the SEFA reviews or alternate procedures which are not being performed timely, there is an increased risk that subrecipients could be misspending and/or inappropriately tracking and reporting federal funds over multiple year periods, and these discrepancies may not be properly monitored, detected, and corrected by agency personnel on a timely basis as required. Recommendation: We recommend that the above weaknesses that cause untimely subrecipient Single Audit resolution, including untimely management decisions on findings, and untimely review of the SEFA or alternate procedures be corrected to ensure compliance with federal requirements and Commonwealth Management Directives, and to better ensure timelier subrecipient compliance with program requirements. PDOA Response: PDOA agrees with the finding. PDA Response: PDA agrees with the finding. PDE Response: PDE agrees with the finding. DEP Response: DEP agrees with the finding. Finding 2024 ¬– 015: (continued) DHS Response: DHS agrees that there was an exception where human error caused a management decision on one single audit report to be issued untimely; in this instance, the decision itself was made timely but was not communicated in a timely manner. DHS disagrees that an isolated incident due to human error signifies a weakness in internal controls. This was not a systemic issue and therefore should not have been considered a significant deficiency in internal controls, and DHS should not have been included in this finding. Auditors’ Conclusion: The agency responses from PDOA, PDA, PDE, and DEP indicate agreement with the finding. DHS agrees that an error occurred resulting in untimely submission of one management decision, DHS disagrees that the error represents a significant deficiency. We acknowledge the error occurred due to an oversight and is not a systemic error, however, the error resulted in noncompliance with one of two audit reports that required timely management decisions. We will evaluate corrective action in the subsequent audit. The finding remains as stated. Questioned Costs: The amount of questioned costs cannot be determined.
Various Agencies Finding 2024 ¬– 015: ALN 10.565, 10.568, 10.569 – Food Distribution Cluster ALN 15.252 – Abandoned Mine Land Reclamation (AMLR) ALN 21.027 – COVID 19 – Coronavirus State and Local Fiscal Recovery Funds ALN 84.425C – COVID 19 – Education Stabilization Fund – GEER Fund ALN 84.425D – COVID 19 – Education Stabilization Fund – ESSER Fund ALN 84.425R – COVID 19 – Education Stabilization Fund – CRRSA EANS Program ALN 84.425U – COVID 19 – Education Stabilization Fund – ARP ESSER ALN 84.425V – COVID 19 – Education Stabilization Fund – ARP EANS Program ALN 84.425W – COVID 19 – Education Stabilization Fund – ARP ESSER HCY ALN 93.044, 93.045, 93.053 – Aging Cluster (including COVID-19) ALN 93.558 – Temporary Assistance for Needy Families ALN 93.667 – Social Services Block Grant A Material Weakness and Material Noncompliance Exist in the Commonwealth’s Subrecipient Audit Resolution Process (A Similar Condition Was Noted in Prior Year Finding 2023-024) Federal Grant Number(s) and Year(s): 228PA100I1003 (6/13/2022 – 6/30/2025), 231PA445Q2204 (10/01/2022 – 9/30/2023), 231PA825Y8005 (10/01/2022 – 9/30/2023), 231PA825Y8105 (10/01/2022 – 9/30/2023), 241PA825Y8005 (10/01/2023 – 9/30/2024), 241PA825Y8105 (10/01/2023 – 9/30/2024), S18AF20004 (11/01/2017 – 10/31/2025), S19AF20004 (12/01/2018 – 11/30/2025), S21AF10015 (1/01/2021 – 12/31/2023), S22AF00017 (1/01/2022 – 12/31/2024), S23AF00002 (11/01/2022 – 10/31/2027), TN75GJE1S7G3 (3/03/2021 – 12/31/2024), S425W210039 (4/23/2021 – 9/30/2024), S425U210028 (3/24/2021– 9/30/2024), S425D210028 (1/05/2021 – 9/30/2024), S425C200013 (5/18/2020 – 4/01/2024), S425R210037 (3/13/2020 – 9/30/2024), S425V210037 (11/16/2021 – 9/30/2024), S425C210013 (3/13/2020 – 9/30/2024), 2101PACMC6 (4/01/2021 – 9/30/2024), 2101PAHDC6 (4/01/2021 – 9/30/2024), 2101PAPHC6 (4/01/2021 – 9/30/2024), 2101PASSC6 (4/01/2021 – 9/30/2024), 2201PAOASS (10/01/2021 – 9/30/2023), 2201PASTPH (1/01/2022 – 9/30/2024), 2301PAOACM (10/01/2022 – 9/30/2024), 2301PAOAHD (10/01/2022 – 9/30/2024), 2301PAOANS (10/01/2022 – 9/30/2024), 2301PAOASS (10/01/2022 – 9/30/2024), 2401PAOACM (10/01/2023 – 9/30/2025), 2401PAOAHD (10/01/2023 – 9/30/2025), 2401PAOANS (10/01/2023 – 9/30/2025), 2401PAOASS (10/01/2023 – 9/30/2025), 2101PATANF (10/01/2020 – 9/30/2021), 2201PATANF (10/01/2021 – 9/30/2022), 2301PATANF (10/01/2022 – 9/30/2023), 2401PATANF (10/01/2023 – 9/30/2024), 2301PASOSR (10/01/2022 – 9/30/2024), 2401PASOSR (10/01/2023 – 9/30/2025), 2301PATANF (10/01/2022 – 9/30/2024), 2401PATANF (10/01/2023 – 9/30/2025) Type of Finding: Significant Deficiency in Internal Control over Compliance, Other Matters for Abandoned Mine Land Reclamation (AMLR), Temporary Assistance for Needy Families, Coronavirus State and Local Fiscal Recovery Funds, and Social Services Block Grant Material Weakness in Internal Control over Compliance, Material Noncompliance for Food Distribution Cluster, Education Stabilization Fund, and Aging Cluster Compliance Requirement: Subrecipient Monitoring Condition: Under the Commonwealth of Pennsylvania's (Commonwealth) implementation of the Single Audit Act, review and resolution of subrecipient Single Audit reports is split into two stages. The Office of the Budget’s Bureau of Accounting and Financial Management (OB-BAFM) ensures the reports meet technical standards through a centralized desk review process. The various funding agencies in the Commonwealth are responsible for making a management decision on each finding within six months of the Federal Audit Clearinghouse’s (FAC) Acceptance date for audits subject to Uniform Guidance and to ensure appropriate corrective action is taken by the subrecipient (except for Uniform Guidance Finding 2024 ¬– 015: (continued) audits under U.S. Department of Labor programs which are permitted 12 months for management decisions in accordance with 2 CFR Section 2900.21). Each Commonwealth agency is also responsible for reviewing financial information in each audit report to determine whether the audit included all pass-through funding provided by the agency to ensure pass-through funds were subject to audit. Most agencies meet this requirement by performing Schedule of Expenditures of Federal Awards (SEFA) reconciliations. The agency is also required to adjust Commonwealth records, if necessary. Our fiscal year ended June 30, 2024 audit of the Commonwealth’s process for review and resolution of subrecipient Single Audits included an evaluation of the Commonwealth’s fiscal year ended June 30, 2023 subrecipient audit universe for audits due for submission to the FAC during the fiscal year ended June 30, 2024. We also evaluated the Commonwealth’s review of 45 subrecipient audit reports with findings in major programs/clusters which were identified on the Commonwealth agencies’ tracking lists during the fiscal year ended June 30, 2024 and required management decisions by Commonwealth agencies. Our testing disclosed the following audit exceptions regarding the Commonwealth agencies’ review of subrecipient audit reports: • Pennsylvania Department of Aging (PDOA): Our testing disclosed that PDOA did not have procedures in place to track audit reports including having an audit tracking list. The time period for making a management decision on findings was approximately 17.6 months to over 18 months after the FAC Acceptance date for two out of two audit reports with findings. There was also a delay in PDOA’s procedures to ensure the subrecipient SEFAs were accurate so that major programs were properly determined and subjected to audit. • Department of Agriculture (PDA): Our testing disclosed that PDA did not have procedures in place to track audit reports including having an audit tracking list. The time period for making a management decision on findings was approximately 8.7 months to over 16 months after the FAC Acceptance date for four out of four audit reports with findings. • Department of Education (PDE): The time period for making a management decision on findings was approximately 7.8 months to over 12 months after the FAC Acceptance date for seven out of 22 audit reports with findings. There were additional audit reports with findings listed on PDE’s audit tracking list where management decisions were not made timely. • Department of Environmental Protection (DEP): The time period for making a management decision on findings was approximately 11.6 months to over 12 months after the FAC Acceptance date for two out of two audit reports with findings. Our testing disclosed for the two late audit reports, DEP made management decisions timely. However, DEP did not notify the subrecipients of the management decisions within the required six month time period after the audit reports FAC Acceptance date. • Department of Human Services (DHS): The time period for making a management decision on findings was approximately 7.2 months after the FAC Acceptance date for one out of two audit reports with findings. Our testing disclosed for the one late audit report DHS made a management decision timely. However, DHS did not notify the subrecipient of the management decision within the required six month time period after the audit reports FAC Acceptance date. Criteria: 2 CFR §200.332, Requirements for pass-through entities, states in part: All pass-through entities must: (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward, and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: Finding 2024 ¬– 015: (continued) (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. (3) Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by §200.521 [Management decision]. (f) Verify that every subrecipient is audited as required by Subpart F [Audit Requirements] of this part when it is expected that the subrecipient’s Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in §200.501 [Audit requirements]. (g) Consider whether the results of the subrecipient’s audit, on-site review, or other monitoring indicate conditions that necessitate adjustments to the pass-through entity’s own records. (h) Consider taking enforcement action against noncompliant subrecipients as described in §200.339 [Remedies for noncompliance] of this part and in program regulations. In order to carry out these responsibilities properly, good internal control dictates that state pass-through agencies ensure subrecipient Single Audit SEFAs are representative of state payment records each year, and that the related federal programs have been properly subjected to Single Audit procedures. 2 CFR §200.512, Report submission, states in part: (a) General. (1) The audit must be completed and the data collection form described in paragraph (b) of this section and reporting package described in paragraph (c) of this section must be submitted within the earlier of 30 calendar days after receipt of the auditor’s report(s), or nine months after the end of the audit period. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day. 2 CFR §200.521, Management decision, states in part: (a) General. The management decision must clearly state whether or not the finding is sustained, the reasons for the decision, and the expected auditee action to repay disallowed costs, make financial adjustments, or take other action. (d) Time requirements. The Federal awarding agency or pass-through entity responsible for issuing a management decision must do so within six months of acceptance of the audit report by the FAC. The auditee must initiate and proceed with corrective action as rapidly as possible and corrective action should begin no later than upon receipt of the audit report. 2 CFR §200.505, Sanctions, states: In cases of continued inability or unwillingness to have an audit conducted in accordance with this part, Federal agencies and pass-through entities must take appropriate action as provided in §200.339 [Remedies for noncompliance]. 2 CFR §200.339, Remedies for noncompliance, states in part: If a non-Federal entity fails to comply with the U.S. Constitution, Federal statutes, regulations or the terms and conditions of a Federal award, the Federal awarding agency or pass-through entity may impose additional conditions, as described in §200.208 [Specific conditions]. If the Federal awarding agency or pass-through entity determines that noncompliance cannot be remedied by imposing additional conditions, the federal awarding agency or pass-through entity may take one or more of the following actions, as appropriate in the circumstances. Finding 2024 ¬– 015: (continued) (a) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency or pass-through entity. (b) Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost of the activity or action not in compliance. (c) Wholly or partly suspend or terminate the Federal award. (d) Initiate suspension or debarment proceedings as authorized under 2 CFR Part 180 and Federal awarding agency regulations (or in the case of a pass-through entity, recommend such a proceeding be initiated by a Federal awarding agency). (e) Withhold further Federal awards for the project or program. (f) Take other remedies that may be legally available. To ensure Commonwealth enforcement of federal regulations for subrecipient noncompliance with audit requirements, Commonwealth Management Directive 325.08, Amended – Remedies for Recipient Noncompliance with Audit Requirements, Section 5 related to policy, states in part: (a) Agencies must develop and implement remedial action that reflects the unique requirements of each program… (b) The remedial action should be implemented within six months from the date the first remedial action is initiated. At the end of the six-month period, the recipient should take the appropriate corrective action or the final stage of remedial action should be imposed on the recipient. Examples of remedial action include, but are not limited to: (1) Meeting or calling the recipient to explain the importance and benefits of the audit and audit resolution processes, emphasizing the value of the audit as an administrative tool and the Commonwealth’s reliance on an acceptable audit and prompt resolution as evidence of the recipient’s ability to properly administer the program. (2) Encouraging the entity to establish an audit committee or designate an individual as the single point of contact to: (a) Communicate regarding the audit. (b) Arrange for and oversee the audit. (c) Direct and monitor audit resolution. (3) Providing technical assistance to the recipient in devising and implementing an appropriate plan to remedy the noncompliance. (4) Withholding a portion of assistance payments until the noncompliance is resolved. (5) Withholding or disallowing overhead costs until the noncompliance is resolved. (6) Suspending the assistance agreement until the noncompliance is resolved. (7) Terminating the assistance agreement with the recipient and, if necessary, seeking alternative entities to administer the program. Finding 2024 ¬– 015: (continued) Management Directive 325.09, Amended – Processing Subrecipient Single Audits of Federal Pass-Through Funds, Section 7 related to procedures, states in part: c. Agencies. (2) Evaluate single audit report submissions received from BAFM to determine program purpose acceptability by verifying, at a minimum, that all agency-funded programs are properly included on the applicable financial schedules; that findings affecting the agency contain sufficient information to facilitate a management decision; and that the subrecipient has submitted an adequate corrective action plan. (5) Issue management decisions relative to audit findings and crosscutting findings assigned to the agency for resolution, as required by 2 CFR §200.521. If responsible for the resolution of crosscutting findings, notify the affected agency or agencies upon resolution of such findings. (6) Impose or coordinate the imposition of remedial action in accordance with 2 CFR Part 200.339 and Management Directive 325.08 Amended, Remedies for Recipient Noncompliance with Audit Requirements, when subrecipients fail to comply with the provisions of Subpart F. Management Directive 325.12, Amended – Standards for Enterprise Risk Management in Commonwealth Agencies, adopted the internal control framework outlined in the United States Government Accountability Office’s, Standards for Internal Control in the Federal Government (Green Book). The Green Book states in part: Management should establish and operate monitoring activities to monitor the internal control system and evaluate the results. Management should remediate identified internal control deficiencies on a timely basis. Cause: One reason provided by Commonwealth management for untimely audit resolution in the various agencies, including making management decisions, approving corrective action, and performing procedures to ensure the accuracy of subrecipient SEFAs, was either a change in staff or a lack of staff to follow up and process subrecipient audit reports more timely. Effect: Since required management decisions were not made within six months to ensure appropriate corrective action was taken on audits received from subrecipients, the Commonwealth did not comply with federal regulations, and subrecipients were not made aware of acceptance or rejection of corrective action plans in a timely manner. Further, noncompliance may recur in future periods if control deficiencies are not corrected on a timely basis, and there is an increased risk of unallowable charges being made to federal programs if corrective action and recovery of questioned costs is not timely. Regarding the SEFA reviews or alternate procedures which are not being performed timely, there is an increased risk that subrecipients could be misspending and/or inappropriately tracking and reporting federal funds over multiple year periods, and these discrepancies may not be properly monitored, detected, and corrected by agency personnel on a timely basis as required. Recommendation: We recommend that the above weaknesses that cause untimely subrecipient Single Audit resolution, including untimely management decisions on findings, and untimely review of the SEFA or alternate procedures be corrected to ensure compliance with federal requirements and Commonwealth Management Directives, and to better ensure timelier subrecipient compliance with program requirements. PDOA Response: PDOA agrees with the finding. PDA Response: PDA agrees with the finding. PDE Response: PDE agrees with the finding. DEP Response: DEP agrees with the finding. Finding 2024 ¬– 015: (continued) DHS Response: DHS agrees that there was an exception where human error caused a management decision on one single audit report to be issued untimely; in this instance, the decision itself was made timely but was not communicated in a timely manner. DHS disagrees that an isolated incident due to human error signifies a weakness in internal controls. This was not a systemic issue and therefore should not have been considered a significant deficiency in internal controls, and DHS should not have been included in this finding. Auditors’ Conclusion: The agency responses from PDOA, PDA, PDE, and DEP indicate agreement with the finding. DHS agrees that an error occurred resulting in untimely submission of one management decision, DHS disagrees that the error represents a significant deficiency. We acknowledge the error occurred due to an oversight and is not a systemic error, however, the error resulted in noncompliance with one of two audit reports that required timely management decisions. We will evaluate corrective action in the subsequent audit. The finding remains as stated. Questioned Costs: The amount of questioned costs cannot be determined.
CONDITION The Department of Public Instruction did not ensure all subrecipients submitted a Single Audit Report or a form identifying a Single Audit is not required. In addition, The Department of Public Instruction did not issue management decisions on audit findings within 6 months or ensure that timely and appropriate corrective action was taken in all applicable instances. CRITERIA 2 CFR 200.331(f) states that a pass-through entity must verify that every subrecipient is audited as required by 2 CFS 200 Subpart F. 2 CFR 200.311(d)(2) states that a pass-through entity must ensure subrecipients take timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity through audits, on-site reviews, and other means. 2 CFR 200.521(d) states that a pass-through entity must issue a management decision within six months of acceptance of the audit report by the Federal Audit Clearinghouse (FAC). 2 CFR 200.303(a) states that non-federal entities 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 statutes, regulations, and the terms and condition of the federal award. CAUSE The Department of Public Instruction maintains a spreadsheet to track all subrecipient audit report monitoring, however, they did not ensure that everyone on the spreadsheet provided a Single Audit report, or review the filed report within 6 months, or provided a certification of total federal expenditures. EFFECT Subrecipients spending more than $750,000 from all federal sources may not be obtaining audits as required or may not be implementing a corrective action plan in a timely manner if findings are noted in audits that were completed. The Department of Public instruction is not meeting the requirements of 2 CFR 200 Subpart F. CONTEXT The total number of subrecipients was 536 and the total amount received from the Department of Public Instruction was $667,731,290. Where sampling was performed, the audit used a non-statistical sampling method. Of all the subrecipients that had errors, the total amount they received from the Department of Public Instruction was $53,403,270. Sixty subrecipients that received funds from the Department of Public Instruction were included in our sampling. One subrecipient was not included on the Departments tracking spreadsheet, two subrecipients did not received the required audit as required by 2 CFR Subpart F. 10 Subrecipients had reports filed, but the Department did not review the report within the required 6 month window. IDENTIFICATION AS A REPEAT FINDING Finding 2022-033 was reported in the immediate prior year. Findings 2020-021 and 2018-041 were reported in previous years. The prior audit finding was reported as implemented on the summary schedule of prior audit findings. This materially misrepresents the status of the finding. RECOMMENDATION We recommend the Department of Public Instruction: • Ensure all subrecipients obtain audits in accordance with 2 CFR 200 Subpart F if they meet the requirements; • Issue management decisions within a timely manner; • Ensure subrecipients took timely corrective action on deficiencies identified in the audits. DEPARTMENT OF PUBLIC INSTRUCTION RESPONSE The Department of Public Instruction agrees with the finding. See “Management’s Response and Corrective Action” section of this report.
CONDITION The Department of Public Instruction did not ensure all subrecipients submitted a Single Audit Report or a form identifying a Single Audit is not required. In addition, The Department of Public Instruction did not issue management decisions on audit findings within 6 months or ensure that timely and appropriate corrective action was taken in all applicable instances. CRITERIA 2 CFR 200.331(f) states that a pass-through entity must verify that every subrecipient is audited as required by 2 CFS 200 Subpart F. 2 CFR 200.311(d)(2) states that a pass-through entity must ensure subrecipients take timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity through audits, on-site reviews, and other means. 2 CFR 200.521(d) states that a pass-through entity must issue a management decision within six months of acceptance of the audit report by the Federal Audit Clearinghouse (FAC). 2 CFR 200.303(a) states that non-federal entities 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 statutes, regulations, and the terms and condition of the federal award. CAUSE The Department of Public Instruction maintains a spreadsheet to track all subrecipient audit report monitoring, however, they did not ensure that everyone on the spreadsheet provided a Single Audit report, or review the filed report within 6 months, or provided a certification of total federal expenditures. EFFECT Subrecipients spending more than $750,000 from all federal sources may not be obtaining audits as required or may not be implementing a corrective action plan in a timely manner if findings are noted in audits that were completed. The Department of Public instruction is not meeting the requirements of 2 CFR 200 Subpart F. CONTEXT The total number of subrecipients was 536 and the total amount received from the Department of Public Instruction was $667,731,290. Where sampling was performed, the audit used a non-statistical sampling method. Of all the subrecipients that had errors, the total amount they received from the Department of Public Instruction was $53,403,270. Sixty subrecipients that received funds from the Department of Public Instruction were included in our sampling. One subrecipient was not included on the Departments tracking spreadsheet, two subrecipients did not received the required audit as required by 2 CFR Subpart F. 10 Subrecipients had reports filed, but the Department did not review the report within the required 6 month window. IDENTIFICATION AS A REPEAT FINDING Finding 2022-033 was reported in the immediate prior year. Findings 2020-021 and 2018-041 were reported in previous years. The prior audit finding was reported as implemented on the summary schedule of prior audit findings. This materially misrepresents the status of the finding. RECOMMENDATION We recommend the Department of Public Instruction: • Ensure all subrecipients obtain audits in accordance with 2 CFR 200 Subpart F if they meet the requirements; • Issue management decisions within a timely manner; • Ensure subrecipients took timely corrective action on deficiencies identified in the audits. DEPARTMENT OF PUBLIC INSTRUCTION RESPONSE The Department of Public Instruction agrees with the finding. See “Management’s Response and Corrective Action” section of this report.
CONDITION The Department of Public Instruction did not ensure all subrecipients submitted a Single Audit Report or a form identifying a Single Audit is not required. In addition, The Department of Public Instruction did not issue management decisions on audit findings within 6 months or ensure that timely and appropriate corrective action was taken in all applicable instances. CRITERIA 2 CFR 200.331(f) states that a pass-through entity must verify that every subrecipient is audited as required by 2 CFS 200 Subpart F. 2 CFR 200.311(d)(2) states that a pass-through entity must ensure subrecipients take timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity through audits, on-site reviews, and other means. 2 CFR 200.521(d) states that a pass-through entity must issue a management decision within six months of acceptance of the audit report by the Federal Audit Clearinghouse (FAC). 2 CFR 200.303(a) states that non-federal entities 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 statutes, regulations, and the terms and condition of the federal award. CAUSE The Department of Public Instruction maintains a spreadsheet to track all subrecipient audit report monitoring, however, they did not ensure that everyone on the spreadsheet provided a Single Audit report, or review the filed report within 6 months, or provided a certification of total federal expenditures. EFFECT Subrecipients spending more than $750,000 from all federal sources may not be obtaining audits as required or may not be implementing a corrective action plan in a timely manner if findings are noted in audits that were completed. The Department of Public instruction is not meeting the requirements of 2 CFR 200 Subpart F. CONTEXT The total number of subrecipients was 536 and the total amount received from the Department of Public Instruction was $667,731,290. Where sampling was performed, the audit used a non-statistical sampling method. Of all the subrecipients that had errors, the total amount they received from the Department of Public Instruction was $53,403,270. Sixty subrecipients that received funds from the Department of Public Instruction were included in our sampling. One subrecipient was not included on the Departments tracking spreadsheet, two subrecipients did not received the required audit as required by 2 CFR Subpart F. 10 Subrecipients had reports filed, but the Department did not review the report within the required 6 month window. IDENTIFICATION AS A REPEAT FINDING Finding 2022-033 was reported in the immediate prior year. Findings 2020-021 and 2018-041 were reported in previous years. The prior audit finding was reported as implemented on the summary schedule of prior audit findings. This materially misrepresents the status of the finding. RECOMMENDATION We recommend the Department of Public Instruction: • Ensure all subrecipients obtain audits in accordance with 2 CFR 200 Subpart F if they meet the requirements; • Issue management decisions within a timely manner; • Ensure subrecipients took timely corrective action on deficiencies identified in the audits. DEPARTMENT OF PUBLIC INSTRUCTION RESPONSE The Department of Public Instruction agrees with the finding. See “Management’s Response and Corrective Action” section of this report.
CONDITION The Department of Public Instruction did not ensure all subrecipients submitted a Single Audit Report or a form identifying a Single Audit is not required. In addition, The Department of Public Instruction did not issue management decisions on audit findings within 6 months or ensure that timely and appropriate corrective action was taken in all applicable instances. CRITERIA 2 CFR 200.331(f) states that a pass-through entity must verify that every subrecipient is audited as required by 2 CFS 200 Subpart F. 2 CFR 200.311(d)(2) states that a pass-through entity must ensure subrecipients take timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity through audits, on-site reviews, and other means. 2 CFR 200.521(d) states that a pass-through entity must issue a management decision within six months of acceptance of the audit report by the Federal Audit Clearinghouse (FAC). 2 CFR 200.303(a) states that non-federal entities 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 statutes, regulations, and the terms and condition of the federal award. CAUSE The Department of Public Instruction maintains a spreadsheet to track all subrecipient audit report monitoring, however, they did not ensure that everyone on the spreadsheet provided a Single Audit report, or review the filed report within 6 months, or provided a certification of total federal expenditures. EFFECT Subrecipients spending more than $750,000 from all federal sources may not be obtaining audits as required or may not be implementing a corrective action plan in a timely manner if findings are noted in audits that were completed. The Department of Public instruction is not meeting the requirements of 2 CFR 200 Subpart F. CONTEXT The total number of subrecipients was 536 and the total amount received from the Department of Public Instruction was $667,731,290. Where sampling was performed, the audit used a non-statistical sampling method. Of all the subrecipients that had errors, the total amount they received from the Department of Public Instruction was $53,403,270. Sixty subrecipients that received funds from the Department of Public Instruction were included in our sampling. One subrecipient was not included on the Departments tracking spreadsheet, two subrecipients did not received the required audit as required by 2 CFR Subpart F. 10 Subrecipients had reports filed, but the Department did not review the report within the required 6 month window. IDENTIFICATION AS A REPEAT FINDING Finding 2022-033 was reported in the immediate prior year. Findings 2020-021 and 2018-041 were reported in previous years. The prior audit finding was reported as implemented on the summary schedule of prior audit findings. This materially misrepresents the status of the finding. RECOMMENDATION We recommend the Department of Public Instruction: • Ensure all subrecipients obtain audits in accordance with 2 CFR 200 Subpart F if they meet the requirements; • Issue management decisions within a timely manner; • Ensure subrecipients took timely corrective action on deficiencies identified in the audits. DEPARTMENT OF PUBLIC INSTRUCTION RESPONSE The Department of Public Instruction agrees with the finding. See “Management’s Response and Corrective Action” section of this report.
CONDITION The Department of Public Instruction did not ensure all subrecipients submitted a Single Audit Report or a form identifying a Single Audit is not required. In addition, The Department of Public Instruction did not issue management decisions on audit findings within 6 months or ensure that timely and appropriate corrective action was taken in all applicable instances. CRITERIA 2 CFR 200.331(f) states that a pass-through entity must verify that every subrecipient is audited as required by 2 CFS 200 Subpart F. 2 CFR 200.311(d)(2) states that a pass-through entity must ensure subrecipients take timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity through audits, on-site reviews, and other means. 2 CFR 200.521(d) states that a pass-through entity must issue a management decision within six months of acceptance of the audit report by the Federal Audit Clearinghouse (FAC). 2 CFR 200.303(a) states that non-federal entities 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 statutes, regulations, and the terms and condition of the federal award. CAUSE The Department of Public Instruction maintains a spreadsheet to track all subrecipient audit report monitoring, however, they did not ensure that everyone on the spreadsheet provided a Single Audit report, or review the filed report within 6 months, or provided a certification of total federal expenditures. EFFECT Subrecipients spending more than $750,000 from all federal sources may not be obtaining audits as required or may not be implementing a corrective action plan in a timely manner if findings are noted in audits that were completed. The Department of Public instruction is not meeting the requirements of 2 CFR 200 Subpart F. CONTEXT The total number of subrecipients was 536 and the total amount received from the Department of Public Instruction was $667,731,290. Where sampling was performed, the audit used a non-statistical sampling method. Of all the subrecipients that had errors, the total amount they received from the Department of Public Instruction was $53,403,270. Sixty subrecipients that received funds from the Department of Public Instruction were included in our sampling. One subrecipient was not included on the Departments tracking spreadsheet, two subrecipients did not received the required audit as required by 2 CFR Subpart F. 10 Subrecipients had reports filed, but the Department did not review the report within the required 6 month window. IDENTIFICATION AS A REPEAT FINDING Finding 2022-033 was reported in the immediate prior year. Findings 2020-021 and 2018-041 were reported in previous years. The prior audit finding was reported as implemented on the summary schedule of prior audit findings. This materially misrepresents the status of the finding. RECOMMENDATION We recommend the Department of Public Instruction: • Ensure all subrecipients obtain audits in accordance with 2 CFR 200 Subpart F if they meet the requirements; • Issue management decisions within a timely manner; • Ensure subrecipients took timely corrective action on deficiencies identified in the audits. DEPARTMENT OF PUBLIC INSTRUCTION RESPONSE The Department of Public Instruction agrees with the finding. See “Management’s Response and Corrective Action” section of this report.
CONDITION The Department of Public Instruction did not ensure all subrecipients submitted a Single Audit Report or a form identifying a Single Audit is not required. In addition, The Department of Public Instruction did not issue management decisions on audit findings within 6 months or ensure that timely and appropriate corrective action was taken in all applicable instances. CRITERIA 2 CFR 200.331(f) states that a pass-through entity must verify that every subrecipient is audited as required by 2 CFS 200 Subpart F. 2 CFR 200.311(d)(2) states that a pass-through entity must ensure subrecipients take timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity through audits, on-site reviews, and other means. 2 CFR 200.521(d) states that a pass-through entity must issue a management decision within six months of acceptance of the audit report by the Federal Audit Clearinghouse (FAC). 2 CFR 200.303(a) states that non-federal entities 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 statutes, regulations, and the terms and condition of the federal award. CAUSE The Department of Public Instruction maintains a spreadsheet to track all subrecipient audit report monitoring, however, they did not ensure that everyone on the spreadsheet provided a Single Audit report, or review the filed report within 6 months, or provided a certification of total federal expenditures. EFFECT Subrecipients spending more than $750,000 from all federal sources may not be obtaining audits as required or may not be implementing a corrective action plan in a timely manner if findings are noted in audits that were completed. The Department of Public instruction is not meeting the requirements of 2 CFR 200 Subpart F. CONTEXT The total number of subrecipients was 536 and the total amount received from the Department of Public Instruction was $667,731,290. Where sampling was performed, the audit used a non-statistical sampling method. Of all the subrecipients that had errors, the total amount they received from the Department of Public Instruction was $53,403,270. Sixty subrecipients that received funds from the Department of Public Instruction were included in our sampling. One subrecipient was not included on the Departments tracking spreadsheet, two subrecipients did not received the required audit as required by 2 CFR Subpart F. 10 Subrecipients had reports filed, but the Department did not review the report within the required 6 month window. IDENTIFICATION AS A REPEAT FINDING Finding 2022-033 was reported in the immediate prior year. Findings 2020-021 and 2018-041 were reported in previous years. The prior audit finding was reported as implemented on the summary schedule of prior audit findings. This materially misrepresents the status of the finding. RECOMMENDATION We recommend the Department of Public Instruction: • Ensure all subrecipients obtain audits in accordance with 2 CFR 200 Subpart F if they meet the requirements; • Issue management decisions within a timely manner; • Ensure subrecipients took timely corrective action on deficiencies identified in the audits. DEPARTMENT OF PUBLIC INSTRUCTION RESPONSE The Department of Public Instruction agrees with the finding. See “Management’s Response and Corrective Action” section of this report.
CONDITION The Department of Public Instruction did not ensure all subrecipients submitted a Single Audit Report or a form identifying a Single Audit is not required. In addition, The Department of Public Instruction did not issue management decisions on audit findings within 6 months or ensure that timely and appropriate corrective action was taken in all applicable instances. CRITERIA 2 CFR 200.331(f) states that a pass-through entity must verify that every subrecipient is audited as required by 2 CFS 200 Subpart F. 2 CFR 200.311(d)(2) states that a pass-through entity must ensure subrecipients take timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity through audits, on-site reviews, and other means. 2 CFR 200.521(d) states that a pass-through entity must issue a management decision within six months of acceptance of the audit report by the Federal Audit Clearinghouse (FAC). 2 CFR 200.303(a) states that non-federal entities 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 statutes, regulations, and the terms and condition of the federal award. CAUSE The Department of Public Instruction maintains a spreadsheet to track all subrecipient audit report monitoring, however, they did not ensure that everyone on the spreadsheet provided a Single Audit report, or review the filed report within 6 months, or provided a certification of total federal expenditures. EFFECT Subrecipients spending more than $750,000 from all federal sources may not be obtaining audits as required or may not be implementing a corrective action plan in a timely manner if findings are noted in audits that were completed. The Department of Public instruction is not meeting the requirements of 2 CFR 200 Subpart F. CONTEXT The total number of subrecipients was 536 and the total amount received from the Department of Public Instruction was $667,731,290. Where sampling was performed, the audit used a non-statistical sampling method. Of all the subrecipients that had errors, the total amount they received from the Department of Public Instruction was $53,403,270. Sixty subrecipients that received funds from the Department of Public Instruction were included in our sampling. One subrecipient was not included on the Departments tracking spreadsheet, two subrecipients did not received the required audit as required by 2 CFR Subpart F. 10 Subrecipients had reports filed, but the Department did not review the report within the required 6 month window. IDENTIFICATION AS A REPEAT FINDING Finding 2022-033 was reported in the immediate prior year. Findings 2020-021 and 2018-041 were reported in previous years. The prior audit finding was reported as implemented on the summary schedule of prior audit findings. This materially misrepresents the status of the finding. RECOMMENDATION We recommend the Department of Public Instruction: • Ensure all subrecipients obtain audits in accordance with 2 CFR 200 Subpart F if they meet the requirements; • Issue management decisions within a timely manner; • Ensure subrecipients took timely corrective action on deficiencies identified in the audits. DEPARTMENT OF PUBLIC INSTRUCTION RESPONSE The Department of Public Instruction agrees with the finding. See “Management’s Response and Corrective Action” section of this report.
CONDITION The Department of Public Instruction did not ensure all subrecipients submitted a Single Audit Report or a form identifying a Single Audit is not required. In addition, The Department of Public Instruction did not issue management decisions on audit findings within 6 months or ensure that timely and appropriate corrective action was taken in all applicable instances. CRITERIA 2 CFR 200.331(f) states that a pass-through entity must verify that every subrecipient is audited as required by 2 CFS 200 Subpart F. 2 CFR 200.311(d)(2) states that a pass-through entity must ensure subrecipients take timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity through audits, on-site reviews, and other means. 2 CFR 200.521(d) states that a pass-through entity must issue a management decision within six months of acceptance of the audit report by the Federal Audit Clearinghouse (FAC). 2 CFR 200.303(a) states that non-federal entities 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 statutes, regulations, and the terms and condition of the federal award. CAUSE The Department of Public Instruction maintains a spreadsheet to track all subrecipient audit report monitoring, however, they did not ensure that everyone on the spreadsheet provided a Single Audit report, or review the filed report within 6 months, or provided a certification of total federal expenditures. EFFECT Subrecipients spending more than $750,000 from all federal sources may not be obtaining audits as required or may not be implementing a corrective action plan in a timely manner if findings are noted in audits that were completed. The Department of Public instruction is not meeting the requirements of 2 CFR 200 Subpart F. CONTEXT The total number of subrecipients was 536 and the total amount received from the Department of Public Instruction was $667,731,290. Where sampling was performed, the audit used a non-statistical sampling method. Of all the subrecipients that had errors, the total amount they received from the Department of Public Instruction was $53,403,270. Sixty subrecipients that received funds from the Department of Public Instruction were included in our sampling. One subrecipient was not included on the Departments tracking spreadsheet, two subrecipients did not received the required audit as required by 2 CFR Subpart F. 10 Subrecipients had reports filed, but the Department did not review the report within the required 6 month window. IDENTIFICATION AS A REPEAT FINDING Finding 2022-033 was reported in the immediate prior year. Findings 2020-021 and 2018-041 were reported in previous years. The prior audit finding was reported as implemented on the summary schedule of prior audit findings. This materially misrepresents the status of the finding. RECOMMENDATION We recommend the Department of Public Instruction: • Ensure all subrecipients obtain audits in accordance with 2 CFR 200 Subpart F if they meet the requirements; • Issue management decisions within a timely manner; • Ensure subrecipients took timely corrective action on deficiencies identified in the audits. DEPARTMENT OF PUBLIC INSTRUCTION RESPONSE The Department of Public Instruction agrees with the finding. See “Management’s Response and Corrective Action” section of this report.
CONDITION The Department of Public Instruction did not ensure all subrecipients submitted a Single Audit Report or a form identifying a Single Audit is not required. In addition, The Department of Public Instruction did not issue management decisions on audit findings within 6 months or ensure that timely and appropriate corrective action was taken in all applicable instances. CRITERIA 2 CFR 200.331(f) states that a pass-through entity must verify that every subrecipient is audited as required by 2 CFS 200 Subpart F. 2 CFR 200.311(d)(2) states that a pass-through entity must ensure subrecipients take timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity through audits, on-site reviews, and other means. 2 CFR 200.521(d) states that a pass-through entity must issue a management decision within six months of acceptance of the audit report by the Federal Audit Clearinghouse (FAC). 2 CFR 200.303(a) states that non-federal entities 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 statutes, regulations, and the terms and condition of the federal award. CAUSE The Department of Public Instruction maintains a spreadsheet to track all subrecipient audit report monitoring, however, they did not ensure that everyone on the spreadsheet provided a Single Audit report, or review the filed report within 6 months, or provided a certification of total federal expenditures. EFFECT Subrecipients spending more than $750,000 from all federal sources may not be obtaining audits as required or may not be implementing a corrective action plan in a timely manner if findings are noted in audits that were completed. The Department of Public instruction is not meeting the requirements of 2 CFR 200 Subpart F. CONTEXT The total number of subrecipients was 536 and the total amount received from the Department of Public Instruction was $667,731,290. Where sampling was performed, the audit used a non-statistical sampling method. Of all the subrecipients that had errors, the total amount they received from the Department of Public Instruction was $53,403,270. Sixty subrecipients that received funds from the Department of Public Instruction were included in our sampling. One subrecipient was not included on the Departments tracking spreadsheet, two subrecipients did not received the required audit as required by 2 CFR Subpart F. 10 Subrecipients had reports filed, but the Department did not review the report within the required 6 month window. IDENTIFICATION AS A REPEAT FINDING Finding 2022-033 was reported in the immediate prior year. Findings 2020-021 and 2018-041 were reported in previous years. The prior audit finding was reported as implemented on the summary schedule of prior audit findings. This materially misrepresents the status of the finding. RECOMMENDATION We recommend the Department of Public Instruction: • Ensure all subrecipients obtain audits in accordance with 2 CFR 200 Subpart F if they meet the requirements; • Issue management decisions within a timely manner; • Ensure subrecipients took timely corrective action on deficiencies identified in the audits. DEPARTMENT OF PUBLIC INSTRUCTION RESPONSE The Department of Public Instruction agrees with the finding. See “Management’s Response and Corrective Action” section of this report.
CONDITION The Department of Public Instruction did not ensure all subrecipients submitted a Single Audit Report or a form identifying a Single Audit is not required. In addition, The Department of Public Instruction did not issue management decisions on audit findings within 6 months or ensure that timely and appropriate corrective action was taken in all applicable instances. CRITERIA 2 CFR 200.331(f) states that a pass-through entity must verify that every subrecipient is audited as required by 2 CFS 200 Subpart F. 2 CFR 200.311(d)(2) states that a pass-through entity must ensure subrecipients take timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity through audits, on-site reviews, and other means. 2 CFR 200.521(d) states that a pass-through entity must issue a management decision within six months of acceptance of the audit report by the Federal Audit Clearinghouse (FAC). 2 CFR 200.303(a) states that non-federal entities 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 statutes, regulations, and the terms and condition of the federal award. CAUSE The Department of Public Instruction maintains a spreadsheet to track all subrecipient audit report monitoring, however, they did not ensure that everyone on the spreadsheet provided a Single Audit report, or review the filed report within 6 months, or provided a certification of total federal expenditures. EFFECT Subrecipients spending more than $750,000 from all federal sources may not be obtaining audits as required or may not be implementing a corrective action plan in a timely manner if findings are noted in audits that were completed. The Department of Public instruction is not meeting the requirements of 2 CFR 200 Subpart F. CONTEXT The total number of subrecipients was 536 and the total amount received from the Department of Public Instruction was $667,731,290. Where sampling was performed, the audit used a non-statistical sampling method. Of all the subrecipients that had errors, the total amount they received from the Department of Public Instruction was $53,403,270. Sixty subrecipients that received funds from the Department of Public Instruction were included in our sampling. One subrecipient was not included on the Departments tracking spreadsheet, two subrecipients did not received the required audit as required by 2 CFR Subpart F. 10 Subrecipients had reports filed, but the Department did not review the report within the required 6 month window. IDENTIFICATION AS A REPEAT FINDING Finding 2022-033 was reported in the immediate prior year. Findings 2020-021 and 2018-041 were reported in previous years. The prior audit finding was reported as implemented on the summary schedule of prior audit findings. This materially misrepresents the status of the finding. RECOMMENDATION We recommend the Department of Public Instruction: • Ensure all subrecipients obtain audits in accordance with 2 CFR 200 Subpart F if they meet the requirements; • Issue management decisions within a timely manner; • Ensure subrecipients took timely corrective action on deficiencies identified in the audits. DEPARTMENT OF PUBLIC INSTRUCTION RESPONSE The Department of Public Instruction agrees with the finding. See “Management’s Response and Corrective Action” section of this report.
CONDITION The Department of Public Instruction did not ensure all subrecipients submitted a Single Audit Report or a form identifying a Single Audit is not required. In addition, The Department of Public Instruction did not issue management decisions on audit findings within 6 months or ensure that timely and appropriate corrective action was taken in all applicable instances. CRITERIA 2 CFR 200.331(f) states that a pass-through entity must verify that every subrecipient is audited as required by 2 CFS 200 Subpart F. 2 CFR 200.311(d)(2) states that a pass-through entity must ensure subrecipients take timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity through audits, on-site reviews, and other means. 2 CFR 200.521(d) states that a pass-through entity must issue a management decision within six months of acceptance of the audit report by the Federal Audit Clearinghouse (FAC). 2 CFR 200.303(a) states that non-federal entities 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 statutes, regulations, and the terms and condition of the federal award. CAUSE The Department of Public Instruction maintains a spreadsheet to track all subrecipient audit report monitoring, however, they did not ensure that everyone on the spreadsheet provided a Single Audit report, or review the filed report within 6 months, or provided a certification of total federal expenditures. EFFECT Subrecipients spending more than $750,000 from all federal sources may not be obtaining audits as required or may not be implementing a corrective action plan in a timely manner if findings are noted in audits that were completed. The Department of Public instruction is not meeting the requirements of 2 CFR 200 Subpart F. CONTEXT The total number of subrecipients was 536 and the total amount received from the Department of Public Instruction was $667,731,290. Where sampling was performed, the audit used a non-statistical sampling method. Of all the subrecipients that had errors, the total amount they received from the Department of Public Instruction was $53,403,270. Sixty subrecipients that received funds from the Department of Public Instruction were included in our sampling. One subrecipient was not included on the Departments tracking spreadsheet, two subrecipients did not received the required audit as required by 2 CFR Subpart F. 10 Subrecipients had reports filed, but the Department did not review the report within the required 6 month window. IDENTIFICATION AS A REPEAT FINDING Finding 2022-033 was reported in the immediate prior year. Findings 2020-021 and 2018-041 were reported in previous years. The prior audit finding was reported as implemented on the summary schedule of prior audit findings. This materially misrepresents the status of the finding. RECOMMENDATION We recommend the Department of Public Instruction: • Ensure all subrecipients obtain audits in accordance with 2 CFR 200 Subpart F if they meet the requirements; • Issue management decisions within a timely manner; • Ensure subrecipients took timely corrective action on deficiencies identified in the audits. DEPARTMENT OF PUBLIC INSTRUCTION RESPONSE The Department of Public Instruction agrees with the finding. See “Management’s Response and Corrective Action” section of this report.