FINDING REFERENCE NUMBER 2023-043 (See Finding Reference Number 2023-015)
FEDERAL PROGRAM (ALN – 93.558) COVID-19 – TEMPORARY ASSISTANCE FOR NEEDY FAMILIES (TANF)
U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES
AWARD NUMBER 2021G9990229 (Federal Award Year: 2021)
ADMINISTRATION ADMINISTRATION FOR SOCIOECONOMIC DEVELOPMENT OF THE FAMILY (ADSEF, BY ITS SPANISH ACRONYM)
COMPLIANCE REQUIREMENT MATCHING, LEVEL OF EFFORT, EARMARKING
TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS
CRITERIA In relation to the Pandemic Emergency Assistance Fund, States, tribes and territories (grantees) may use funds to provide certain non-recurrent, short term (NRST) benefits (described in section A. 3. a. 2.). Additionally, they may use funds for administrative costs (up to a 15-percent cap for states and territories and up to the negotiated cap for tribes). All grantees must use funds to supplement, and not supplant, other Federal, state, tribal, territorial, or local funds.
In addition, for the purposes of PEAF, NRST benefits mean cash payments or other benefits that meet the regulatory definition (45 CFR 260.31(b)(1)) but are limited to those that fall into the specific expenditure reporting category mentioned in the legislation (line 15 of the ACF-196R (PDF), the state financial reporting form for the TANF program). In other words, for this fund, NRST benefits, like all NRSTs under TANF, must: be designed to deal with a specific crisis situation or episode of need; not be intended to meet on-going needs; and not extend beyond four months; and (as explained in the instructions for reporting on line 15 of the ACF-196R) NRSTs paid for with PEAF funds: must only include expenditures such as emergency assistance and diversion payments, emergency housing and short-term homelessness assistance, emergency food aid, short-term utilities payments, burial assistance, clothing allowances, and back-to-school payments; and may not include tax credits, child care, transportation, or short-term education and training.
2 CFR section 200.303 (a) establishes that the recipient and subrecipient must: establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient or subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should align with the 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).
STATEMENT OF CONDITION As part of our audit procedures on internal controls and compliance related to the Level of Effort – Supplement not Supplant requirement, ADSEF staff were asked to indicate how the amount of the benefit to be granted was determined, the identified need for granting the benefit, and how the use of these benefits would be monitored. This information was not provided; in interviews, they indicated that the benefit was granted to provide an additional benefit and without restrictions. Additionally, a list of participants who benefited from this assistance was requested but was not provided. This represents a scope limitation.
QUESTIONED COSTS Undetermined.
PERSPECTIVE INFORMATION This deficiency is systematic. ADSEF does not maintain an internal control structure that allows for the communication of additional funds or modifications to the terms and conditions of grant awards to those responsible for program administration, so that they can adequately document the processes for granting benefits under each program.
STATEMENT OF CAUSE ADSEF did not maintain an adequate internal controls process that documented the justification for issuing the benefit with these funds, validated that this issuance of benefits was to supplement and not supplant the aid provided by regular TANF funds, created and distributed staff guidance on supplement-not-supplant, and maintained evidence of a final reconciliation of expenses incurred with these funds with the PRIFAS accounting system used for the preparation of the financial statement and SEFA.
POSSIBLE ASSERTED EFFECT ADSEF was unable to provide evidence of internal controls created and documented regarding how these funds were processed, the criteria used, the needs identified, and the personnel responsible for each process executed with these funds.
IDENTIFICATION OF
REPEAT FINDING No reported as prior audit finding.
RECOMMENDATIONS We recommend ADSEF establish written adequate internal controls process that documented the justification for issuing the benefit with these funds, validated that this issuance of benefits was to supplement and not supplant the aid provided by other Federal funds, created and distributed staff guidance on supplement-not-supplant, and maintained evidence of a final reconciliation of expenses incurred with these funds with the PRIFAS accounting system used for the preparation of the financial statement and SEFA.