Finding Text
Assistance Listing, Federal Agency, and Program Name 93.778, U.S Department of Health and Human Services, Medical Assistance Program (Medicaid) Federal Award Identification Number and Year N/A Pass through Entity Michigan Department of Community Health Finding Type Material weakness Repeat Finding No Criteria 2 CFR 200.303 requires that recipients and subrecipients receiving federal awards establish, document and maintain effective internal control over the federal awards that provides reasonable assurance that the recipient or subrecipient is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards including internal controls relevant to the allowability compliance category as defined in 2 CFR 200, Subpart E (Cost Principles). Condition The Intermediate School District (ISD) did not have internal controls in place to ensure that all the expenditures included in the quarterly claims for reimbursement were allowable. Questioned Costs None If questioned costs are not determinable, description of why known questioned costs were undetermined or otherwise could not be reported N/A Identification of How Questioned Costs Were Computed N/A Context The Medicaid Administrative Outreach Program (AOP) allows the Intermediate School District (ISD) to include its eligible expenditures and eligible expenditures from all of the Local Educational Authorities (LEAs) in Macomb County in its quarterly cost pool report that is submitted to a state contractor for their calculation of the AOP reimbursement. While the ISD has internal controls to ensure that the expenditures included in the quarterly cost reports that pertain to the ISD, are allowable, the ISD did not have an internal control to ensure that expenditures reported by the LEAs were allowable. For the year ended June 30, 2025, approximately 77 percent of total expenditures included in the quarterly cost pool reports, were incurred by the LEAs. Our compliance sample size was 60 of which 38 were from LEAs. No instances of noncompliance were noted. Cause and Effect The ISD relied on the LEAs and state contractor to ensure that LEA costs were allowable. The ISD did not establish internal controls to ensure that all LEA expenditures included in the quarterly AOP claim calculations were allowable, which is required as the ISD is the recipient of the grant funds. Recommendation We recommend that the ISD develop and implement internal controls to ensure expenditures from LEAs are allowable. Views of Responsible Officials and Corrective Action Plan Management agrees with the finding. The ISD will review the process used by the local districts to report quarterly expenditures for the Administrative Outreach program. We will then create a process that ensures that the local districts provide supporting documentation that allows us to monitor the quarterly submission amounts for accuracy.