Finding 1167347 (2025-006)

Federal Agency: United States Department of Health and Human Services Federal Program: Social Services Block Grant (93.667) Federal Award Numbers: 2201NYSOR, 2101NYSOR, 2021NYTANF, 2301NYTANF, 2401NYTANF Federal Award Years: 2022, 2023, 2024, 2025 State Agency: Office of Children and Family Services Reference Number: 2025-006 Criteria Subrecipient Monitoring Title U.S. code of Federal Regulations Part 75 (45 CFR 75), Uniform Administrative Requirements, Cost Principles, and Audit Requirements for HHS Awards, section 75.32(d) states all pass through entities must monitor the activities of the subrecipient as necessary to ensure that the subaward issued for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward, and that subaward performance goals are achieved including ensuring that information related to eligible participants reported by district offices used to compile the annual Post Expenditure Report is complete and accurate. 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 pass through entity detected through audits, on site reviews, and other means. Performance Reporting – Post Expenditure Report The 42 USC 1397e requires states and territories to submit to the federal administering agency, the Office of Community Services, an annual Post Expenditure Report no later than six months following the close of the fiscal year. Internal Controls Lastly, 45 CFR 75.303(a) states the non federal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the non federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government,” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework,” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition During the fiscal year ended March 31, 2025, the Office of Children and Families (the Office) passed through $132,346,259 under the Social Services Block Grant (SSBG) federal program (ALN 93.667), to local districts (or subrecipients) to provide programmatic services under the SSBG program. As part of the funding arrangement, the local districts are responsible for the administration of the federal program, including ensuring that costs incurred under the federal program are in compliance with federal regulations. During the fiscal year ended March 31, 2025, we noted that on an annual basis, the Office submits the Post Expenditure Report to the Federal Office of Community Services. As part of the federal reporting process, the Office is required to report the number of eligible individuals who received services paid for in part or in whole with federal funds under the SSBG program. All participant services are provided directly by the local district offices. In order to obtain the number of eligible individuals by services category to be included on the report, the Office obtains the information directly from the Welfare Reporting and Tracking Systems (WRTS). The WRTS system contains data from the State’s Welfare Management System (WMS) and the Benefits Issuance Control System (BICS). As it is the responsibility of the district offices to determine eligibility for services, the Office is relying on the district offices to have data entered complete and accurate information within the WMS and BICS systems. During our testwork, we identified that while monitoring procedures have been implemented by the Office to monitor that local districts are utilizing SSBG funds to provide services to participants that meet applicable eligibility criteria established for funded programs, the Office does not extend those monitoring procedures over the portion of funds transferred into the SSBG program by the Temporary Assistance for Needy Families (TANF). As a result, the Office does not have procedures in place to ensure that data related to claims paid using TANF transfer funds reported on the Post Expenditure Report is complete and accurate. Cause The condition found was primarily due to the monitoring procedures implemented by the Office does not include a review to ensure that the participant was eligible to receive services related to TANF transfer funds, which would assist in assuring that the data reported on the Post Expenditure Report is accurate. Possible Asserted Effect The lack of executed monitoring procedures over subawards provided to subrecipients could result in the use of federal funding provided under the federal award not being in compliance with Federal statutes, regulations and the terms and conditions of the subaward. Questioned Costs None Statistical Sampling The sample was not intended to be, and was not, a statistically valid sample. Repeating Finding A similar finding was included in the 2024 Single Audit Report as finding number 2024 006 on pages 32 34. Recommendation We recommend that the Office continue to enhance its subrecipient monitoring policies, procedures, and internal control to help ensure that the Office is monitoring subrecipients in accordance with 45 CFR 75.352(d) and 45 CFR 75.352(e). The Office should also review its monitoring procedures to ensure that they are reviewing to determine if participants were eligible to receive services paid for using TANF transfer funds to assist in assuring that the data reported within the annual Post Expenditure Report is complete and accurate. Such monitoring activities should be performed at a precision level that would detect and identify errors in that could impact accuracy of the annual Post Expenditure Report. View of Responsible Official Recommendation accepted. Please refer to corrective action plan.