Finding Text
FINDING REFERENCE NUMBER 2024-040 FEDERAL PROGRAM (ALN – 93.558) TEMPORARY ASSISTANCE FOR NEEDY FAMILIES (TANF) U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES AWARD NUMBERS 2022G996117 (Federal Award Year: 10/1/2021 – 9/30/2022) 2023G996117 (Federal Award Year: 10/1/2022 – 9/30/2023) ADMINISTRATION ADMINISTRATION FOR SOCIOECONOMIC DEVELOPMENT OF THE FAMILY (ADSEF, BY ITS SPANISH ACRONYM) COMPLIANCE REQUIREMENT REPORTING – SPECIAL REPORTING TYPE OF FINDING INTERNAL CONTROL AND COMPLIANCE – MATERIAL WEAKNESS AND MATERIAL NONCOMPLIANCE CRITERIA In accordance with 45 CFR, Subtitle B, Chapter II, Part 265.7, each State's quarterly reports (the TANF Data Report, the TANF Financial Report (or Territorial Financial Report), the SSP-MOE Data Report, and the Work Outcomes of TANF Exciters Report) must be complete and accurate and filed by the due date. (d) For the TANF Financial Report (or, as applicable, the Territorial Financial Report), “a complete and accurate report” means that: (1) The reported data accurately reflects information available to the State in case records, financial records, and automated data systems; (2) The data are free from computational errors and are internally consistent (e.g., items that should add to totals do so); (3) The State reports data on all applicable elements; and (4) All expenditures have been made in accordance with 2 CFR 200.302(a). (f) We will review the data filed in the quarterly reports to determine if they meet these standards. In addition, we will use audits and reviews to verify the accuracy of the data filed by the States. In addition, 2 CFR § 200.302(a) establishes that each State must expend and account for the Federal award in accordance with State laws and procedures for expending and accounting for the State's funds. Financial management systems must be sufficient to permit the preparation of required reports and ensure tracking of expenditures so that funds can be properly reconciled and reported in accordance with Federal statutes, regulations, and award terms. STATEMENT OF CONDITION As part of our procedures for understanding the preparation and reconciliation of TANF financial and programmatic reports, we compared the Maintenance-of-Effort (MOE) expenditures reported in the ACF-204 Annual Report with the amounts reported in the ACF-196TR TANF Financial Report for the same fiscal year. Our review identified that the MOE expenditures reported in the ACF-204 do not reconcile with the corresponding amounts reported in the ACF-196TR. Specifically, the totals reported in both reports contained differences that were not supported by documented reconciliation procedures. In addition, ADSEF did not provide evidence of a formal reconciliation process or supporting documentation demonstrating that the differences between both reports were identified, analyzed, and resolved prior to submission. QUESTIONED COSTS None. PERSPECTIVE INFORMATION This is a systemic internal control deficiency over the reconciliation and validation of Maintenance-of-Effort (MOE) expenditures reported in Federal TANF reporting processes. The deficiency is considered systemic because ADSEF did not demonstrate that adequate controls were in place to ensure consistent reconciliation between the ACF-204 Annual Report and the ACF-196-TR Financial Report prior to submission. In addition, the lack of formalized procedures and effective oversight over the preparation and validation of Federal reports indicates a broader weakness in the internal control structure governing financial and programmatic reporting. STATEMENT OF CAUSE ADSEF did not establish and implement written policies and procedures governing the reconciliation, preparation, and validation of Maintenance-of-Effort (MOE) expenditures reported in the ACF-204 Annual Report and the ACF-196TR TANF Financial Report. In addition, management did not implement adequate internal controls to ensure that reported amounts between both reports were reviewed, reconciled, and verified for consistency prior to submission. Furthermore, there was insufficient monitoring to ensure that financial and programmatic reporting data were properly compared and validated against supporting financial records, resulting in discrepancies between the reports not being identified or corrected opportunely. POSSIBLE ASSERTED EFFECT As a result of the condition, the Maintenance-of-Effort (MOE) expenditures reported in the ACF-204 Annual Report and the ACF-196TR TANF Financial Report are not reliable or fully reconcilable, which may affect the accuracy and integrity of federal reporting. This condition increases the risk that reported financial information may be misstated and that inconsistencies between required federal reports may not be detected in a timely manner. In addition, the lack of reconciliation between reports may result in noncompliance with federal reporting requirements and could lead to questions regarding the accuracy and allowability of reported MOE expenditures. IDENTIFICATION OF REPEAT FINDING No reported as prior audit finding. RECOMMENDATIONS We recommend should establish formal procedures to ensure the reconciliation, review, and validation of Maintenance-of-Effort (MOE) expenditures reported in the ACF-204 and ACF-196-TR prior to submission. These procedures should ensure that reported amounts are consistent with supporting financial records. In addition, ADSEF should strengthen internal controls to ensure proper supervisory review and monitoring of Federal reporting to prevent and detect discrepancies between required reports.