Federal Assistance Listing Number: 97.036 Program: COVID-19 Disaster Grants – Public Assistance (Presidentially Declared Disasters) Federal Agency Name: US Department of Health and Human Services Federal Award Number:4499DRORP 00008961 Federal Award Year: 2025 Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles, and Special Tests and Provisions Criteria: Per Title 2, U.S. Code of Federal Regulations Part 200 (2 CFR 200), Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, Subpart E, Section 200.403(a) states that costs must be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. Per Title 2, U.S. Code of Federal Regulations Part 200 (2 CFR 200), Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, Subpart F, Section 200.514(d), auditors must test compliance with Special Tests and Provisions. Under the COVID-19 Disaster Grants – Public Assistance (Presidentially Declared Disasters) 44 CFR 206.205, the recipient shall make an accounting to the Regional Administrator of eligible costs for each approved large project. In submitting the accounting the recipient shall certify that reported costs were incurred in the performance of eligible work, that the approved work was completed, that the project is in compliance with the provisions of the FEMA-State Agreement, and that payments for that project have been made in accordance with 2 CFR 200.305. Per Title 2, U.S. Code of Federal Regulations Part 200 (2 CFR 200), Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, (Subpart D, Section 200.303), 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. Conditions Found: In six of 40 sample items selected for testwork over activities allowed or unallowed and allowable costs/cost principles related to the program, $469,054 in expenditures out of a total of $1,368,522 expenditures (or 34%) were submitted for reimbursement to the Federal Emergency Management Agency (FEMA) but were related to the same invoices and therefore were duplicate expenditures. Upon further investigation, management identified that a total of $2,636,044 expenditures out of a total of $14,470,349 expenditures related to the program were duplicate expenditures. Further, management’s review that was performed over the underlying program details was not designed at a sufficient level of precision that enabled the identification of the duplication errors. Further, in management’s review for the completed project certification for one of two projects for the program these duplication errors were not identified. Cause: In discussing these conditions with management, they stated the Entity did not have adequate controls in place that were designed appropriately to ensure that all the expenditures submitted for reimbursement and certified to FEMA under the COVID-19 Disaster Grants – Public Assistance (Presidentially Declared Disasters) program represented allowable costs. Effect: Expenditures could be reimbursed by the program that were not allowable or certified incorrectly, resulting in material non-compliance with program requirements. Questioned Costs: Known questioned costs of $2,636,044. Statistical Sample: The sample was not intended to be, and was not, a statistically valid sample. Repeat Finding:This finding is not a repeat finding. Recommendation:We recommend that management strengthen processes and controls in place to ensure expenditures submitted for reimbursement and certified under the program are appropriately reviewed prior to submission to ensure they represent allowable costs. Views of Responsible Officials: Management agrees with the finding and acknowledges that duplicate expenditures were submitted for reimbursement under the FEMA program. The error resulted from insufficient controls over the tracking, reconciliation, and review of specific expenditures included in reimbursement requests, which allowed certain invoices to be claimed more than once. Upon identification of the issue, management conducted a comprehensive review of all reimbursement requests submitted under the program and identified the full population of duplicate expenditures. Management is committed to maintaining full compliance with federal award requirements and has implemented corrective actions to strengthen reimbursement controls, including enhanced expenditure tracking, independent secondary review procedures, reconciliation of submitted costs to prior claims, and updated policies and staff training. Management does not believe the finding resulted from an intentional misuse of federal funds, but rather from a limited lapse in internal controls over the reimbursement process. Management is working with FEMA, as appropriate, to resolve the duplicate claims.