Finding 24185 (2022-004)

"Finding No. 2022-004: Inadequate Controls over Subrecipient Monitoring of Nutrition Service Providers Type of Finding: Significant Deficiency Assistance Listing Title: Special Programs for the Aging, Title III, Part C, Nutrition Services; COVID-19 Special Programs for the Aging, Title III, Part C, Nutrition Services; and Nutrition Services Incentive Program Assistance Listing Number: 93.045; 93.053 Federal Award Number: 2001SDOACM, 2101SDOACM, 2201SDOACM, 2001SDOANS, 2101SDOANS, 2201SDOANS, 2001SDOAHD, 2101SDOAHD, 2201SDOAHD Federal Award Year: FFY20, FFY21, FFY22 Federal Agency: Department of Health and Human Services Category of Finding: Subrecipient Monitoring Criteria: Title 45 of the Code of Federal Regulations (CFR), Part 1321.11, states: (a) The State agency on aging shall develop policies governing all aspects of programs operated under this part ?. The state agency is responsible for enforcement of these policies. (b) The policies developed by the State agency shall address the manner in which the State agency will monitor the performance of all programs and activities initiated under this part for quality and effectiveness. 45 CFR 75.352 requires pass-through entities to: (b) Evaluate each subrecipient?s risk of noncompliance with Federal statues, regulations, and the terms and conditions of the subaward for purposes of determining the appropriate subrecipient monitoring described in paragraphs (d) and (e) of this section ?. ?. (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward; and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: ?. (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. ?. (e) Depending upon the pass-through entity?s assessment of risk posed by the subrecipient (as described in paragraph (b) of this section), the following monitoring tools may be useful for the pass-through entity to ensure proper accountability and compliance with program requirements and achievement of performance goals: (1)Providing subrecipients with training and technical assistance on program-related matters; and (2) Performing on-site reviews of the subrecipient's program operations? Condition: Controls were not adequate to ensure policies for subrecipient monitoring of nutrition service providers were properly developed, implemented, and documented during the audit period. The Division of Long-Term Services and Supports (LTSS) within the South Dakota Department of Human Services (DHS) administers the Title III-C Nutrition Services program through grants to subrecipients who provide congregate and home-delivered meals to eligible participants. LTSS was not able to provide us with any written policies and procedures over subrecipient monitoring that had been prepared prior to the end of the audit period. On December 29, 2022, we requested the policies and procedures in place over subrecipient monitoring during state fiscal year (FY) 2022. On January 20, 2023, we were provided written subrecipient monitoring procedures for the Department of Human Services Office of Budget and Finance which were dated as having been printed on January 13, 2023 and approved on January 19, 2023. These policies state: If a subrecipient relationship is determined, a pre-award risk assessment is completed while working with the department?s budget and financial grants/contracts specialist. The pre-award risk assessment helps to determine a subrecipient organization?s financial and management strength, which helps assess risk and dictates the monitoring plan for domestic subrecipients. We requested these risk assessments for nine of the 14 subrecipients providing nutrition services during FY22 and were provided completed assessments prepared on standardized risk assessment forms approved by the South Dakota Board of Internal Control. These forms rank risk on a number scale and determine a risk rating of ?Low?, ?Moderate?, or ?High? depending on the point values assigned to the various risk factors for each subrecipient. Two of the nine risk assessments reviewed had a ranking of ?Low? risk, while seven had a risk ranking of ?Moderate?. The written subrecipient monitoring procedures for the Department of Human Services Office of Budget and Finance state: If the subrecipient is determined to be medium risk by the department, the subrecipient must complete a subrecipient questionnaire. The completed subrecipient questionnaire is then scored by division staff using the questionnaire scoring sheet and if the risk is determined to be low, medium, or high, various periodic departmental procedures will be implemented. The periodic departmental procedures that will be implemented based on the assessed level of risk are: ? reviewing invoices prior to payment ? program/financial desk reviews ? program/financial field reviews We requested the subrecipient questionnaires from LTSS and were again provided the standardized risk assessment forms described above. These risk assessment forms do not contain any conclusions as to what monitoring procedures will be performed for that subrecipient, and we were unable to obtain any information tying the risk assessments to the monitoring carried out for these subrecipients. According to the LTSS nutrition program manager, on-site assessments are done for nutrition sites on a rotational basis, with the dates that sites last received assessments and the fiscal year of the next scheduled assessment recorded on a tracking spreadsheet to ensure the proper assessments get performed. During FY22, this spreadsheet identified 142 nutrition sites operated by ten nutrition providers. Tribal providers were not included on this tracking spreadsheet, as discussed further below. We reviewed a random sample of 15 nutrition sites out of the 142 sites on the tracking spreadsheet and identified the following issues: For six of the 15 sites selected for testing, there had been no site assessment performed since the DHS took over the program during state FY18. Three of these six sites were scheduled for review during FY22 on the tracking spreadsheet, but there was no review performed. For two of the on-site assessments in our sample, issues were identified as needing correction on the assessment checklist, but there was no documentation in the file that nutrition site personnel acknowledged the review or prepared a corrective action plan. Further, there was no documentation in the file documenting LTSS personnel had followed up with the nutrition site to determine if the issues were corrected. Tribal nutrition sites receive direct funding from the Federal Department of Human Services, Administration for Community Living (ACL) under Title VI of the Older Americans Act in addition to the funding provided to some of the tribes by the South Dakota DHS under the Title III Nutrition Program. Since the tribes also receive direct funding from ACL, personnel at LTSS informed us that they believe the on-site assessments are handled by the federal government, but they had not requested or received these assessments or any notice that the assessments had been completed. Because the amount given to the tribal governments by the DHS does not exceed the Single Audit threshold, no Single Audits of the tribes were requested or reviewed by LTSS or DHS Budget and Finance Office personnel. Cause: Employee turnover, personnel shortages, and the lack of written policies and procedures over subrecipient monitoring resulted in inconsistent application and inadequate documentation of internal controls. Effect: As a result of the deficiencies in internal control over subrecipient monitoring, LTSS was hindered in its ability to verify and document that all subawards were used for authorized purposes in compliance with Federal statutes, regulations, and the terms and conditions of the subaward, and that subaward performance goals were achieved. Questioned Costs: None. Repeat Finding from Prior Year: No. Recommendation: We recommend DHS maintain written internal control procedures over the subrecipient monitoring process to ensure that monitoring procedures for nutrition service providers are consistently applied and adequately documented. These procedures should include documentation tying pre-award risk assessments to monitoring procedures to be performed for all subrecipients, including tribal governments, and proper follow up on any issues identified with subrecipients as a result of monitoring performed. Views of Responsible Officials: The Department of Human Services concurs with this audit finding. "