New Mexico Early Childhood Education and Care Department

2024 – 002 (Previously 2023-002) FFATA Reporting Federal Agency: U.S. Department of Agriculture Federal Program Name: Summer Food Service Program - Child Nutrition Cluster Assistance Listing Number: 10.559 Federal Award Identification Number and Year: 246NM329N1099/2024 Award Period:10/1/2023 – 09/30/2025 Type of Finding: Significant Deficiency in Internal Control over Compliance and Other Matters Criteria or specific requirement: The Transparency Act requires use of the information obtained in the subaward to complete reporting in the FSRS portal. Condition: Federal Funding Accountability and Transparency Act (FFATA) Reporting - while the program has an internal checklist to obtain the necessary information from the respective subrecipients to complete the FFATA reporting, the program did not complete the actual reporting during the State FY 2024. The program has furthered these processes in State FY25 to ensure this information is actually reported. Management’s Progress on Repeat Finding: This was resolved by the program that had the finding in FY23, however, there was lack of communication between the Food and Nutrition Bureau and ASD Grants Team to ensure that the data acquired then needed to be entered into the USAspending website Questioned costs: None Context: We tested 8 subrecipients; FFATA reporting was not completed for any. There are a total 34 subrecipients under this program. The sample was statistically valid. Cause: Lack of communication between program and ASD Grants Team to ensure that the data acquired then needed to be entered into the USAspending website. Effect: Noncompliance with reporting under the Transparency Act. Repeat Finding: Yes Recommendation: While the program did perform the monthly FNS418 reporting, we recommend the program ensure follow-through with the FFATA reporting requirement by entering the data collected from the subrecipients into the FSRS portal. Views of responsible officials: At the time of audit completion, the relevant FFATA information from the Food and Nutrition Bureau was submitted to the Grant Manager for proper reporting, ensuring compliance for FY2025. To support this process, Legal will collaborate with the program to ensure that award letters accurately identify the awardee. Additionally, the CFO conducted Federal Grant Management training in May 2024, which included FFATA documentation and reporting, along with an overview of ECECD’s final policies and procedures for Grant Management. The CFO and ASD will continue to update training materials to maintain compliance moving forward. Responsible official and timeline: The CFO has already implemented some of the review processes in collaboration with the Budget Director, Grant Management team, and relevant programs. The remaining processes will be addressed and fully implemented by June 30, 2025, to ensure the accuracy and integrity of our financial records.

2023 – 002 FFATA Reporting Federal Agency: US Department of Health and Human Services Federal Program Name: Maternal, Infant, Early Childhood Home Visiting Assistance Listing Number: 93.870 Federal Award Identification Number and Year: X10MC43597 - 9/1/2021-9/29/23 X10MC39703 - 9/30/2020-9/29/2022 X11MC41939 -05/01/21-09/30/23 6X11MC45479-01-02 - 12/31/21-9/30/24 Award Period: X10MC43597 - 9/1/2021-9/29/23 X10MC39703 - 9/30/2020-9/29/2022 X11MC41939 -05/01/21-09/30/23 6X11MC45479-01-02 - 12/31/21-9/30/24 Type of Finding: Material Weakness in Internal Control and Material Noncompliance (Modified Opinion) Criteria or specific requirement: The Transparency Act requires use of the information obtained in the subaward to complete reporting in the FSRS portal. Condition: Federal Funding Accountability and Transparency Act (FFATA) Reporting - while the program has an internal checklist to obtain the necessary information from the respective subrecipients to complete the FFATA reporting, the program did not complete the actual reporting during the State FY 2023. The program has furthered these processes in state FY24 to ensure this information is actually reported. Questioned costs: None Context: We tested 5 subrecipients; FFATA reporting was not completed for any. There are a total 8 subrecipients under this program. Cause: Lack of understanding that the data acquired then needed to be entered into the USSpending website. Effect: Noncompliance with reporting under the Transparency Act. Repeat Finding: Yes Recommendation: While the program did perform the annual SF425 reporting, we recommend the program ensure follow-through with the FFATA reporting requirement by entering the data collected from the subrecipients into the FSRF portal. Views of responsible officials: There is no disagreement with the audit finding.

2023 – 003 (Previously 2022-002) Subrecipient Monitoring Federal Agency: US Department of Health and Human Services Federal Program Name: Maternal, Infant, Early Childhood Home Visiting Assistance Listing Number: 93.870 Federal Award Identification Number and Year: X10MC43597 - 9/1/2021-9/29/23 X10MC39703 - 9/30/2020-9/29/2022 X11MC41939 -05/01/21-09/30/23 6X11MC45479-01-02 - 12/31/21-9/30/24 Award Period: X10MC43597 - 9/1/2021-9/29/23 X10MC39703 - 9/30/2020-9/29/2022 X11MC41939 -05/01/21-09/30/23 6X11MC45479-01-02 - 12/31/21-9/30/24 Type of Finding: Significant Deficiency in Internal Control over Compliance and Other Matters Criteria or specific requirement: The PTE must make the subrecipient aware of the award information required by 2 CFR section 200.331(a) sufficient for the PTE to comply with Federal statutes, regulations, and the terms and conditions of the award Condition: While the program has improved in its subrecipient monitoring efforts, the subaward agreements lack all required elements of a subaward. There were agreements included with all. Questioned costs: None Context: We tested 5 subrecipients; 4 agreements were incomplete Cause: Lack of knowledge of all required elements. Agreements contained some of the elements, but not all. Effect: Noncompliance with requirements of a subaward. Repeat Finding: Yes Recommendation: We recommend the program create an agreement template that contains the required elements of a subaward to distribute to its subreceipients Views of responsible officials: There is no disagreement with the audit finding.

2023 – 004 Period of Performance Federal Agency: US Department of Education Federal Program Name: Special Education - Grants for Infants and Families Assistance Listing Number: 84.181A Federal Award Identification Number and Year: H181X210125-21A & H181A210125 Award Period: 7/1/21-09/30/22 Type of Finding: Significant Deficiency in Internal Control over Compliance and Other Matters Criteria or specific requirement: Part 4 of the Federal Compliance Supplement states that costs under a grant should not be incurred after the period of performance end date. Condition: During our testing of 8 vouchers, 4 had costs incurred after the grant end date. Additionally, 1 voucher was not paid within the liquidation period of 120 days after the period of performance. Questioned costs: $32,998.27 Context: We tested 18 vouchers, 4 contained exceptions Cause: Management oversight with regard to recording the activity to the correct grant award. Effect: Noncompliance with period of performance Repeat Finding: No Recommendation: We recommend the program thoroughly review the dates on vouchers to ensure the activity is recorded to the right grant award based on the period of performance. Views of responsible officials: There is no disagreement with the audit finding.

2023 – 005 Allowable Costs Federal Agency: US Department of Education Federal Program Name: Special Education - Grants for Infants and Families Assistance Listing Number: 84.181A Federal Award Identification Number and Year: H181X210125-21A & H181A210125 Award Period: 7/1/21-09/30/22 & 7/1/22-09/30/23 Type of Finding: Significant Deficiency in Internal Control over Compliance and Other Matters Criteria or specific requirement: Part 4 of the Federal Compliance Supplement and the IDEA Application says, "A state may charge rent, occupancy, or space maintenance costs as a direct cost to its IDEA Part C grant award, only if it indicates so in the Section IV.B.2, "Restricted Indirect Cost Rate/Cost Allocation Plan Information," of its IDEA Part C grant application and receives approval from the US Education Department in its grant award letter (34 CFR section 303.225(c) (3)). Condition: During our testing of 34 vouchers, 14 were for costs related to space maintenance. Questioned costs: $2,666.72 Context: We tested 34 vouchers, of which 14 contained exceptions Cause: Management oversight with regard to requiring explicit approval from the US Education Department in advance Effect: Noncompliance with allowable costs Repeat Finding: No Recommendation: We recommend the program review the compliance supplement and grant applications thoroughly to notate instances when federal approval is required in advance. Views of responsible officials: There is no disagreement with the audit finding.

2022-002 (Previously 2021-001) Subrecipient Monitoring Federal Agency: United States Department of Health and Human Services Federal Program Title: Child Care Development Fund Block Grant and Maternal, Infant, Early Childhood Homevisiting Assistance Listing Numbers: 93.575/596 and 93.870 Pass-Through Agency: 93.596 ? Passed through NM Department of Human Services ? 22-630-9000- 0005 Federal Award Identification Number and Year: 93.596: 22-630-9000-0005 -7/1/21-06/30/2022 2102 CCDF ? 10/1/2020-09/30/2023 93.870: X10MC43597 - 9/1/2021-9/29/23 X10MC39703 - 9/30/2020-9/29/2022 X11MC41939 -05/01/21-09/30/23 6X11MC45479-01-02 - 12/31/21-9/30/24 Type of Finding: Material Weakness in Internal Control and Material Noncompliance (Modified Opinion) Condition: During our testing, we noted the following: 93.596: -2 of the 3 subrecipients identified did not have adequate documentation of formal financial monitoring activities during the year. The program did provide support for programmatic monitoring. - Additionally, the agreements did not contain language regarding suspension and debarment. -2 of the 3 applicable subrecipients tested did not have related FFATA reporting documentation, nor was there documentation provided to support a risk assessment process was undertaken prior to selecting these entities as subrecipients. 93.870: -For 3 out of 3 potential subrecipients, the Program has agreements with entities that identify subaward arrangements, but the program was not performing programmatic or financial monitoring procedures. Management?s response towards implementing prior-year corrective action plan: ECECD program managers began to perform financial monitoring in the form of reviews of federal audit reports, reviews of subrecipient single audits and reviewed general ledger outputs to determine proper PO creation and project ID tracking for PreK awards in FY `22. We also had identification of program elements related to management control (key stakeholder turnover, and system shocks) with program staff after feedback from our internal audit. ECECD is not certain about the status of subrecipient monitoring in other areas of the agency, however PreK program made great strides in remediation in this area for private and public PreK.2022-002 (Previously 2021-001) Subrecipient Monitoring (Continued) Condition (Continued): PreK has created draft policies and procedures for subrecipient monitoring at the program level that address allowability, financial monitoring, risk determinations. These policies and procedures are being reviewed for agency wide implementation for our grants compliance internal audit. These procedures are currently in use while we await approval by ASD and Executive Management. PreK also created a single guidance document and passed that out to all PreK stakeholders outlining allowability of expenditures that is a living document but I have attached this information here. This was developed and implemented with stakeholder training after our PreK internal audit identified this as an issue. Criteria or Specific Requirement: Per 2 CFR ?200.331 Requirements for pass-through entities, a non-federal entity must 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. Passthrough entity monitoring of the subrecipient must include reviewing financial and performance reports required by the pass-through entity. Additionally, ?200.331(a) includes required elements that are to be included in the subawards. Questioned Costs: none Context: This was identified during our testing of the respective samples selected for subrecipient monitoring. See condition above. Cause: Lack of thorough communication between program and ASD staff regarding language to be included in subawards. Additionally, lack of emphasis placed on financial monitoring; focus is on programmatic monitoring. Additionally, with regarding to 93.870, current program personnel did not believe the entities qualified as a subrecipient and have communication from the federal agent to support that determination. However, current program personnel were unaware that the agreement between the Department and the entity identified the entity as a subrecipient because the determination was made by program personnel that did not have adequate experience with determination of subrecipients. Effect: The Department is not compliance with Federal Regulations. Repeat Finding: Yes Recommendation: We recommend the Department implement procedures to ensure compliance with required monitoring of its subrecipients, including review of financial reporting provided by its subrecipients. Additionally, we recommend the Department review the Federal Regulations to ensure the required elements are included in the subaward agreements. In general, the Department could benefit from improved processes over identification of entities at subrecipients or contractors and related tracking/monitoring of those entities identified as subrecipients.2022-002 (Previously 2021-001) Subrecipient Monitoring (Continued) Views of Responsible Officials: The Early Childhood Education and Care Department (ECECD) agrees with this audit finding and the Family Support and Early Intervention Division (FSEI) agrees with the recommendation that the Department could benefit from improved processes. To ensure this does not occur again, the FSEI Director and Deputy Director will implement procedures for program managers to ensure adequate compliance with required monitoring of its subrecipients, including review of financial reporting provided by its subrecipients. The FESI Director and Deputy Director will ensure that program staff are adequately trained on subrecipient monitoring. The FESI Director and Deputy Director will work with the Administrative Services Division (ASD) Director, Chief Financial Officer (CFO) and Grants Manager to verify subrecipient status and to ensure required elements are included in subaward agreements. Furthermore, the FSEI Director and Deputy Director will implement an internal review process to ensure program and financial monitoring is aligned and involves a third level of review by ASD Director, CFO and Grants Manager and other program personnel. The timeline is June 30, 2023.

2022 -003 Procurement, Suspension, and Debarment Federal Agency: US Department of Health and Human Services Federal Program Name: Maternal, Infant, Early Childhood Home Visiting Assistance Listing Number: 93.870 Federal Award Identification Number and Award Period: X10MC43597 - 9/1/2021-9/29/23 X10MC39703 - 9/30/2020-9/29/2022 X11MC41939 -05/01/21-09/30/23 6X11MC45479-01-02 - 12/31/21-9/30/24 Type of Finding: Material Weakness in Internal Control and Material Noncompliance (Modified Opinion) Criteria or Specific Requirement: UG ?200.318 General procurement standards. The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Additionally, non-federal entities are prohibited from contracting with or making subawards under covered transactions to parties that are suspended or debarred. ?Covered transactions? include contracts for goods and services awarded under a non-procurement transaction (e.g., grant or cooperative agreement) that are expected to equal or exceed $25,000 or meet certain other criteria as specified in 2 CFR section 180.220). All non-procurement transactions entered into by a pass-through entity (i.e., subawards to subrecipients), irrespective of award amount, are considered covered transactions, unless they are exempt as provided in 2 CFR section 180.215. Condition: During our testing, we noted the following: ? 5 out of 6 applicable agreements were not supported by evidence of appropriate procurement before entering into agreement with the entity to provide services for the program. ? 4 out of 6 applicable agreements did not include the Department's Attachment 3 - "ECECD Suspension and Debarment Form". No other evidence of SAM check provided as evidence of check before entering into agreement with entity to provide services for the program ? 3 out of the 6 agreements reviewed included language to identify the entity as a subrecipient. However, not such monitoring of other required subrecipient protocols were followed because program staff did not believe they used subrecipients. Questioned Costs: N/A Context: Total amount of agreements subject to the suspension and debarment thresholds is 6. We tested all applicable agreements under this program. 2022 -003 Procurement, Suspension, and Debarment (Continued) Cause: Lack of adequate communication between program staff and ASD personnel responsible for procurements and development of agreements to make sure the adequate language was included. Effect: Department may not have followed federal guidelines for procuring vendors. Repeat Finding: No Recommendation: We recommend the program staff and ASD staff responsible for procuring contracts review federal compliance requirements to ensure appropriate language is included in all agreements Views of Responsible Officials: The Early Childhood Education and Care Department (ECECD) agrees with this audit finding in that the Agency did not provide CLA with the appropriate information needed to test for federal compliance requirements. Although the Agency?s Certified Procurement Officer (CPO) later verified that all agreements did contain the required ?Suspension and Debarment? language, it was too late to test in time to submit the audit on time. The various departments of ECECD will use this finding to ensure that designated ASD and Program staff fully understand the importance of providing complete and accurate information to the auditors. In addition, ECECD ASD will work toward improving communication regarding potential audit findings to the appropriate program staff, allowing for enough time to address the potential finding and possibly avoid a finding altogether. This will be completed by June 30, 2023.

2022-004 Unallowable Costs Federal Agency: US Department of Health and Human Services Federal Program Name: Child Care and Development Funds Block Grant (CCDF) - CRRSA (Coronavirus Response and Relieve Supplemental Act) Assistance Listing Number: 93.575 Federal Award Identification Number and Year: 2102NMCCC5 Award Period: 12/27/2020-09/30/2023 Type of Finding: Significant Deficiency in Internal Control over Compliance and Other Matters Criteria or Specific Requirement: 2 CFR Part 200, Subpart E: 200.403 (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. 200.403 (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. 200.405 Allocable to a particular Federal award or other cost objective if the goods or services involved are chargeable or assignable to that Federal award or cost objective in accordance with relative benefits received Condition: Out of 40 transactions tested, we identified 3 where the underlying support identified payments made to entities for teachers and staff that participate in HeadStart activities. Questioned Costs: $354,000 Context: We sampled 40 transactions. After bringing this to the Department's attention, the Grants Managers did perform a thorough assessment and accumulated all payments under this additional funding for this purpose. Cause: Program staff were allocating this additional funding to entities that have CCDF and Headstart programs. However, there was not appropriate tracking to separate the transactions and ensure they were charged to the correct federal programs. Effect: Costs associated with another federal program were charged to CCDF. Repeat Finding: No Recommendation: We recommend the program work closely with ASD to ensure expenditures are tracked and mapped to the appropriate federal award. Views of Responsible Officials: The Early Childhood Education and Care Department (ECECD) agrees with this audit finding and the ASD Director, CFO and Grants Manager will work with The Federal Program Team to develop formal policies and procedures for grant management to ensure compliance with programmatic grant requirements and track expenditures to ensure costs charged to grants are allowable, necessary, and reasonable. This will be completed by June 30, 2023.

2021 ? 001 Federal agency: United States Department of Health and Human Services and United States Department of Education Federal program title: Temporary Assistance for Needy Families and ESF ? Governor?s Emergency Education Relief Funds Assistance Listing Numbers: 93.558 and 84.425C Pass-Through Agency: 93.558 ? Passed through NM Department of Human Services 84.425C ? Passed through NM Department of Finance and Administration Pass-Through Number(s): 93.558: 21-630-9000-0002; 21-630-9000-0001 84.425C - 2021-GEER-ECECD Award Period: 93.558 ? July 1, 2020 ? June 30, 2021 84.425C ? July 1, 2020 ? September 30, 2021 Type of Finding: Significant Deficiency in Internal Control over Compliance - Other Noncompliance Condition: For all subawards tested between the Department and respective subrecipients do not include the required elements outlined in 2 CFR section 200.331(a). Additionally, the Department did not adequately perform its financial monitoring responsibilities. The Department did perform its required programmatic monitoring. ? 93.558 ? 8 out of 8 samples tested. Additionally, 1 out of 8 did not have a signed award. ? 84.425C ? 13 out of 13 samples tested. Additionally, 1 out of 13 did not have a signed award. Criteria or specific requirement: Per 2 CFR ?200.331 Requirements for pass-through entities, a nonfederal entity must 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 reviewing financial and performance reports required by the pass-through entity. Additionally, ?200.331(a) includes required elements that are to be included in the subawards. Questioned costs: none Context: This was identified during our testing of the respective samples selected for subrecipient monitoring. See condition above. Cause: The Department was unaware of the full requirement and does not have controls in place to ensure full compliance with Federal regulations or the terms and conditions of the Federal award. Effect: The Department is not compliance with Federal Regulations. Repeat Finding: No Recommendation: We recommend the Department implement procedures to ensure compliance with required monitoring of its subrecipients, including review of financial reporting provided by its subrecipients. Additionally, we recommend the Department review the Federal Regulations to ensure the required elements are included in the subaward agreements. Management Response: Management concurs with this finding. Corrective Actions: ECECD leadership and Early Care, Education, and Nutrition (ECEN) contract and grants managers are now aware of all ?200.331 requirements and will ensure that all subrecipient?s financial and performance reports are reviewed to ensure compliance, and that all subawards contain the required elements specified in 2 CFR 200.332 (A) as follows: 1. ECEN staff will review all current state fiscal year 2022 (FY22) subrecipient contracts to ensure a completed FY22 Attachment 5 is on all contracts that are associated with a federal award, and that grant award letters contain the required Federal funding identification. ASD will provide ECEN staff with a PO listing of all contracts/grants with Federal project identification at the time of revenue identification (usually twice a year ? at fiscal year beginning and after Federal fiscal year start with PO modifications). In future award cycles ASD staff will review grants and contracts for completed federal revenue identification attachments or that elements are contained in grant award letters. Expected Date of Completion: 12/31/21 2. The ECEN Deputy Director will develop policies and procedures necessary to ensure proper financial monitoring and oversight. Elements to be included in the policies and procedures include a review of time and expenditure records for necessary elements related to date, time, nature, and cost of services; review for suspension and debarment from financial awards; and review of single audit findings of subrecipient and financial audits that could impact financial award and the issuing of appropriate management decisions. Policies and procedures will ensure monitoring meets the Uniform Grant Guidance requirements and include a subrecipient financial monitoring checklist. Expected date of Completion: 12/31/21 3. ECEN staff that manage contracts and grants will complete financial monitoring and oversight activities on a sample of subrecipient financial activities where appropriate (time and effort, suspension/disbarment). The Agency will complete all financial monitoring of all entities by June 30, 2022. All contracts/grants that have been identified with federal fund sources will have a prior year financial audit review completed and a management decision form completed by the end of the FY21 fiscal year. Expected date of completion: 6/30/22

2021-002 (Previously 2020-002) Subrecipient (Significant Deficiency and Noncompliance) Type of Finding: ? Significant Deficiency in Internal Control Over Compliance and Other Matter Federal Program Title: Veterans Cemetery Grants Program CFDA: 64.203 Federal Agency: The Department of Veterans Affairs Award Period: 9/25/2017-9/24/2020, and 9/12/2018-9/11/2021 Condition: 1 out of 1 subrecipient tested did not have adequate subaward agreements that include the points listed in 2 CFR ?200.331 Requirements for pass-through entities. Management?s Response to repeat finding: The agency does not concur with this finding. Cemetery construction related to this grant was already completed and agency did not feel that it was required to inform post completion. During the fiscal year, agency financial and program staff attended and completed ?Subrecipient Monitoring Under the Uniform Grant Guidance? per ?200.331 as recommended. Criteria or Specific Requirement: Per ?200.331 Requirements for pass-through entities, all passthrough entities must ensure that every subaward is clearly identified to the subrecipient as a subaward and includes the information listed at ?200.331 at the time of the subaward and if any of these data elements change, include the changes in subsequent subaward modification. When some of this information is not available, the pass-through entity must provide the best information available to describe the Federal award and subaward.Context: See ?Condition?. Question Cost: None Effect: The Department is in violation of federal regulations and the terms and conditions of the awards. Cause: The Department does not have internal controls in place to ensure compliance with federal regulations or the terms and conditions of the federal award. Recommendation: We recommend the Department implements procedures to ensure compliance with federal regulations and the terms and conditions of federal awards. Additionally, the Department should create an amendment or a memo to notify its subrecipient about the requirement stated at ?200.331. Repeat finding: Yes Views of Responsible Officials: The agency?s Chief Financial Officer ensured that the agency?s fiscal and program staff attended and completed ?Subrecipient Monitoring Under the Uniform Grant Guidance? per ?200.331 as it relates to the Veterans? Cemetery Grants Program by June 30, 2021. The agency will ensure compliance going forward when the next proceeding Cemetery commences.

2 out of 2 subrecipient tested did not have adequate sub-ward agreements that include the points listed in 2 CFR ?200.331 Requirements for pass-through entities.

Two out of two samples selected did not perform a check on the System of Awards Management (SAM) to ensure if the vendor is suspended or debarred.

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