State of New Jersey

Reference Number: 2025-001 Prior Year Finding: No Federal Agency: U.S. Department of Agriculture State Agency: Department of Agriculture Federal Program: Child and Adult Care Food Program Assistance Listing Number: 10.558 Award Number and Year: 251NJ3014N2020 (10/1/2024 – 9/30/2025) 251NJ304N1099 (10/1/2024 – 9/30/2025) 251NJ314N1050 (10/1/2024 – 9/30/2026) 251NJ314N1150 (10/1/2024 – 9/30/2026) Compliance Requirement: Subrecipient Monitoring Type of Finding: Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance – Per 2 CFR section 200.332(e) and (g), pass-through entities must monitor the activities of a subrecipient as necessary to ensure that the subrecipient complies with Federal statutes, regulations, and the terms and conditions of the subaward. The pass-through entity is responsible for monitoring the overall performance of a subrecipient to ensure that the goals and objectives of the subaward are achieved. In monitoring a subrecipient, a pass-through entity must review financial and performance reports, ensure that the subrecipient takes corrective action on all significant developments that negatively affect the subaward, issue a management decision for audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity, resolve audit findings specifically related to the subaward, and verify that a subrecipient is audited as required by Subpart F. Per 7 CFR part 226(l), State agencies must provide technical and supervisory assistance to institutions and facilities to facilitate effective Program operations, monitor progress toward achieving Program goals, and ensure compliance with all requirements of title VI of the Civil Rights Act of 1964, title IX of the Education amendments of 1972, section 504 of the Rehabilitation Act of 1973, the Age Discrimination Act of 1975, and the Department's regulations concerning nondiscrimination (parts 15, 15a, and 15b of this title). The State agency must maintain documentation of supervisory assistance activities, including reviews conducted, corrective actions prescribed, and follow-up efforts. The New Jersey Department of Agriculture was granted a waiver by the USDA Food and Nutrition Service to extend the normal three-year review frequency requirement of 7 CFR 226.6(m)(i) to September 30, 2025. Control – Per 2 CFR section 200.303(a), a 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: The Department of Agriculture (Department) was unable to provide documentation that it performed subrecipient reviews. Context: For two of forty subrecipients selected for testing, the Department was unable to provide documentation that it monitored subrecipients per program requirements. Per the Department’s approved waiver, reviews should have been conducted by September 30, 2025, but the Department was unable to provide documentation that the reviews had been performed. Questioned costs: Undetermined. Cause: The Department indicated that the reviews were performed in 2023, but it was unable to provide the electronic files documenting the reviews. Therefore, auditors were unable to verify that the reviews had been performed in accordance with program requirements and the approved waiver. Effect: Untimely subrecipient monitoring may result in a failure of the Department to detect that subrecipients are not meeting compliance requirements or program goals. It may also result in a failure of these deficiencies to be corrected on a timely basis. Recommendation: The Department should review and enhance internal controls to ensure that it maintains documentation that subrecipient reviews are conducted timely in accordance with program requirements and any applicable approved extensions. We further recommend that documentation is readily available for audit. Views of responsible officials: At the time of the single audit records request, two out of the forty selected Department Child and Adult Care Food Program (CACFP) subrecipient monitoring review documentation files were identified by program staff as logged on the annual 2023 review logs and found to be saved in the Department network user folders. However, these files could not be opened or accessed by program staff. Department IT staff also made several attempts to retrieve these corrupt files but were unsuccessful. Screenshots on page 2 show network files dated for 2023, which were shared by email with the auditor to represent the two subrecipient monitoring reviews conducted in 2023 and saved in state network files. However, the documentation could not be shared with the auditor to verify that the Department conducted these reviews to ensure compliance had been met. As mentioned above, annual compliance tracking for Department CACFP subrecipient monitoring is tracked utilizing the following internal control documentation record reviews throughout the monitoring process: Frequent monthly updating and annual review of staff’s detailed administrative review logs. Management review of staff administrative and facility review forms from conducted reviews. Review of staff fiscal action (overclaim) assessments for subrecipient non-compliance. Updating CACFP management compliance review cycle oversight reports for the annual number of reviews. For background, since FFY 2020, or the first year of the 5-year review cycle waiver, CACFP subrecipient review documentation records have been maintained in the Department network user file folders as PDF fillable forms, labeled by agreement year. However, earlier in FFY 2025, program staff identified challenges with record retention and added the following internal control changes: new administrative staff, a new recordkeeping system, and retention methods. New internal control practices have been developed and implemented to ensure that the Department can detect that all sponsoring organizations are meeting compliance requirements and that identified deficiencies are being corrected on a timely basis. Additionally, the Department enhanced internal controls to ensure that it maintains documentation that sponsoring organization reviews are conducted timely in accordance with program requirements, to ensure documentation is readily available for audit. The following Department CACFP enhanced internal controls have been added or are continuing to ensure that the Department maintains CACFP record retention of subrecipient monitoring documentation: Updated staff administrative review procedures to include record retention requirements. Saving FFY 2026 Subrecipient Monitoring records in the Department CACFP Cares System – 1st Copy. Saving FFY 2026 Subrecipient Monitoring records in the Department CACFP Shared Staff files – 2nd Copy. Saving FFY 2026 Subrecipient Monitoring records in the Department CACFP Restricted files – 3rd Copy. Developing an online Subrecipient Monitoring Review system (SOARS) for maintaining documentation. Tracked by Assistant Coordinator, Staff, Administrative Staff, and Fiscal Office for assessed fiscal action. Conducting file inventory for review records from 2020 through the current date. Added new CACFP administrative staff with more experienced record management skills and greater awareness of federal program records retention needs, and structured logging practices for maintaining State Agency documentation internal control and data integrity to meet or exceed documentation compliance requirements.

Reference Number: 2025-002 Prior Year Finding: 2024-001 Federal Agency: U.S. Department of Housing and Urban Development State Agency: Department of Community Affairs Federal Program: Community Development Block Grants Disaster Recovery (CDBG-DR) Cluster Assistance Listing Number: 14.269, 14.272 Award Number and Year: B-13-DS-34-0001 (10/30/2012 – 9/30/2029) B-13-DS-34002 (1/21/2016 – 9/30/2029) Compliance Requirement: Reporting – Federal Funding Accountability and Transparency Act (FFATA) Type of Finding: Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance: Per the Federal Funding Accountability and Transparency Act (FFATA), prime (direct) recipients of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Reports must be filed in FSRS by the end of the month following the month in which the prime recipient awards any sub-grant greater than or equal to $30,000. If the initial award is below $30,000 but subsequent grant modifications result in a total award equal to or over $30,000, the award will be subject to the reporting requirements as of the date the award exceeds $30,000. If the initial award equals or exceeds $30,000 but funding is subsequently de-obligated such that the total award amount falls below $30,000, the award continues to be subject to FFATA reporting requirements. On March 8, 2025, FSRS.gov was retired, and all subaward reporting data and functionality transitioned to SAM.gov after that date. The following key data elements must be reported: Subawardee Name and Unique Entity Identifier (UEI) number; Amount of Subaward (inclusive of modifications); Subaward Obligation/Action Date; Date of Report Submission; Subaward Number; Project Description; and Names and Compensation of Highly Compensated Officers. (Names and Compensation of Highly Compensated Officers must only be reported when the entity in the preceding fiscal year received 80 percent or more of its annual gross revenues in Federal awards; and $25,000,000 or more in annual gross revenues from Federal awards; and the public does not have access to this information about the compensation of the senior executives of the entity through periodic reports filed under section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. §§ 78m(a), 78o(d)) or section 6104 of the Internal Revenue Code of 1986.) Control: Per 2 CFR section 200.303(a), a 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 comply 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: The Department of Community Affairs (Department) did not report subaward information timely in accordance with FFATA requirements. Context: Five of five subawards selected for testing, issued from 2014 to 2020, were not reported timely in accordance with FFATA reporting requirements. Three subawards were reported approximately 5 years late, one subaward was reported 9 months late, and one subaward was reported 15 days late. All subawards were reported prior to FY 2025. SEE SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR CHART/TABLE Cause: At the time of subaward issuance, the Department did not have sufficient procedures or controls to ensure that subaward information was reported timely. Effect: Subawards were not reported timely in accordance with FFATA requirements. Questioned costs: None noted. Recommendation: We recommend that the Department review its procedures and controls to ensure that all required subawards are reported to SAM.gov no later than the end of the month following the month of issuance or modification. Views of responsible officials: The Department of Community Affairs (DCA) acknowledges prior instances of delayed reporting for subawards under the Federal Funding Accountability and Transparency Act (FFATA). The most recent subaward reviewed under the FY 2025 single audit for compliance occurred in November 2021. Subsequent to this audit, DCA has undertaken and completed a thorough revision of its policies and procedures to enhance both accountability and transparency. Following these updates, DCA is currently in full compliance with all aspects of FFATA, including those related to timeliness. Additionally, DCA is committed to the continuous review and enhancement of its processes to maintain alignment with all federal requirements, thereby reinforcing its dedication to upholding the highest standards of compliance and reporting accuracy.

Reference Number: 2025-003 Prior Year Finding: 2024-005 Federal Agency: U.S. Department of Labor State Agency: Department of Labor and Workforce Development Federal Program: WIOA Cluster Assistance Listing Number: 17.258, 17.259, 17.278 Award Number and Year: AA-34783-20-55-A-34 (7/1/2021 – 6/30/2024) AA-36334-21-55-A-34 (7/1/2021 – 6/30/2024) AA-38544-22-55-A-34 (7/1/2022 – 6/30/2025) 23A55AY000022 (7/1/2023 – 6/30/2026) 23A55AT000047 (7/1/2023 – 6/30/2026) 23A55AW000045 (7/1/2023 – 6/30/2026) Compliance Requirement: Reporting – Federal Funding Accountability and Transparency Act (FFATA) Type of Finding: Material Weakness in Internal Control Over Compliance, Material Non-compliance Criteria or specific requirement: Compliance: Per the Federal Funding Accountability and Transparency Act (FFATA), prime (direct) recipients of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Reports must be filed in FSRS by the end of the month following the month in which the prime recipient awards any sub-grant greater than or equal to $30,000. If the initial award is below $30,000 but subsequent grant modifications result in a total award equal to or over $30,000, the award will be subject to the reporting requirements as of the date the award exceeds $30,000. If the initial award equals or exceeds $30,000 but funding is subsequently de-obligated such that the total award amount falls below $30,000, the award continues to be subject to FFATA reporting requirements. On March 8, 2025, FSRS.gov was retired, and all subaward reporting data and functionality transitioned to SAM.gov after that date. The following key data elements must be reported: Subawardee Name and Unique Entity ID (UEI) number; Amount of Subaward (inclusive of modifications); Subaward Obligation/Action Date; Date of Report Submission; Subaward Number; Project Description; and Names and Compensation of Highly Compensated Officers. (Names and Compensation of Highly Compensated Officers must only be reported when the entity in the preceding fiscal year received 80 percent or more of its annual gross revenues in Federal awards; and $25,000,000 or more in annual gross revenues from Federal awards; and the public does not have access to this information about the compensation of the senior executives of the entity through periodic reports filed under section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. §§ 78m(a), 78o(d)) or section 6104 of the Internal Revenue Code of 1986.) Control: Per 2 CFR section 200.303(a), a 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 comply 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: The Department of Labor and Workforce Development (Department) did not report subaward information timely in accordance with FFATA requirements and reported an incorrect subaward amount. Context: Eight subawards were selected for testing and we noted the following exceptions: • 2 of 8 subawards selected for testing were not reported. The subawards were issued in June and August 2024 and they were not reported to SAM.gov as of the date of audit test work. • 1 of 8 subawards selected for testing reported an incorrect subaward amount. The subaward amount was $1,439,026 but the amount reported was $1,558,312, for a variance of $119,286 overreported. SEE SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR CHART/TABLE Cause: The Department’s internal controls were not sufficient to ensure that subawards were reported timely nor that subawards were reported accurately. The Department ha not fully implemented its corrective action plan from the prior year. Effect: Subawards were not reported in accordance with FFATA requirements. Questioned costs: None noted. Recommendation: We recommend that the Department complete implementation of its prior year corrective action plan. It should develop internal controls and procedures to ensure that all required subawards are reported timely and accurately no later than the end of the month following the month of issuance in accordance with FFATA reporting requirements. Views of responsible officials: The New Jersey Department of Labor and Workforce Development (DLWD) has transitioned from a manual contract agreement process to a web-based grant administration system using the System for Administering Grants Electronically (SAGE) and IntelliGrants (IGX) applications. The DLWD FFATA Reporting Unit accesses these automated systems and monitors them monthly to identify new Subaward contracts/agreements for timely reporting in the FFATA system. Additionally, the DLWD Fiscal & Accounting Division will complete the full implementation of this transition by developing stronger internal controls and procedures to ensure that all required subawards are reported no later than the end of the month following issuance, in accordance with FFATA reporting requirements.

Reference Number: 2025-004 Prior Year Finding: No Federal Agency: U.S. Department of Labor State Agency: Department of Labor and Workforce Development Federal Program: WIOA Cluster Assistance Listing Number: 17.258, 17.259, 17.278 Award Number and Year: AA-34783-20-55-A-34 (7/1/2021 – 6/30/2024) AA-36334-21-55-A-34 (7/1/2021 – 6/30/2024) AA-38544-22-55-A-34 (7/1/2022 – 6/30/2025) 23A55AY000022 (7/1/2023 – 6/30/2026) 23A55AT000047 (7/1/2023 – 6/30/2026) 23A55AW000045 (7/1/2023 – 6/30/2026) Compliance Requirement: Subrecipient Monitoring Type of Finding: Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance: Per 2 CFR section 200.332(a) - Requirements for Pass-Through Entities states, in part, that all pass-through entities must ensure that every subaward is clearly identified to the subrecipient as a subaward and includes information 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. Per 2 CFR section 200.332(e) and (g), pass-through entities must monitor the activities of a subrecipient as necessary to ensure that the subrecipient complies with Federal statutes, regulations, and the terms and conditions of the subaward. The pass-through entity is responsible for monitoring the overall performance of a subrecipient to ensure that the goals and objectives of the subaward are achieved. In monitoring a subrecipient, a pass-through entity must review financial and performance reports, ensure that the subrecipient takes corrective action on all significant developments that negatively affect the subaward, issue a management decision for audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity, resolve audit findings specifically related to the subaward, and verify that a subrecipient is audited as required by Subpart F. Control: Per 2 CFR section 200.303(a), a 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 comply 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: The Department of Labor and Workforce Development (Department) omitted required federal award information from subawards and did not ensure that subrecipients were audited as required by Subpart F. Context: For eight of eight subawards selected for testing, the subaward agreement did not include all required federal award information. Specifically, we noted the following: • 8 or 8 subawards were missing identification of whether the award was research and development • 7 or 8 subawards were missing the federal award identification number (FAIN) • 4 of 8 subawards were missing the federal award date for when the Federal agency awarded the funds to the prime recipient For one of eight subrecipients selected for testing, the Department did not ensure the subrecipient was audited as required by Subpart F. Cause: The Department’s procedures and internal controls were not sufficient to ensure that subawards included all required information in accordance with 2 CFR section 200.332, nor that subrecipients were audited as required by Subpart F. Effect: Excluding required federal grant award information at the time of the subaward may cause subrecipients and their auditors to be uninformed about specific program information and other regulations that apply to the funds they receive. There is also the potential for subrecipients to have incomplete Schedules of Expenditures of Federal Awards (SEFA) in their Single Audit reports, and federal funds may not be properly audited at the subrecipient level in accordance with the Uniform Guidance. Failure to perform subrecipient monitoring and ensure that subrecipients are audited as required by Subpart F may result in a failure of the Department to detect that subrecipients are not meeting compliance requirements or program goals. It may also result in these deficiencies to not be corrected on a timely basis. Questioned costs: Undetermined. Recommendation: We recommend the Department review and enhance internal controls and procedures to ensure that required federal award information is included in its subawards and that subrecipients are monitored and audited as required by Subpart F. Views of Responsible Officials: The New Jersey Department of Labor and Workforce Development’s (DLWD) Workforce Division will review and enhance internal controls and procedures in accordance with 2CFR 200.303 to ensure that all required federal award information is included in its subawards. Additionally, DLWD will monitor all subrecipients to verify they are audited as required under Subpart F of the Uniform Guidance.

Reference Number: 2025-005 Prior Year Finding: 2024-007 Federal Agency: U.S. Department of the Treasury State Agency: Department of Community Affairs Federal Program: COVID-19 – Coronavirus Capital Projects Fund Assistance Listing Number: 21.029 Award Number and Year: CPFFN0185 (2021) Compliance Requirement: Reporting – Federal Funding Accountability and Transparency Act (FFATA) Type of Finding: Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance: Per the Federal Funding Accountability and Transparency Act (FFATA), prime (direct) recipients of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Reports must be filed in FSRS by the end of the month following the month in which the prime recipient awards any sub-grant greater than or equal to $30,000. If the initial award is below $30,000 but subsequent grant modifications result in a total award equal to or over $30,000, the award will be subject to the reporting requirements as of the date the award exceeds $30,000. If the initial award equals or exceeds $30,000 but funding is subsequently de-obligated such that the total award amount falls below $30,000, the award continues to be subject to FFATA reporting requirements. On March 8, 2025, FSRS.gov was retired, and all subaward reporting data and functionality transitioned to SAM.gov after that date. The following key data elements must be reported: Subawardee Name and Unique Entity ID (UEI) number; Amount of Subaward (inclusive of modifications); Subaward Obligation/Action Date; Date of Report Submission; Subaward Number; Project Description; and Names and Compensation of Highly Compensated Officers. (Names and Compensation of Highly Compensated Officers must only be reported when the entity in the preceding fiscal year received 80 percent or more of its annual gross revenues in Federal awards; and $25,000,000 or more in annual gross revenues from Federal awards; and the public does not have access to this information about the compensation of the senior executives of the entity through periodic reports filed under section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. §§ 78m(a), 78o(d)) or section 6104 of the Internal Revenue Code of 1986.) Control: Per 2 CFR section 200.303(a), a 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 comply 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: The Department of Community Affairs (Department) did not report subaward information timely in accordance with FFATA requirements. Context: Two of three subawards selected for testing were not reported timely. The subawards were issued in February and July 2024 but were not reported until December 2024. The subawards were reported as part of the implementation of the Department’s corrective action plan from the prior audit year. SEE SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR CHART/TABLE Cause: The Department had not completed implementation of its corrective action plan from the prior audit year. Effect: Subawards were not reported timely in accordance with FFATA requirements. Questioned costs: None noted. Recommendation: We recommend that the Department complete implementation of its corrective action plan from the prior audit year. It should review procedures and internal controls to ensure that all required subawards are reported timely to SAM.gov no later than the end of the month following the month of issuance or modification. Views of responsible officials: The Department of Community Affairs (DCA) has effectively executed a comprehensive corrective action plan to address and rectify findings related to the Federal Funding Accountability and Transparency Act (FFATA). The issue of late FFATA submissions was originally identified in the Single Audit for fiscal year 2024. In recognition of the overlap, DCA undertook all necessary updates and enhancements to its reporting processes prior to the fiscal year 2025 audit. The findings persisted into fiscal year 2025 due to the inability to make retroactive changes in SAM.gov for past updates. To mitigate this, the department has implemented robust protocols and systems designed to ensure the accuracy and timeliness of future financial disclosures, thereby preventing the recurrence of similar issues.

Reference Number: 2025-006 Prior Year Finding: 2024-009 Federal Agency: U.S. Department of Health and Human Services State Agency: Department of Human Services Federal Program: Temporary Assistance for Needy Families Assistance Listing Number: 93.558 Award Number and Year: 250INJTANF (10/1/2024 – 9/30/2025) 240INJTANF (10/1/2023 – 9/30/2024) Compliance Requirement: Reporting – Federal Funding Accountability and Transparency Act (FFATA) Type of Finding: Material Weakness in Internal Control Over Compliance, Material Non-compliance Criteria or specific requirement: Compliance: Per the Federal Funding Accountability and Transparency Act (FFATA), prime (direct) recipients of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Reports must be filed in FSRS by the end of the month following the month in which the prime recipient awards any sub-grant greater than or equal to $30,000. If the initial award is below $30,000 but subsequent grant modifications result in a total award equal to or over $30,000, the award will be subject to the reporting requirements as of the date the award exceeds $30,000. If the initial award equals or exceeds $30,000 but funding is subsequently de-obligated such that the total award amount falls below $30,000, the award continues to be subject to FFATA reporting requirements. On March 8, 2025, FSRS.gov was retired, and all subaward reporting data and functionality transitioned to SAM.gov after that date. The following key data elements must be reported: Subawardee Name and Unique Entity Identified (UEI); Amount of Subaward (inclusive of modifications); Subaward Obligation/Action Date; Date of Report Submission; Subaward Number; Project Description; and Names and Compensation of Highly Compensated Officers. (Names and Compensation of Highly Compensated Officers must only be reported when the entity in the preceding fiscal year received 80 percent or more of its annual gross revenues in Federal awards; and $25,000,000 or more in annual gross revenues from Federal awards; and the public does not have access to this information about the compensation of the senior executives of the entity through periodic reports filed under section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. §§ 78m(a), 78o(d)) or section 6104 of the Internal Revenue Code of 1986.) Control: Per 2 CFR section 200.303(a), a 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 comply 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: The Department of Human Services (Department) did not report subaward information as required by FFATA requirements. Context: None of the fourteen subawards selected for testing were reported. The subawards were all issued on 1/1/2025 and they have not been reported as of the time of audit test work. SEE SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR CHART/TABLE Cause: The Department did not have procedures or controls in place to ensure that subaward information was reported as required by FFATA requirements. Effect: Subawards were not reported in accordance with FFATA requirements. Questioned costs: None noted. Recommendation: We recommend that the Department develop controls and procedures to ensure that all required subawards are reported accurately and timely to SAM.gov no later than the end of the month following the month of issuance. Views of responsible officials: The New Jersey Department of Human Services’ Division of Family Development (DHD/DFD) has taken significant steps to ensure the effective management of FFATA (Federal Funding Accountability and Transparency Act) data. DHD/DFD has appointed qualified personnel dedicated to the accurate reporting of FFATA information. All appointed personnel have undergone comprehensive training programs designed to equip them with the knowledge and skills required for the accurate entry and maintenance of FFATA data.

Reference Number: 2025-007 Prior Year Finding: 2024-011 Federal Agency: U.S. Department of Health and Human Services State Agency: Department of Human Services Federal Program: CCDF Cluster Assistance Listing Number: 93.575, 93.596 Award Number and Year: G2301NJCCDF (10/1/2022 – 9/30/2025) G2301NJCCDD (10/1/2022 – 9/30/2025) 2401NJCCDD (10/1/2023 – 9/30/2026) 2401NJCCDF (10/1/2023 – 9/30/2026) 2401NJCCDM (10/1/2023 – 9/30/2025) Compliance Requirement: Reporting – Federal Funding Accountability and Transparency Act (FFATA) Type of Finding: Material Weakness in Internal Control Over Compliance, Material Non-compliance Criteria or specific requirement: Compliance: Per the Federal Funding Accountability and Transparency Act (FFATA), prime (direct) recipients of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Reports must be filed in FSRS by the end of the month following the month in which the prime recipient awards any sub-grant greater than or equal to $30,000. If the initial award is below $30,000 but subsequent grant modifications result in a total award equal to or over $30,000, the award will be subject to the reporting requirements as of the date the award exceeds $30,000. If the initial award equals or exceeds $30,000 but funding is subsequently de-obligated such that the total award amount falls below $30,000, the award continues to be subject to FFATA reporting requirements. On March 8, 2025, FSRS.gov was retired, and all subaward reporting data and functionality transitioned to SAM.gov after that date. The following key data elements must be reported: Subawardee Name and Unique Entity Identified (UEI); Amount of Subaward (inclusive of modifications); Subaward Obligation/Action Date; Date of Report Submission; Subaward Number; Project Description; and Names and Compensation of Highly Compensated Officers. (Names and Compensation of Highly Compensated Officers must only be reported when the entity in the preceding fiscal year received 80 percent or more of its annual gross revenues in Federal awards; and $25,000,000 or more in annual gross revenues from Federal awards; and the public does not have access to this information about the compensation of the senior executives of the entity through periodic reports filed under section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. §§ 78m(a), 78o(d)) or section 6104 of the Internal Revenue Code of 1986.) Control: Per 2 CFR section 200.303(a), a 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 comply 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: The Department of Human Services (Department) did not report subaward information in accordance with FFATA requirements. Context: None of the seven subawards selected for testing were reported. The Department informed auditors that it did not report subawards during FY 2025. SEE SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR CHART/TABLE Cause: The Department does not have procedures and controls to ensure that FFATA reporting requirements are met. Effect: Subawards were not reported in accordance with FFATA requirements. Questioned costs: None noted. Recommendation: We recommend that the Department develop internal controls and procedures to ensure that FFATA reporting requirements are met. We further recommend the Department develop controls and procedures to ensure that all required subawards are reported accurately and timely no later than the end of the month following the month of issuance. Views of responsible officials: The New Jersey Department of Human Services’ Division of Family Development (DHD/DFD) has taken significant steps to ensure the effective management of FFATA (Federal Funding Accountability and Transparency Act) data. DHD/DFD has appointed qualified personnel dedicated to the accurate reporting of FFATA information. All appointed personnel have undergone comprehensive training programs designed to equip them with the knowledge and skills required for accurate entry and maintenance of FFATA data. DHD/DFD and its internal units will work in close coordination to manage, review, and validate FFATA submissions.

Reference Number: 2025-008 Prior Year Finding: No Federal Agency: U.S. Department of Health and Human Services State Agency: Department of Children and Families Federal Program: Social Services Block Grant Assistance Listing Number: 93.667 Award Number and Year: 2300NJSOSR (10/1/2022 – 9/30/2024) 2400NJSOSR (10/1/2023 – 9/30/2025) 2500NJSOSR (10/1/2024 – 9/30/2026) Compliance Requirement: Reporting – Federal Funding Accountability and Transparency Act (FFATA) Type of Finding: Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance: Per the Federal Funding Accountability and Transparency Act (FFATA), prime (direct) recipients of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Reports must be filed in FSRS by the end of the month following the month in which the prime recipient awards any sub-grant greater than or equal to $30,000. If the initial award is below $30,000 but subsequent grant modifications result in a total award equal to or over $30,000, the award will be subject to the reporting requirements as of the date the award exceeds $30,000. If the initial award equals or exceeds $30,000 but funding is subsequently de-obligated such that the total award amount falls below $30,000, the award continues to be subject to FFATA reporting requirements. On March 8, 2025, FSRS.gov was retired, and all subaward reporting data and functionality transitioned to SAM.gov after that date. The following key data elements must be reported: Subawardee Name and Unique Entity ID (UEI) number; Amount of Subaward (inclusive of modifications); Subaward Obligation/Action Date; Date of Report Submission; Subaward Number; Project Description; and Names and Compensation of Highly Compensated Officers. (Names and Compensation of Highly Compensated Officers must only be reported when the entity in the preceding fiscal year received 80 percent or more of its annual gross revenues in Federal awards; and $25,000,000 or more in annual gross revenues from Federal awards; and the public does not have access to this information about the compensation of the senior executives of the entity through periodic reports filed under section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. §§ 78m(a), 78o(d)) or section 6104 of the Internal Revenue Code of 1986.) Control: Per 2 CFR section 200.303(a), a 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 comply 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: The Department of Children and Families (Department) did not report subaward information timely in accordance with FFATA requirements. Context: The Department had one subaward subject to FFATA reporting requirements and it was not reported timely. The subaward was issued on 10/1/2023 and it was reported on 6/28/2024, or 211 days late. SEE SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR CHART/TABLE Cause: At the time of subaward issuance, the Department’s procedures and controls were not sufficient to ensure that subawards were reported timely in accordance with FFATA requirements. Effect: The subaward was not reported timely. Questioned costs: None noted. Recommendation: We recommend that the Department review procedures and internal controls to ensure that all required subawards are reported timely to SAM.gov no later than the end of the month following the month of issuance or modification. Views of responsible officials: The Department of Children and Families (DCF) will conduct a thorough review of its current procedures to ensure that all required subawards are reported in a timely manner to SAM.gov (System for Award Management). Specifically, DCF will verify that each subaward is reported no later than the end of the month following the month in which the award is issued or upon the allocation of funding to subrecipients. This review will include evaluating existing protocols for subaward reporting to identify any gaps or areas for improvement and implementing regular monitoring and compliance checks to verify that subawards are being reported accurately and timely.

Reference Number: 2025-009 Prior Year Finding: 2024-015 Federal Agency: U.S. Department of Health and Human Services State Agency: Department of Human Services Federal Program: Block Grants for Prevention and Treatment of Substance Abuse, COVID-19 – Block Grants for Prevention and Treatment of Substance Abuse Assistance Listing Number: 93.959 Award Number and Year: 6B08TI085822 (10/1/2022 – 9/30/2024) 1B08TI087054 (10/1/2023 – 9/30/2025) Compliance Requirement: Reporting – Federal Funding Accountability and Transparency Act (FFATA) Type of Finding: Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance: Per the Federal Funding Accountability and Transparency Act (FFATA), prime (direct) recipients of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Reports must be filed in FSRS by the end of the month following the month in which the prime recipient awards any sub-grant greater than or equal to $30,000. If the initial award is below $30,000 but subsequent grant modifications result in a total award equal to or over $30,000, the award will be subject to the reporting requirements as of the date the award exceeds $30,000. If the initial award equals or exceeds $30,000 but funding is subsequently de-obligated such that the total award amount falls below $30,000, the award continues to be subject to FFATA reporting requirements. On March 8, 2025, FSRS.gov was retired, and all subaward reporting data and functionality transitioned to SAM.gov after that date. The following key data elements must be reported: Subawardee Name and Unique Entity ID (UEI) number; Amount of Subaward (inclusive of modifications); Subaward Obligation/Action Date; Date of Report Submission; Subaward Number; Project Description; and Names and Compensation of Highly Compensated Officers. (Names and Compensation of Highly Compensated Officers must only be reported when the entity in the preceding fiscal year received 80 percent or more of its annual gross revenues in Federal awards; and $25,000,000 or more in annual gross revenues from Federal awards; and the public does not have access to this information about the compensation of the senior executives of the entity through periodic reports filed under section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. §§ 78m(a), 78o(d)) or section 6104 of the Internal Revenue Code of 1986.) Control: Per 2 CFR section 200.303(a), a 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 comply 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: The Department of Health (Department) did not report subaward information timely in accordance with FFATA requirements. Context: Three of thirteen subaward transactions selected for testing were not reported timely. The subawards were reported to SAM.gov one week to four months late. SEE SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR CHART/TABLE Cause: The Department did not establish effective procedures and controls to ensure that subawards were reported timely. Effect: Subawards were not reported timely in accordance with FFATA requirements. Questioned costs: Undetermined. Recommendation: We recommend that the Department review its procedures and controls to ensure that all required subawards are reported to SAM.gov no later than the end of the month following the month of issuance or modification. Views of responsible officials: The Department of Human Services, Division of Mental Health and Addiction Services (DMHAS) does not dispute the FFATA upload dates for three (3) of the thirteen (13) subawards tested, but it disputes that such uploads were untimely. One subaward was uploaded only seven (7) days late. DMHAS submits that it substantially complied, no finding should issue and no corrective action is required in that instance. The two (2) remaining awards at issue were funded with the ARPA Block Grant. On March 24, 2025, U.S. DHHS took unprecedented action and issued a notice of early termination of ARPA funding, purportedly for cause because the Covid-19 health emergency had ended. The notice of early termination and subsequent, revised Notice of Award (NOA), required DMHAS to cease all activities. It also sought to revise the original grant terms, retroactive to the original September 1, 2021 project start date. By way of example, the revised NOA also includes new conditions and certifications required to draw down federal funds. DMHAS complied with the notice of early termination and immediately ceased all activities; it stopped issuing subaward letters, it ceased all subaward uploads into its Contract Information Management System, it stopped all reimbursements, and it stopped all FFATA uploads pending or in process. Also in response to the abrupt early termination of funding, DMHAS issued “stop work” orders to all impacted agencies and advised that there was no assurance of reimbursement as of the effective date of notice. Shortly thereafter, DMHAS joined numerous other State authorities and filed a formal complaint in federal district court, alleging that the early termination was unlawful and caused the States irreparable harm. On April 5, 2025, the court entered a temporary injunction and scheduled a hearing for preliminary injunctive relief. U.S. DHHS moved for reconsideration. Several weeks later, the Court entered a preliminary injunction enjoining the enforcement of the early termination of ARPA until further order of the Court. The cessation of FFATA uploads from the March termination to the receipt of injunctive relief was necessary to: 1. Maintain strict compliance with the revised NOA terms and conditions, including the written obligation to cease all activities; 2. Maintain strict compliance with the revised NOA terms and conditions, by issuing “stop work” orders; 3. Ensuring DMHAS’s “stop work” orders were not superseded by FFATA uploads or USA.Spending publications while the request for injunctive relief was pending, so no individual or entity (including the US Office of the Attorney General, US DHHS, or subawardee) could construe the upload as renewed authority to continue to expend funds through subaward end date; 4. Fully protect the prosecution of DMHAS’s claims in the pending, federal litigation, as well as DMHAS’s defenses; and 5. Mitigate DMHAS and subawardee damages in the underlying litigation. Based on the unprecedented early termination of block grant funding and ensuing litigation, DMHAS submits that the timeline to complete FFATA uploads was stayed. Such determination is consistent with the Court’s preliminary injunction, which makes clear that U.S. DHHS immediately treat any actions taken to implement or enforce the early funding terminations, as null and void and rescinded. Therefore, DMHAS should not be issued a FFATA finding that relates directly to the revised NOAs or the direction to cease all activities, and under these extraordinary circumstances, the uploads in question should be classified as non-reportable and immaterial, with no corrective action required. Auditor Rejoinder: Annually, the Office of Management and Budget issues a Compliance Supplement which is based on the requirements of 31 USC Chapter 75 and 2 CFR Part 200, Subpart F. The Supplement is a document that identifies existing compliance requirements that the federal government expects to be considered as part of an audit required by the 1996 Amendments to the Single Audit Act. The Supplement provides information for auditors to understand Federal program’s objectives, procedures, and requirements subject to the audit. The 2025 Supplement identifies FFATA reporting as applicable to ALN 93.959 – Block Grants for Prevention and Treatment of Substance Abuse. Among the FFATA requirements included in the Supplement, auditors must verify that subawards were reported to SAM.gov no later than the last day of the month following the month in which the subaward/subaward amendment obligation was made or the subcontract award/subcontract modification was made. It does not include an exception to FFATA reporting deadlines for ALN 93.959. For the three exceptions noted, the subawards were not reported to SAM.gov by the required deadline, resulting in an audit finding.

Reference Number: 2025-010 Prior Year Finding: 2024-016 Federal Agency: U.S. Department of Homeland Security State Agency: Department of Law and Public Safety Federal Program: Disaster Grants - Public Assistance (Presidentially Declared Disasters) Assistance Listing Number: 97.036 Award Number and Year: 066224614PA: 9/5/2021; 066214574PA: 12/11/2020; 066204488PA: 3/13/2020; 066134086PA: 10/30/2012 Compliance Requirement: Reporting – Federal Funding Accountability and Transparency Act (FFATA) Type of Finding: Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance: Per the Federal Funding Accountability and Transparency Act (FFATA), prime (direct) recipients of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Reports must be filed in FSRS by the end of the month following the month in which the prime recipient awards any sub-grant greater than or equal to $30,000. If the initial award is below $30,000 but subsequent grant modifications result in a total award equal to or over $30,000, the award will be subject to the reporting requirements as of the date the award exceeds $30,000. If the initial award equals or exceeds $30,000 but funding is subsequently de-obligated such that the total award amount falls below $30,000, the award continues to be subject to FFATA reporting requirements. On March 8, 2025, FSRS.gov was retired, and all subaward reporting data and functionality transitioned to SAM.gov after that date. The following key data elements must be reported: Subawardee Name and Unique Entity ID (UEI) number; Amount of Subaward (inclusive of modifications); Subaward Obligation/Action Date; Date of Report Submission; Subaward Number; Project Description; and Names and Compensation of Highly Compensated Officers. (Names and Compensation of Highly Compensated Officers must only be reported when the entity in the preceding fiscal year received 80 percent or more of its annual gross revenues in Federal awards; and $25,000,000 or more in annual gross revenues from Federal awards; and the public does not have access to this information about the compensation of the senior executives of the entity through periodic reports filed under section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. §§ 78m(a), 78o(d)) or section 6104 of the Internal Revenue Code of 1986.) Control: Per 2 CFR section 200.303(a), a 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 comply 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: The Department of Law and Public Safety (Department) did not report subaward information timely in accordance with FFATA reporting requirements. Context: Sixteen subawards were selected for testing and the following exceptions were noted: • 1 of 16 subawards selected for testing was not reported until after it was selected for testing by auditors. The subaward was issued in December 2024 but was not reported to SAM.gov until February 2026. • 3 of 16 subawards selected for testing were issued from 2013 through 2023 but were not reported until September and November 2024. • 1 of 16 subawards selected for testing was issued in May 2022 but it was not reported until May 2025. SEE SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR CHART/TABLE Cause: In its corrective action plan from the 2024 audit, the Department indicated that it was in full compliance with FFATA reporting requirements as of August 2024, however, the reporting exceptions noted above indicate that the corrective action plan has not been fully implemented. Effect: Subawards were not reported timely in accordance with FFATA requirements. Questioned costs: None noted. Recommendation: We recommend that the Department complete implementation of its corrective action plan from the prior audit and ensure all subawards are reported to SAM.gov. It should review procedures and internal controls to ensure that all required subawards are reported no later than the end of the month following the month of issuance or modification. Views of responsible officials: The Department of Law and Public Safety (DLPS) acknowledges that certain FFATA reports for awards obligated in prior fiscal years were not submitted on time due to technical issues with the FEMA system, which prevented timely reporting. These technical issues have since been resolved. The DLPS has been in full compliance with FFATA reporting requirements since August 2024.

Reference Number: 2024-001 Prior Year Finding: No Federal Agency: U.S. Department of Housing and Urban Development State Agency: Department of Community Affairs Federal Program: Community Development Block Grants Disaster Recovery (CDBG-DR) Cluster Assistance Listing Number: 14.269, 14.272 Award Number and Year: B-13-DS-34-0001, B-13-DS-34002 Compliance Requirement: Reporting – Federal Funding Accountability and Transparency Act (FFATA) Type of Finding: Material Weakness in Internal Control Over Compliance, Material Noncompliance Criteria or specific requirement: Compliance: Per the Federal Funding Accountability and Transparency Act (FFATA), prime (direct) recipients of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Reports must be filed in FSRS by the end of the month following the month in which the prime recipient awards any sub-grant greater than or equal to $30,000. If the initial award is below $30,000 but subsequent grant modifications result in a total award equal to or over $30,000, the award will be subject to the reporting requirements as of the date the award exceeds $30,000. If the initial award equals or exceeds $30,000 but funding is subsequently de-obligated such that the total award amount falls below $30,000, the award continues to be subject to FFATA reporting requirements. The following key data elements must be reported: Subawardee Name and Data Universal Numbering System (DUNS) number; Amount of Subaward (inclusive of modifications); Subaward Obligation/Action Date; Date of Report Submission; Subaward Number; Project Description; and Names and Compensation of Highly Compensated Officers. (Names and Compensation of Highly Compensated Officers must only be reported when the entity in the preceding fiscal year received 80 percent or more of its annual gross revenues in Federal awards; and $25,000,000 or more in annual gross revenues from Federal awards; and the public does not have access to this information about the compensation of the senior executives of the entity through periodic reports filed under section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. §§ 78m(a), 78o(d)) or section 6104 of the Internal Revenue Code of 1986.) Control: Per 2 CFR section 200.303(a), a 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 comply 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: The Department of Community Affairs (Department) did not report subaward information to FSRS in accordance with FFATA requirements. Context: Three of four subawards selected for testing were not reported to FSRS in accordance with FFATA reporting requirements. Specifically, we noted the following: • 1 of 4 subawards was not reported timely. The subaward amendment was issued 1/21/2023 and was not reported until 5/20/2024, or fifteen months late. • 2 of 4 subawards were not reported to FSRS. SEE SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR CHART/TABLE Cause: The Department did not have sufficient procedures to ensure that subaward information was reported timely to FSRS. Internal controls did not prevent or detect the errors. Effect: Subawards were not reported to FSRS in accordance with FFATA requirements. Questioned costs: None noted. Recommendation: We recommend that the Department develop controls and procedures to ensure that all required subawards are reported to FSRS no later than the end of the month following the month of issuance. Views of responsible officials: The New Jersey Department of Community Affairs (DCA) recognizes the need to strengthen its monitoring of Subaward reporting requirements to ensure timely reporting. To address this, the agency is already in the process of updating its policies and procedures to enhance oversight and compliance. As part of the policy updates, the DCA is assigning designated staff to track Subaward issuance and reporting. This ensures clear accountability and improves oversight of reporting requirements. The DCA is working to integrate automated reminders and alerts into its process to notify designated staff of upcoming Subaward reporting deadlines. This proactive approach minimizes the risk of missed reporting obligations. The DCA is working to establish a process for conducting periodic compliance reviews to assess adherence to FFATA Subaward reporting requirements. This review will help identify potential issues early and allow for timely corrective actions. To reinforce FFATA compliance, the DCA is working to implement a training initiative to ensure designated staff are knowledgeable about FFATA requirements and the importance of timely reporting. Regular communication efforts will further promote awareness and adherence to reporting deadlines.

Reference Number: 2024-002 Prior Year Finding: 2023-001 Federal Agency: U.S. Department of Labor State Agency: Department of Labor and Workforce Development Federal Program: Unemployment Insurance Assistance Listing Number: 17.225 Award Number and Year: 24A55UI000025 (10/1/2023-12/31/2026) UI-39337-23-55-A-34 (10/1/2022-12/31/2025) Compliance Requirement: Eligibility Type of Finding: Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance: Pandemic Unemployment Assistance (PUA) – PUA provides benefits to covered individuals, who are those individuals not eligible for regular unemployment compensation (UC or extended benefits under state or federal law or Pandemic Emergency Unemployment Compensation (PEUC), including those who have exhausted all rights to such benefits. Covered individuals also include self-employed, those seeking part-time employment, individuals lacking sufficient work history, and those who otherwise do not qualify for regular unemployment compensation or extended benefits under state or federal law or PEUC. PUA is payable to individuals who are ineligible for regular UC, and are unemployed, partially unemployed, or unable or unavailable to work due to one of the COVID-19 related reasons identified Attachment I to UIPL No. 16-20, Change 5. Section 2102(a)(3)(A)(ii)(I) of the CARES Act included 10 specific COVID-19 related reasons. The Department, under the authority provided by Section 2102(a)(3)(A)(ii)(I)(kk) of the CARES Act, has added additional COVID-19 related reasons; these are discussed in more detail in Section 4.a. of UIPL No. 16-20, Change 5. While three of these new COVID-19 related reasons were introduced to states with the publication of UIPL No. 16-20, Change 5 on February 25, 2021, all COVID-19 related reasons apply retroactively to the beginning of the PUA program. Additionally, as described in Section 4.b.i. of UIPL No. 16-20, Change 5, paraphrasing of the COVID-19 related reasons is not permissible; individuals must be permitted to select more than one COVID-19 related reason; individuals must be permitted to select different COVID-19 related reasons each week; and individuals must be permitted to file and select no COVID-19 related reasons. Control: Per 2 CFR section 200.303(a), a 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 comply 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: CLA noted that an ineligible claimant received PUA unemployment benefits. The Department of Labor and Workforce Development (Department) did not maintain an effective control environment over eligibility requirements of the New Jersey Local Office Online Payment System (NJLOOPS) for PUA. Context: 1 of 5 claimants receiving PUA did not identify a COVID-19 reason for their unemployment and was ineligible for the program. Questioned costs: $365 Cause: The Department began providing benefits to the claimant before NJLOOPS had completed the eligibility determination process. Effect: An ineligible claimant received unemployment compensation benefits. Recommendation: We recommend the Department review and enhance procedures and controls to ensure that only eligible claimants receive unemployment compensation benefits. Views of responsible officials: The New Jersey Department of Labor and Workforce Development (DLWD) has reviewed the controls in place for the Pandemic Unemployment Assistance (PUA) and Federal Pandemic Unemployment Compensation (FPUC) programs that expired with payments for CWE 9/4/21. The system controls in place for FPUC continues to require that an underlying UI/PUA payment must first be issued before any FPUC payment could be generated. Similar controls were in place for any PUA payments, where claimants have to choose a valid pandemic related reason for being unemployed before any PUA payment could be issued. These controls, before any CARES Act related payment could be issued, were in place for the duration of the CARES Act program. No PUA or FPUC payment should be issued without these requirements being met. We will continue to enforce these controls.

Reference Number: 2024-003 Prior Year Finding: 2023-002 Federal Agency: U.S. Department of Labor State Agency: Department of Labor and Workforce Development Federal Program: Unemployment Insurance, COVID-19 – Unemployment Insurance Assistance Listing Number: 17.225 Award Number and Year: UI-35663-21-55-A-34 (10/1/2020 – 12/31/2023), UI-37994-22-60-A-34 (10/1/2020 – 9/30/2023), UI-37238-22-55-A-34 (10/1/21 – 12/31/24), UI-39337-23-55-A-34 (10/1/2022 – 12/31/2025), 24A55UI000025-01 (10/1/2023 – 12/31/2026), 23A60UR000027 (1/1/2023 – 9/30/2024), 23A55UB000007 (3/1/2023 – 6/1/2025) Compliance Requirement: Special Tests and Provisions: UI Reemployment Programs: RESEA Type of Finding: Significant Deficiency in Internal Control over Compliance, Other Matters Criteria or specific requirement: Compliance: Per 42 U.S. Code § 506 (a) The Secretary of Labor (in this section referred to as the “Secretary”) shall award grants under this section for a fiscal year to eligible States to conduct a program of reemployment services and eligibility assessments for individuals referred to reemployment services as described in section 503(j) of this title for weeks in such fiscal year for which such individuals receive unemployment compensation. Further, per 42 U.S. Code § 506 (c) (1), In carrying out a State program of reemployment services and eligibility assessments using grant funds awarded to the State under this section, a State shall use such funds only for interventions demonstrated to reduce the number of weeks for which program participants receive unemployment compensation by improving employment outcomes for program participants. The UI program serves as one of the principal “gateways” to the workforce system. It is often the first workforce program accessed by individuals who need workforce services. The WPRS and RESEA programs serve as UI’s primary programs that facilitate the reemployment needs of UI claimants. WPRS, which is mandated by Section 303(j) of the Social Security Act, is designed to identify UI claimants who are most likely to exhaust their benefits and need reemployment assistance to return to work, and refer them to appropriate reemployment services, such as: job search and job placement assistance; counseling; testing; provision of occupational and labor market information; and assessments. WPRS provides reemployment services to selected claimants through an early intervention process. The number of individuals served under WPRS is determined by the state (and/or local areas) based on its capacity to serve these individuals. UIPL No. 41-94 provides guidance on WPRS requirements. RESEA is authorized by Section 306 of the Social Security Act and builds on the success of RESEA’s predecessor, the former UI Reemployment and Eligibility Assessment (REA) program. RESEA uses an evidence-based integrated approach that combines an eligibility assessment for continuing UI eligibility and the provision of reemployment services. State administration of the RESEA is voluntary and under certain circumstances may be designed to also satisfy WPRS requirements. Operating guidance for the RESEA program is updated annually. UIPL 10-22 provides RESEA operating Guidance for FY 2022. Control: Per 2 CFR section 200.303(a), a 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: The Department of Labor (Department) did not retain documentation required by the RESEA program to verify compliance with federal program regulations. Controls were not working sufficiently to document that claimants completed all required RESEA forms, nor that a staff member at the Department with knowledge of the program reviewed eligibility requirements prior to admission of participants to the RESEA program. Context: The Department’s policy is that RESEA eligibility interviews must be conducted and eligibility review forms completed. Both steps are to be reviewed and signed by the participant and an Unemployment Insurance (UI) staff member who is knowledgeable of the program requirements. Sixty cases were selected for testing and the following exceptions were noted: • For 5 of 60 cases selected for testing, the Department was unable to provide a signed RESEA worksheet indicating the interview had been completed and the claimant was reviewed and approved by a UI supervisor. • For 2 of 60 cases selected for testing, the claimant did not complete all required RESEA forms. Questioned costs: Undetermined. Cause: The Department’s procedures and internal controls are not sufficient to ensure compliance with RESEA requirements. Effect: Without clear documentation supporting a participant’s eligibility and supervisory review, ineligible participants could go undetected and federal funds could be paid to recipients who do not qualify to participate in the RESEA program. Recommendation: We recommend that policies and procedures be implemented to ensure that internal controls over RESEA include retention of documentation of each participant’s eligibility and review and approval by a UI supervisor. Views of responsible officials: The New Jersey Department of Labor and Workforce Development (DLWD) has policies and procedures in place that ensure that internal controls over RESEA include retention of documentation of each participant’s eligibility. All required Reemployment Services and Eligibility Assessment (RESEA) forms are collected from the participant and reviewed to determine UI eligibility by staff that are trained in RESEA and UI policy. Staff are required to upload all participant documentation into our online case management system where the information is available to staff indefinitely. DLWD will continue to provide training to staff to ensure that all participants are provided services in a timely manner and that all documentation is uploaded into our case management system. Corrective actions will be fully implemented as of June 30, 2025.

Reference Number: 2024-004 Prior Year Finding: 2023-004 Federal Agency: U.S. Department of Labor State Agency: Department of Labor and Workforce Development Federal Program: Unemployment Insurance, COVID-19 – Unemployment Insurance Assistance Listing Number: 17.225 Award Number and Year: UI-35663-21-55-A-34 (10/1/2020 – 12/31/2023), UI-37994-22-60-A-34 (10/1/2020 – 9/30/2023), UI-37238-22-55-A-34 (10/1/21 – 12/31/24), UI-39337-23-55-A-34 (10/1/2022 – 12/31/2025), 24A55UI000025-01 (10/1/2023 – 12/31/2026), 23A60UR000027 (1/1/2023 – 9/30/2024), 23A55UB000007 (3/1/2023 – 6/1/2025) Compliance Requirement: Reporting – ETA 9050 and ETA 9052 Type of Finding Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance: The ETA 9050 – Time Lapse of All First Payments except Workshare report contains monthly information on first payment time lapse. This report concerns the time it takes states to pay benefits to claimants for the first compensable week of unemployment. First Payments are considered timely at 14/21 days, Interstate and Intrastate UI, UCFE, and UCX, full and partial weeks. The report is due in the ETA National Office on the 20th of the month following the month to which the data relates. The ETA 9052 – Nonmonetary Determination Time Lapse Detection report contains monthly information on the time it take states to issue nonmonetary determinations from the date the issues are first detected by the agency. Single-claimant and multi-claimant nonmonetary determinations are included in the report. Nonmonetary determinations made by organizational units such as Benefits Accuracy Measurement (BAM) and Benefit Payment Control (BPC) are also included in the report. Nonmonetary determinations are considered timely if completed within 21 days. The report is due in the ETA National Office on the 20th of the month following the month to which the data relates. Control: Per 2 CFR section 200.303(a), a 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 comply 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: Reports submitted by the Department of Labor and Workforce Development (Department) indicate that First Payment Time Lapse and Nonmonetary Determinations were untimely during FY 2024. Context: Four ETA 9050 and four ETA 9052 reports were selected for testing for the months of October 2023, December 2023, March 2024 and June 2024. We noted the following exceptions: • ETA 9050: 4 of 4 reports indicate that First Payments were made in more than 14/21 days. • ETA 9052: 4 of 4 reports indicate that nonmonetary determinations were completed in more than 21 days. Questioned costs: None noted. Cause: The Department’s procedures and controls were not operating effectively to ensure that first payments and nonmonetary determinations were completed timely. Effect: First Payments and Nonmonetary Determinations were not completed timely as required by the program. Recommendation: We recommend that the Department review its policies and procedures to ensure that it makes first payments within 14/21 days and that nonmonetary determinations are completed within 21 days per program requirements. Views of responsible officials: The New Jersey Department of Labor and Workforce Development (DLWD) continues to monitor workloads for both first payment and non-monetary time lapse measurements. Identity verification remains an issue with a segment of the claim population, and delays with claimants completing their ID verification has a direct bearing on first payment and non-monetary time lapse. DLWD will continue to work on improving communications around the importance of timely verifying ID and provide assistance to claimants that may be struggling with this process. DLWD has been working with USDOL to expand identity verification options and expects the new process to be in full production by June 30, 2025. It will allow claimants to report to any USPS Post Office for an in-person ID verification. This additional in-person option to complete ID verification provides greater flexibility for claimants to complete this requirement, especially those that struggle with the digital verification process that DLWD currently uses. We expect the new process to have a positive impact on time lapse scores and overall improvement for these metrics. Most recent time lapse figures showed that for the period November 2024 through February 2025, combined non-monetary time lapse exceeded the 80% ALP for each month.

Reference Number: 2024-005 Prior Year Finding: 2023-006 Federal Agency: U.S. Department of Labor State Agency: Department of Labor and Workforce Development Federal Program: WIOA Cluster Assistance Listing Number: 17.258, 17.259, 17.278 Award Number and Year: AA-34783-20-55-A-34 (7/1/2021 – 6/30/2024), AA-36334-21-55-A-34 (7/1/2021 – 6/30/2024), AA-38544-22-55-A-34 (7/1/2022 – 6/30/2025), 23A55AY000022 (7/1/2023 – 6/30/2026), 23A55AT000047 (7/1/2023 – 6/30/2026), 23A55AW000045 (7/1/2023 – 6/30/2026) Compliance Requirement: Reporting – Federal Funding Accountability and Transparency Act (FFATA) Type of Finding: Material Weakness in Internal Control Over Compliance, Material Non-compliance Criteria or specific requirement: Compliance: Per the Federal Funding Accountability and Transparency Act (FFATA), prime (direct) recipients of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Reports must be filed in FSRS by the end of the month following the month in which the prime recipient awards any sub-grant greater than or equal to $30,000. If the initial award is below $30,000 but subsequent grant modifications result in a total award equal to or over $30,000, the award will be subject to the reporting requirements as of the date the award exceeds $30,000. If the initial award equals or exceeds $30,000 but funding is subsequently de-obligated such that the total award amount falls below $30,000, the award continues to be subject to FFATA reporting requirements. The following key data elements must be reported: Subawardee Name and Unique Entity ID (UEI) number; Amount of Subaward (inclusive of modifications); Subaward Obligation/Action Date; Date of Report Submission; Subaward Number; Project Description; and Names and Compensation of Highly Compensated Officers. (Names and Compensation of Highly Compensated Officers must only be reported when the entity in the preceding fiscal year received 80 percent or more of its annual gross revenues in Federal awards; and $25,000,000 or more in annual gross revenues from Federal awards; and the public does not have access to this information about the compensation of the senior executives of the entity through periodic reports filed under section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. §§ 78m(a), 78o(d)) or section 6104 of the Internal Revenue Code of 1986.) Control: Per 2 CFR section 200.303(a), a 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 comply 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: The Department of Labor and Workforce Development (Department) did not report subaward information timely to FSRS. Context: Seven of eight subawards selected for testing were not reported timely to FSRS. We noted the following exceptions: • 4 of 8 subawards tested were issued on 7/1/2022 and were not reported to FSRS until 3/1/2023, or 182 days late. • 3 of 8 subawards tested were issued on 7/1/2023 and were not reported to FSRS until 11/9/2023, or 70 days late. SEE SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR CHART/TABLE Cause: The Department’s internal controls were not sufficient to ensure that subawards were reported timely to FSRS. The Department had not fully implemented its corrective action plan from the prior year. Effect: Subawards were not reported to FSRS in accordance with FFATA requirements. Questioned costs: None noted. Recommendation: We recommend that the Department complete implementation of its prior year corrective action plan. It should develop internal controls and procedures to ensure that all required subawards are reported timely to FSRS no later than the end of the month following the month of issuance in accordance with FFATA reporting requirements. Views of responsible officials: The New Jersey Department of Labor and Workforce Development (DLWD) transitioned from a manual contract agreement process to a web-based grant administration system that employs the System for Administering Grants Electronically (SAGE) and IntelliGrants (IGX) applications. The DLWD FFATA Reporting Unit has access to these automated systems and monitors them monthly to identify when new Subaward contracts/agreements are approved to report the required data in the FFATA system. DLWD corrective actions regarding FFATA reporting were fully implemented as of June 30, 2024.

Reference Number: 2024-006 Prior Year Finding: No Federal Agency: U.S. Department of Transportation State Agency: Department of Transportation Federal Program: Highway Planning and Construction Assistance Listing Number: 20.205 Award Number and Year: 2023-2024 Compliance Requirement: Special Tests and Provisions – Utilities Type of Finding Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance – Recipients are required to develop policies and procedures pertaining to the use, accommodation and/or relocation of public and private utility facilities on highway rights-of way using federal highway funds. Recipients are required to develop, maintain, and obtain Federal Highway Administration (FHWA) approval of their Utility Accommodation Policy (UAP) (23 CFR section 645.215). Expenses incurred for relocating utility facilities necessitated by highway construction projects using federal highway program funds are eligible for reimbursement from FHWA provided these costs were incurred in a manner consistent with state laws or FHWA regulations, whichever is more restrictive (23 CFR section 645.103(d)). Control – Per 2 CFR section 200.303(a), a 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: The Department of Transportation (Department) did not have an FHWA-approved Utility Accommodation Policy (UAP) in FY2024. Context: The Department’s UAP was not approved by FHWA. Questioned costs: Undetermined. Cause: The Department’s procedures and internal controls were not sufficient to ensure that it submitted its UAP to FHWA for approval, and that it was operating the program under an approved plan. Effect: The Department was not operating the program under an approved UAP. Recommendation: The Department should review and enhance internal controls and procedures to ensure that it submits its UAP to FHWA for approval on a timely basis and that it operates its program under a Federally approved UAP. Views of responsible officials: The New Jersey Department of Transportation (NJDOT) has finalized its Utility Accommodation Policy (UAP) to align with federal requirements. The UAP follows the formal state regulatory process, and it was re-adopted on June 6, 2023, with technical changes. The UAP remains to be in full form and effect. In compliance with the federal rules, the UAP is being amended to incorporate provisions for Broadband and Telecommunications and Video Surveillance. The amended language has been reviewed and approved by Federal Highway Administration (FHWA). The UAP is progressing through the formal regulatory process. The policy is expected to be published on April 7, 2025. A 60-day public comment period will follow, allowing stakeholders to provide feedback. Once the public comment period is completed, the revised UAP will be implemented immediately to ensure compliance. The DOT will continue to monitor the implementation and ensure that all utility accommodation actions align with the newly approved policy.

Reference Number: 2024-007 Prior Year Finding: No Federal Agency: U.S. Department of the Treasury State Agency: Department of Community Affairs Federal Program: COVID-19 – Coronavirus Capital Projects Fund Assistance Listing Number: 21.029 Award Number and Year: CPFFN0185 (2021) Compliance Requirement: Reporting – Federal Funding Accountability and Transparency Act (FFATA) Type of Finding: Material Weakness in Internal Control Over Compliance, Material Non-compliance Criteria or specific requirement: Compliance: Per the Federal Funding Accountability and Transparency Act (FFATA), prime (direct) recipients of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Reports must be filed in FSRS by the end of the month following the month in which the prime recipient awards any sub-grant greater than or equal to $30,000. If the initial award is below $30,000 but subsequent grant modifications result in a total award equal to or over $30,000, the award will be subject to the reporting requirements as of the date the award exceeds $30,000. If the initial award equals or exceeds $30,000 but funding is subsequently de-obligated such that the total award amount falls below $30,000, the award continues to be subject to FFATA reporting requirements. The following key data elements must be reported: Subawardee Name and Unique Entity ID (UEI) number; Amount of Subaward (inclusive of modifications); Subaward Obligation/Action Date; Date of Report Submission; Subaward Number; Project Description; and Names and Compensation of Highly Compensated Officers. (Names and Compensation of Highly Compensated Officers must only be reported when the entity in the preceding fiscal year received 80 percent or more of its annual gross revenues in Federal awards; and $25,000,000 or more in annual gross revenues from Federal awards; and the public does not have access to this information about the compensation of the senior executives of the entity through periodic reports filed under section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. §§ 78m(a), 78o(d)) or section 6104 of the Internal Revenue Code of 1986.) Control: Per 2 CFR section 200.303(a), a 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 comply 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: The Department of Community Affairs (Department) did not report subaward information to FSRS. Context: Two of two subawards were not reported to FSRS until after they were selected by auditors for testing. The subawards were issued in April 2024 but were not reported to FSRS until December 2024 which was after they were selected for testing. SEE SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR CHART/TABLE Cause: The Department does not have procedures and internal controls to ensure that subawards were reported to FSRS. Effect: Subawards were not reported to FSRS in accordance with FFATA requirements. Questioned costs: None noted. Recommendation: We recommend that the Department develop procedures and internal controls to ensure that all required subawards are reported timely to FSRS no later than the end of the month following the month of issuance in accordance with FFATA reporting requirements. Views of responsible officials: The New Jersey Department of Community Affairs (DCA) recognizes the need to strengthen its monitoring of Subaward reporting requirements to ensure timely reporting. To address this, the agency is already in the process of updating its policies and procedures to enhance oversight and compliance. As part of the policy updates, the DCA is assigning designated staff to track Subaward issuance and reporting. This ensures clear accountability and improves oversight of reporting requirements. The DCA is working to integrate automated reminders and alerts into its process to notify designated staff of upcoming Subaward reporting deadlines. This proactive approach minimizes the risk of missed reporting obligations. The DCA is working to establish a process for conducting periodic compliance reviews to assess adherence to FFATA Subaward reporting requirements. This review will help identify potential issues early and allow for timely corrective actions. To reinforce FFATA compliance, the DCA is working to implement a training initiative to ensure designated staff are knowledgeable about FFATA requirements and the importance of timely reporting. Regular communication efforts will further promote awareness and adherence to reporting deadlines.

Reference Number: 2024-008 Prior Year Finding: 2023-012 Federal Agency: U.S. Department of Health and Human Services State Agency: Department of Human Services Federal Program: Aging Cluster and COVID-19 Aging Cluster Assistance Listing Number: 93.044, 93.045, 93.053 Award Number and Year: 2101NJSSC6 (4/1/2021 – 9/30/2024) 2101NJHDC6 (4/1/2021 – 9/3/2024) 2101NJCMC6 (4/1/2021 – 9/30/2024) 2201NJOANS (10/1/2021 – 9/30/2023) 2201NJOASS (10/1/2021 – 9/30/2023) 2201NJOACM (10/1/2021 – 9/30/2023) 2201NJOAHD (10/1/2021 – 9/30/2023) 2201NJOAPH (10/1/2021 – 9/30/2023) 2201NJOAFC (10/1/2021 – 9/30/2023) 2301NJOASS (10/1/2022 – 9/30/2024) 2401NJOACM (10/1/2023 – 9/30/2025) 2301NJOAHD (10/1/2022 – 9/30/2024) 2401NJOASS (10/1/2023 – 9/309/2025) 2301NJOANS (10/1/2022 – 9/30/2024) 2401NJOANS (10/1/2023 – 9/30/2025) Compliance Requirement: Reporting – Federal Funding Accountability and Transparency Act (FFATA) Type of Finding: Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance: Per the Federal Funding Accountability and Transparency Act (FFATA), prime (direct) recipients of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Reports must be filed in FSRS by the end of the month following the month in which the prime recipient awards any sub-grant greater than or equal to $30,000. If the initial award is below $30,000 but subsequent grant modifications result in a total award equal to or over $30,000, the award will be subject to the reporting requirements as of the date the award exceeds $30,000. If the initial award equals or exceeds $30,000 but funding is subsequently de-obligated such that the total award amount falls below $30,000, the award continues to be subject to FFATA reporting requirements. The following key data elements must be reported: Subawardee Name and Data Universal Numbering System (DUNS) number; Amount of Subaward (inclusive of modifications); Subaward Obligation/Action Date; Date of Report Submission; Subaward Number; Project Description; and Names and Compensation of Highly Compensated Officers. (Names and Compensation of Highly Compensated Officers must only be reported when the entity in the preceding fiscal year received 80 percent or more of its annual gross revenues in Federal awards; and $25,000,000 or more in annual gross revenues from Federal awards; and the public does not have access to this information about the compensation of the senior executives of the entity through periodic reports filed under section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. §§ 78m(a), 78o(d)) or section 6104 of the Internal Revenue Code of 1986.) Section III – Federal Award Findings and Questioned Costs (Continued) Control: Per 2 CFR section 200.303(a), a 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 comply 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: The Department of Human Services (Department) did not report subaward information to FSRS timely. Context: Zero of thirty-six subawards selected for testing were reported to FSRS timely. The subawards were issued in May 2024 and were not reported to FSRS until October 2024, or three months late. SEE SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR CHART/TABLE Cause: The Department’s procedures were not sufficient to ensure that subaward information was reported timely to FSRS. Internal controls did not prevent or detect the errors. Effect: Subawards were not reported to FSRS in accordance with FFATA requirements. Questioned costs: None noted. Recommendation: We recommend that the Department enhance its controls and procedures to ensure that all required subawards are reported timely to FSRS no later than the end of the month following the month of issuance. Views of responsible officials: The Division of Aging Services (DoAS) hired a fiscal staff member in June of 2024. Responsibilities include the timely and accurate submission of FFATA reports. We are confident that with the additional staff we will be able to comply with managing FFATA reporting requirements and timely submissions.

Reference Number: 2024-009 Prior Year Finding: No Federal Agency: U.S. Department of Health and Human Services State Agency: Department of Human Services Federal Program: Temporary Assistance for Needy Families Assistance Listing Number: 93.558 Award Number and Year: 230INJTANF (10/1/2022 – 9/30/2023) 240INJTANF (10/1/2023-9/30/2024) Compliance Requirement: Reporting – Federal Funding Accountability and Transparency Act (FFATA) Type of Finding: Material Weakness in Internal Control Over Compliance, Material Non-compliance Criteria or specific requirement: Compliance: Per the Federal Funding Accountability and Transparency Act (FFATA), prime (direct) recipients of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Reports must be filed in FSRS by the end of the month following the month in which the prime recipient awards any sub-grant greater than or equal to $30,000. If the initial award is below $30,000 but subsequent grant modifications result in a total award equal to or over $30,000, the award will be subject to the reporting requirements as of the date the award exceeds $30,000. If the initial award equals or exceeds $30,000 but funding is subsequently de-obligated such that the total award amount falls below $30,000, the award continues to be subject to FFATA reporting requirements. The following key data elements must be reported: Subawardee Name and Data Universal Numbering System (DUNS) number; Amount of Subaward (inclusive of modifications); Subaward Obligation/Action Date; Date of Report Submission; Subaward Number; Project Description; and Names and Compensation of Highly Compensated Officers. (Names and Compensation of Highly Compensated Officers must only be reported when the entity in the preceding fiscal year received 80 percent or more of its annual gross revenues in Federal awards; and $25,000,000 or more in annual gross revenues from Federal awards; and the public does not have access to this information about the compensation of the senior executives of the entity through periodic reports filed under section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. §§ 78m(a), 78o(d)) or section 6104 of the Internal Revenue Code of 1986.) Control: Per 2 CFR section 200.303(a), a 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 comply 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: The Department of Human Services (Department) did not report subaward information to FSRS as required by the FFATA. Context: Zero of twenty-eight subrecipients selected for testing were reported to FSRS. Total subawards tested were $156,936,574, and $0 was reported. SEE SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR CHART/TABLE Cause: The Department did not have procedures or controls in place to ensure that subaward information was reported to FSRS as required by FFATA requirements. Effect: Subawards were not reported to FSRS. Questioned costs: None noted. Recommendation: We recommend that the Department develop controls and procedures to ensure that all required subawards are reported accurately and timely to FSRS no later than the end of the month following the month of issuance. Views of responsible officials: The New Jersey Department of Human Services’ Division of Family Development (DHD/DFD) acknowledges the audit finding regarding the required submission of Subaward to the FFATA Subaward Reporting System (FSRS). One of the primary factors that contributed to non-compliance was system inefficiencies in the FSRS, which led to challenges in tracking, reporting and ensuring data accuracy. With the transition of Subaward reporting from FSRS to sam.gov, the DHD/DFD expects this change to be beneficial in developing effective internal controls and procedures, addressing past compliance challenges and creating a sustainable reporting framework.

Reference Number: 2024-010 Prior Year Finding: No Federal Agency: U.S. Department of Health and Human Services State Agency: Department of Community Affairs Federal Program: Low-Income Home Energy Assistance Program Assistance Listing Number: 93.568 Award Number and Year: 2402NJLIEA (10/1/2023 – 9/30/2025), 2402NJLIEI (10/1/2023 – 9/30/2025) Compliance Requirement: Earmarking Type of Finding: Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance – No more than 10 percent of a state’s LIHEAP funds for a federal fiscal year may be used for planning and administrative costs, including both direct and indirect costs. This limitation applies, in the aggregate, to planning and administrative costs at both the state and subrecipient levels. This cap may not be exceeded by supplementing with other federal funds. Control – Per 2 CFR section 200.303(a), a 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: The Department of Community Affairs (Department) exceeded the 10% cap on administrative funds. Context: The Department expended a total of $136,319,452 against the Fiscal Year 2024 award which included $14,016,444, or 10.28%, on planning and administration. This exceeded the 10% cap on administrative costs by $384,499. Questioned costs: Undetermined. Cause: The Department’s procedures were not sufficient to ensure that it did not exceed the 10% cap on administrative costs. Internal controls did not prevent or detect the errors. Effect: When the Department expends more on administrative costs than is allowed by the program, fewer funds are available to expend for programmatic purposes. Section III – Federal Award Findings and Questioned Costs (Continued) Recommendation: The Department should review and enhance internal controls and procedures to ensure that expenditures for planning and administration do not exceed the 10% administrative cap. Views of responsible officials: The New Jersey Department of Community Affairs (DCA) has revised its processes and procedures related to earmarked funds. Specifically, the spending plan formula has been updated to ensure that the earmark for Administration and Planning does not exceed the allowable 10% threshold. Additionally, the FY 2024 spending plan has been updated, and accounts have been reconciled to reflect the Administration and Planning earmark within the 10% threshold.

Reference Number: 2024-011 Prior Year Finding: 2023-020 Federal Agency: U.S. Department of Health and Human Services State Agency: Department of Human Services Federal Program: CCDF Cluster, COVID-19 – CCDF Cluster Assistance Listing Number: 93.575, 93.596 Award Number and Year: 2001NJCCC3 (3/27/2020 – 9/30/2023) 2301NJCCDD (10/1/2022 – 9/30/2025) 2301NJCCDF (10/1/2022 – 9/30/2025) 2201NJCCDF (10/1/2021 – 9/30/2024) 2201NJCCDD (10/1/2021 – 9/30/2024) 2101NJCSC6 (10/1/2020 – 9/30/2023) 2101NJCDC6 (10/1/2020 – 9/30/2024) 2101NJCCDF (10/1/2020 – 9/30/2023) 2101NJCCDD (10/1/2023 – 9/30/2025) 2401NJCCDF (10/1/2023 – 9/30/2025) 2401NJCCDM (10/1/2023 – 9/30/2025) Compliance Requirement: Reporting – Federal Funding Accountability and Transparency Act (FFATA) Type of Finding: Material Weakness in Internal Control Over Compliance, Material Non-compliance Criteria or specific requirement: Compliance: Per the Federal Funding Accountability and Transparency Act (FFATA), prime (direct) recipients of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Reports must be filed in FSRS by the end of the month following the month in which the prime recipient awards any sub-grant greater than or equal to $30,000. If the initial award is below $30,000 but subsequent grant modifications result in a total award equal to or over $30,000, the award will be subject to the reporting requirements as of the date the award exceeds $30,000. If the initial award equals or exceeds $30,000 but funding is subsequently de-obligated such that the total award amount falls below $30,000, the award continues to be subject to FFATA reporting requirements. The following key data elements must be reported: Subawardee Name and Data Universal Numbering System (DUNS) number; Amount of Subaward (inclusive of modifications); Subaward Obligation/Action Date; Date of Report Submission; Subaward Number; Project Description; and Names and Compensation of Highly Compensated Officers. (Names and Compensation of Highly Compensated Officers must only be reported when the entity in the preceding fiscal year received 80 percent or more of its annual gross revenues in Federal awards; and $25,000,000 or more in annual gross revenues from Federal awards; and the public does not have access to this information about the compensation of the senior executives of the entity through periodic reports filed under section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. §§ 78m(a), 78o(d)) or section 6104 of the Internal Revenue Code of 1986.) Control: Per 2 CFR section 200.303(a), a 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 comply with guidance in “Standards for Section III – Federal Award Findings and Questioned Costs (Continued) 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: The Department of Human Services (Department) did not report subaward information to FSRS. Context: Zero of eight subawards selected for testing were reported to FSRS. Total subawards tested were $96,799,274, and $0 was reported as required by FFATA requirements. SEE SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR CHART/TABLE Cause: The Department does not have procedures and controls to ensure that FFATA reporting requirements are met. Effect: Subawards were not reported to FSRS in accordance with FFATA requirements. Questioned costs: None noted. Recommendation: We recommend that the Department develop internal controls and procedures to ensure that FFATA reporting requirements are met. We further recommend the Department develop controls and procedures to ensure that all required subawards are reported accurately and timely to FSRS no later than the end of the month following the month of issuance. Views of responsible officials: The Department of Human Services’ Division of Family Development (DHS/DFD) acknowledges the audit finding regarding the required submission of Subaward to the FFATA Subaward Reporting System (FSRS). One of the primary factors that contributed to non-compliance was system inefficiencies in the FSRS, which led to challenges in tracking, reporting and ensuring data accuracy. With the transition of Subaward reporting from FSRS to sam.gov, the DHS/ DFD expects this change to be beneficial in developing effective internal controls and procedures, addressing past compliance challenges and creating a sustainable reporting framework.

Reference Number: 2024-012 Prior Year Finding: No Federal Agency: U.S. Department of Health and Human Services State Agency: Department of Human Services Federal Program: CCDF Cluster, COVID-19 – CCDF Cluster Assistance Listing Number: 93.575, 93.596 Award Number and Year: 2001NJCCC3 (3/27/2020 – 9/30/2023) 2301NJCCDD (10/1/2022 – 9/30/2025) 2301NJCCDF (10/1/2022 – 9/30/2025) 2201NJCCDF (10/1/2021 – 9/30/2024) 2201NJCCDD (10/1/2021 – 9/30/2024) 2101NJCSC6 (10/1/2020 – 9/30/2023) 2101NJCDC6 (10/1/2020 – 9/30/2024) 2101NJCCDF (10/1/2020 – 9/30/2023) 2101NJCCDD (10/1/2023 – 9/30/2025) 2401NJCCDF (10/1/2023 – 9/30/2025) 2401NJCCDM (10/1/2023 – 9/30/2025) Compliance Requirement: Special Tests and Provisions – Health and Safety Requirements Type of Finding: Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance – As part of their CCDF plans, Lead Agencies must certify that procedures are in effect (e.g., monitoring and enforcement) to ensure that providers serving children who receive subsidies comply with all applicable health and safety requirements. This includes verifying and documenting that child care providers (unless they meet an exception, e.g., family members who are caregivers or individuals who object to immunization on certain grounds) serving children who receive subsidies meet requirements pertaining to health and safety. These requirements must address eleven specific areas—including first aid and CPR, safe sleeping practices, and administration of medication—and child care workers must be trained in these areas (42 USC 9858c(c)(2)(I); 45 CFR section 98.41). Control – Per 2 CFR section 200.303(a), a 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: The Department of Human Services (Department) was not in compliance with health and safety requirements for the program. Context: For 3 of 40 providers selected for testing, the annual health and safety inspection was not performed as required by program policy. Section III – Federal Award Findings and Questioned Costs (Continued) Questioned costs: Undetermined. Cause: The Department’s procedures were not effective to ensure that provider health and safety inspections were performed as required by program policy. Internal controls did not prevent or detect the errors. Effect: Failure to verify and document compliance with health and safety standards could allow ineligible providers to perform services under the program. Recommendation: The Department should review and enhance internal controls and procedures to ensure that provider health and safety inspections are performed as required by program policy. Views of responsible officials: The Department of Human Services’ Division of Family Development (DHS/DFD) acknowledges the audit finding that 3 of the 40 sampled providers had not been inspected as required by program policy. DHS/DFD contracts with the Department of Children and Families’ Office of Licensing (“OOL”) as the regulatory authority to monitor and inspect licensed centers and family child care providers. In response to this finding, OOL has implemented internal measures to ensure that monitoring occurs on an annual basis. These measure include the use of the New Jersey Child Care Information System (NJCCIS). A subsequent inspection of licensed child care centers was conducted on September 13, 2024. Regarding the two other family child care providers, the Child Care Resource and Referral (“CCR&R”) works in conjunction with OOL to track health and safety inspections. However, CCR&R did not monitor the two family child care providers in 2023. Since then, monitoring has been carried out in 2024 which included a review of the annual training requirements for these providers. To enhance compliance with inspections, CCR&R has acquired updated software to improve its monitoring capabilities. Copies of the 2024 inspection reports can be provided upon request. The DFD’s Office of Child Care will develop internal controls and procedures to ensure that inspections are performed as required by program policy.

Reference Number: 2024-013 Prior Year Finding: 2023-024 Federal Agency: U.S. Department of Health and Human Services State Agency: Department of Human Services Federal Program: Opioid STR Assistance Listing Number: 93.788 Award Number and Year: H79T1083317 (9/3/2020 – 9/29/2023), H79T1085743 (9/30/2022 – 9/29/2024) Compliance Requirement: Reporting – Federal Funding Accountability and Transparency Act (FFATA) Type of Finding: Material Weakness in Internal Control Over Compliance, Material Non-compliance Criteria or specific requirement: Compliance: Per the Federal Funding Accountability and Transparency Act (FFATA), prime (direct) recipients of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Reports must be filed in FSRS by the end of the month following the month in which the prime recipient awards any sub-grant greater than or equal to $30,000. If the initial award is below $30,000 but subsequent grant modifications result in a total award equal to or over $30,000, the award will be subject to the reporting requirements as of the date the award exceeds $30,000. If the initial award equals or exceeds $30,000 but funding is subsequently de-obligated such that the total award amount falls below $30,000, the award continues to be subject to FFATA reporting requirements. The following key data elements must be reported: Subawardee Name and Data Universal Numbering System (DUNS) number; Amount of Subaward (inclusive of modifications); Subaward Obligation/Action Date; Date of Report Submission; Subaward Number; Project Description; and Names and Compensation of Highly Compensated Officers. (Names and Compensation of Highly Compensated Officers must only be reported when the entity in the preceding fiscal year received 80 percent or more of its annual gross revenues in Federal awards; and $25,000,000 or more in annual gross revenues from Federal awards; and the public does not have access to this information about the compensation of the senior executives of the entity through periodic reports filed under section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. §§ 78m(a), 78o(d)) or section 6104 of the Internal Revenue Code of 1986.) Control: Per 2 CFR section 200.303(a), a 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 comply 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: The Department of Human Services (Department) did not timely report subaward information to FSRS during FY 2024. Section III – Federal Award Findings and Questioned Costs (Continued) Context: Twelve subaward transactions were selected for testing during FY 2024. The twelve subawards were not reported to FSRS timely. The subawards were not reported to FSRS until January and February 2025, but the subawards were issued during August – October 2023. SEE SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR CHART/TABLE Cause: The Department did not establish effective procedures and controls to ensure subawards were reported to FSRS. Effect: Subawards were not reported to FSRS in accordance with FFATA requirements. Questioned costs: None noted. Recommendation: We recommend that the Department develop internal controls and procedures to ensure that FFATA reporting requirements are met. We further recommend the Department develop controls and procedures to ensure that all required subawards are reported accurately and timely to FSRS no later than the end of the month following the month of issuance. Views of responsible officials: The Department of Human Services, Division of Mental Health and Addiction Services (DMHAS) agrees that for fiscal year 2024 it did not complete Federal Funding Accountability & Transparency Act (FFATA) uploads timely. DMHAS maintains written FFATA policies and procedures, and it is compliant with its SSA SFY 2023 Corrective Action Plan (CAP) which included a January 1, 2025 implementation date. However, DMHAS was unable to comply timely with the FFATA reporting requirements due to competing reporting requirements, in conjunction with the volume of data and effort required. In addition to the significant progress DMHAS reported in the FY 2023 CAP update provided below, DMHAS accomplished the following: On October 21, 2024, DMHAS on boarded a full-time FFATA Analyst dedicated to FFATA data collection and uploads. On October 23 and October 29, 2024, DMHAS conducted training for the FFATA analyst. On or about January 29, 2025 and February 3, 2025, in an effort to demonstrate its proficiency and show its good faith efforts to comply, DMHAS uploaded all SUPTRS SFY23 and SFY24 Test Contracts (FAIN ending 5822) for the SSA SFY 2024. On or about February 3, 2025 and February 19, 2025, in an effort to demonstrate its proficiency and show its good faith efforts to comply, DMHAS uploaded all SOR SFY23 and SFY24 (FAIN ending 5743) Test Contracts for the SSA SFY24. Thereafter, DMHAS completed the following uploads: • February 27, 2025 – SOR FAIN ending 5743 – remaining contracts (outside of the SSA24 Test group) up to the FSRS ceiling (which limits data entry to forty (40) pages and UEIs. • March 4, 2025 – SUPTRS FAIN ending 7054 – all contracts uploaded. • March 6, 2025 – SOR FAIN ending 7774 – all contracts (into FSRS prior to migration) • March 6, 2025 – SUPTRS FAIN ending 5822 - remaining contracts (outside of the SSA24 Test group) up to the FSRS ceiling (which limits data entry to forty (40) pages and UEIs. On January 22, 2025, the DMHAS Compliance Quality Assurance Specialist who helps monitor FFATA compliance completed the federal SAM.gov training. On March 5, 2025, the DMHAS FFATA Analyst completed the federal SAM.gov training. DMHAS remains committed to FFATA compliance, is prioritizing FFATA reporting, and is making a good faith effort to comply. However, DMHAS notes various federal issues outside of the State’s control that are causing delays and increasing administrative burden. More specifically, uploads that predated the conversion from FSRS to Sam.gov were limited by a system error so DMHAS was precluded from entering all contracts/UEIs. In addition, FAINs are missing from SAM.gov, thus precluding the submission of the corresponding uploads. DMHAS is documenting the upload limitations and missing FAINs, along with its continued efforts to overcome the various obstacles outside of its control.

Reference Number: 2024-014 Prior Year Finding: 2023-025 Federal Agency: U.S. Department of Health and Human Services State Agency: Department of Human Services Federal Program: Opioid STR Assistance Listing Number: 93.788 Award Number and Year: H79T1083317 (9/3/2020 – 9/29/2023), H79T1085743 (9/30/2022 – 9/29/2024) Compliance Requirement: Subrecipient Monitoring Type of Finding: Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance – Per 2 CFR section 200.332(a), all pass-through entities must ensure that every subaward is clearly identified to the subrecipient as a subaward and includes information 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. Control – Per 2 CFR section 200.303(a), a 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: The Department of Human Services (Department) did not include all required information in subaward agreements. Context: For 1 of 13 subawards selected for testing, the subrecipient’s unique identifier and the Federal Award Identification Number (FAIN) were omitted from the subaward agreement. Questioned costs: None noted. Cause: The Department’s procedures were not effective to ensure that subawards were issued in compliance with Federal requirements. Internal controls did not prevent or detect the errors. Effect: Excluding the required federal grant award information at the time of the subaward may cause subrecipients and their auditors to be uninformed about specific program and other regulations that apply to the funds they receive. There is also the potential for subrecipients to have incomplete Schedules of Expenditures of Federal Awards (SEFA) in their Single Audit reports, and federal funds may not be properly audited at the subrecipient level in accordance with the Uniform Guidance. Recommendation: The Department should review and enhance internal controls and procedures to ensure that all required information is included in subaward agreements. Views of responsible officials: DMHAS acknowledges that the FAIN was omitted in a single notice of sub recipient award that predates the implementation date of its FY 2023 Corrective Action Plan (CAP). The award at issue relates to a “special County” add-on contract (one (1) of a total of nineteen (19)) that is tracked manually and in the DMHAS Contract Information Management System (CIMS) on which it currently relies to relay the data components required by 2 CFR 200.332. The single omission of the FAIN was due to a clerical error, whereby CIMS was not updated consistent with the manual record of the 2024 County contract renewal. DMHAS acknowledged in its FY 2023 CAP that CIMS was being replaced with SAGE in order to automate sub recipient notices, reduce administrative burden and decrease clerical errors that result from manual data entry. DMHAS notes that the original 2025 SAGE go-live date has been delayed and moved to Summer 2026. Therefore, DMHAS made improvements to CIMS (that is available to Providers). In addition to identifying the federal funding source in the program column and in the notes, CIMS now includes a federal drop down box that links the federal NOAs to the subrecipient agreement. DMHAS is compliant with its FY 2023 CAP which included a July 1, 2024 implementation date. Beginning July 1, 2024, DMHAS starting using a new Subaward template that includes the requisite data elements. DMHAS created a contract policy update and completed template trainings in-person and remotely. The DMHAS Compliance Unit audited the use of the new template to ensure Subaward include the requisite data elements.

Reference Number: 2024-015 Prior Year Finding: 2023-026 Federal Agency: U.S. Department of Health and Human Services State Agency: Department of Human Services Federal Program: Block Grants for Prevention and Treatment of Substance Abuse, COVID-19 – Block Grants for Prevention and Treatment of Substance Abuse Assistance Listing Number: 93.959 Award Number and Year: 6B08TI084660 (10/1/2021 – 9/30/2024), 6B08TI085822 (10/1/2022 – 9/30/2024), 1B08TI087054 (10/1/2023 – 9/30/2025) Compliance Requirement: Reporting – Federal Funding Accountability and Transparency Act (FFATA) Type of Finding: Material Weakness in Internal Control Over Compliance, Material Noncompliance Criteria or specific requirement: Compliance: Per the Federal Funding Accountability and Transparency Act (FFATA), prime (direct) recipients of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Reports must be filed in FSRS by the end of the month following the month in which the prime recipient awards any sub-grant greater than or equal to $30,000. If the initial award is below $30,000 but subsequent grant modifications result in a total award equal to or over $30,000, the award will be subject to the reporting requirements as of the date the award exceeds $30,000. If the initial award equals or exceeds $30,000 but funding is subsequently de-obligated such that the total award amount falls below $30,000, the award continues to be subject to FFATA reporting requirements. The following key data elements must be reported: Subawardee Name and Unique Entity ID (UEI) number; Amount of Subaward (inclusive of modifications); Subaward Obligation/Action Date; Date of Report Submission; Subaward Number; Project Description; and Names and Compensation of Highly Compensated Officers. (Names and Compensation of Highly Compensated Officers must only be reported when the entity in the preceding fiscal year received 80 percent or more of its annual gross revenues in Federal awards; and $25,000,000 or more in annual gross revenues from Federal awards; and the public does not have access to this information about the compensation of the senior executives of the entity through periodic reports filed under section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. §§ 78m(a), 78o(d)) or section 6104 of the Internal Revenue Code of 1986.) Control: Per 2 CFR section 200.303(a), a 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 comply 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: The Department of Health (Department) did not timely report subaward information to FSRS during FY2024. Context: Twelve subaward transactions were selected for testing during FY 2024. The twelve subawards were not reported to FSRS timely. The subawards were not reported to FSRS until February 2025, but the subawards were issued during July 2022 – January 2024. SEE SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR CHART/TABLE Cause: The Department did not establish effective procedures and controls to ensure that subawards were reported to FSRS. Effect: Subawards were not reported to FSRS in accordance with FFATA requirements. Questioned costs: None noted. Recommendation: We recommend that the Department develop procedures and internal controls to ensure that all required subawards are reported to FSRS no later than the end of the month following the month of issuance in accordance with FFATA reporting requirements. Views of responsible officials: The Department of Human Services, Division of Mental Health and Addiction Services (DMHAS) agrees that for fiscal year 2024 it did not complete Federal Funding Accountability & Transparency Act (FFATA) uploads timely. DMHAS maintains written FFATA policies and procedures, and it is compliant with its SSA SFY 2023 Corrective Action Plan (CAP) which included a January 1, 2025 implementation date. However, DMHAS was unable to comply timely with the FFATA reporting requirements due to competing reporting requirements, in conjunction with the volume of data and effort required. In addition to the significant progress DMHAS reported in the FY 2023 CAP update provided below, DMHAS accomplished the following: On October 21, 2024, DMHAS on boarded a full-time FFATA Analyst dedicated to FFATA data collection and uploads. On October 23 and October 29, 2024, DMHAS conducted training for the FFATA analyst. On or about January 29, 2025 and February 3, 2025, in an effort to demonstrate its proficiency and show its good faith efforts to comply, DMHAS uploaded all SUPTRS SFY23 and SFY24 Test Contracts (FAIN ending 5822) for the SSA SFY 2024. On or about February 3, 2025 and February 19, 2025, in an effort to demonstrate its proficiency and show its good faith efforts to comply, DMHAS uploaded all SOR SFY23 and SFY24 (FAIN ending 5743) Test Contracts for the SSA SFY24. Thereafter, DMHAS completed the following uploads: • February 27, 2025 – SOR FAIN ending 5743 – remaining contracts (outside of the SSA24 Test group) up to the FSRS ceiling (which limits data entry to forty (40) pages and UEIs. • March 4, 2025 – SUPTRS FAIN ending 7054 – all contracts uploaded. • March 6, 2025 – SOR FAIN ending 7774 – all contracts (into FSRS prior to migration) • March 6, 2025 – SUPTRS FAIN ending 5822 - remaining contracts (outside of the SSA24 Test group) up to the FSRS ceiling (which limits data entry to forty (40) pages and UEIs. On January 22, 2025, the DMHAS Compliance Quality Assurance Specialist who helps monitor FFATA compliance completed the federal SAM.gov training. On March 5, 2025, the DMHAS FFATA Analyst completed the federal SAM.gov training. DMHAS remains committed to FFATA compliance, is prioritizing FFATA reporting, and is making a good faith effort to comply. However, DMHAS notes various federal issues outside of the State’s control that are causing delays and increasing administrative burden. More specifically, uploads that predated the conversion from FSRS to Sam.gov were limited by a system error so DMHAS was precluded from entering all contracts/UEIs. In addition, FAINs are missing from SAM.gov, thus precluding the submission of the corresponding uploads. DMHAS is documenting the upload limitations and missing FAINs, along with its continued efforts to overcome the various obstacles outside of its control.

Reference Number: 2024-016 Prior Year Finding: 2023-028 Federal Agency: U.S. Department of Homeland Security State Agency: Department of Law and Public Safety Federal Program: Disaster Grants - Public Assistance (Presidentially Declared Disasters) Assistance Listing Number: 97.036 Award Number and Year: 066124021PA: 8/31/11; 066224614PA: 9/5/21; 066214597PA: 4/28/21; 066214574PA: 12/11/20; 066204488PA: 3/13/20; 066134086PA: 10/30/12 066244725PA: 8/11/2023 Compliance Requirement: Reporting – Federal Funding Accountability and Transparency Act (FFATA) Type of Finding: Material Weakness in Internal Control Over Compliance, Material Non-compliance Criteria or specific requirement: Compliance: Per the Federal Funding Accountability and Transparency Act (FFATA), prime (direct) recipients of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Reports must be filed in FSRS by the end of the month following the month in which the prime recipient awards any sub-grant greater than or equal to $30,000. If the initial award is below $30,000 but subsequent grant modifications result in a total award equal to or over $30,000, the award will be subject to the reporting requirements as of the date the award exceeds $30,000. If the initial award equals or exceeds $30,000 but funding is subsequently de-obligated such that the total award amount falls below $30,000, the award continues to be subject to FFATA reporting requirements. The following key data elements must be reported: Subawardee Name and Unique Entity ID (UEI) number; Amount of Subaward (inclusive of modifications); Subaward Obligation/Action Date; Date of Report Submission; Subaward Number; Project Description; and Names and Compensation of Highly Compensated Officers. (Names and Compensation of Highly Compensated Officers must only be reported when the entity in the preceding fiscal year received 80 percent or more of its annual gross revenues in Federal awards; and $25,000,000 or more in annual gross revenues from Federal awards; and the public does not have access to this information about the compensation of the senior executives of the entity through periodic reports filed under section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. §§ 78m(a), 78o(d)) or section 6104 of the Internal Revenue Code of 1986.) Control: Per 2 CFR section 200.303(a), a 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 comply 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). Section III – Federal Award Findings and Questioned Costs (Continued) Condition: The Department of Law and Public Safety (Department) did not report subaward information timely to FSRS. Context: Sixty subawards were selected for testing and the following exceptions were noted: • 23 of 60 subawards selected for testing were not reported to FSRS as of FY2024. • 37 of 60 subawards selected for testing were not reported to FSRS on a timely basis. SEE SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR CHART/TABLE Cause: The Department has not fully implemented its corrective action plan from the prior audit. Its procedures and internal controls are not sufficient to ensure that subawards are reported to FSRS on a timely basis. Effect: Subawards were not reported to FSRS in accordance with FFATA requirements. Questioned costs: None noted. Recommendation: We recommend that the Department complete implementation of its corrective action plan from the prior audit and ensure all subawards are reported to FSRS. It should develop procedures and internal controls to ensure that all required subawards are reported to FSRS no later than the end of the month following the month of issuance in accordance with FFATA reporting requirements. Views of responsible officials: The Department has completed its corrective action plan from the prior audit. DLPS has been in full compliance with the FFATA reporting requirement since August 2024.

Reference Number: 2023-001 Prior Year Finding: 2022-003 Federal Agency: U.S. Department of Labor State Agency: Department of Labor and Workforce Development Federal Program: Unemployment Insurance, COVID-19 – Unemployment Insurance Assistance Listing Number: 17.225 Award Number and Year: UI-39337-23-55-A-34 (10/1/2022 – 12/31/2025), UI-37238-22-55-A-34 (10/1/2021 – 12/31/2024), UI-35663-21-55-A-34 (10/1/2020 – 12/31/2023), UI-35959-21-60-A-34 (1/1/2021 – 9/30/2022) Compliance Requirement: Eligibility Type of Finding Material Weakness in Internal Control Over Compliance, Material Noncompliance Criteria or specific requirement: Compliance: Regular Unemployment Compensation (UC) Program – Under state UC laws, a worker’s benefit rights depend on the amount of the worker’s wages and/or weeks of work in covered employment in a “base period.” While most states define the base period as the first four of the last five completed calendar quarters prior to the filing of the claim, other base periods may be used. To qualify for benefits, a claimant must have earned a certain amount of wages or have worked a certain number of weeks or calendar quarters within the base period or meet some combination of wage and employment requirements. Some states require a waiting period of one week of total or partial unemployment before UC is payable. A “waiting period” is a non-compensable period of unemployment in which the worker is otherwise eligible for benefits. To be eligible to receive UC, all states provide that a claimant must have been separated from suitable work for non-disqualifying reasons under state law (i.e., not because of such acts as leaving voluntarily without good cause or discharge for misconduct connected with work). After separation, he or she must be able and available for work, actively seeking work, legally authorized to work in the United States and must not have refused an offer of suitable work. Pandemic Unemployment Assistance (PUA) – PUA provides benefits to covered individuals, who are those individuals not eligible for regular unemployment compensation (UC or extended benefits under state or federal law or Pandemic Emergency Unemployment Compensation (PEUC), including those who have exhausted all rights to such benefits. Covered individuals also include self-employed, those seeking part-time employment, individuals lacking sufficient work history, and those who otherwise do not qualify for regular unemployment compensation or extended benefits under state or federal law or PEUC. PUA is payable to individuals who are ineligible for regular UC, and are unemployed, partially unemployed, or unable or unavailable to work due to one of the COVID-19 related reasons identified Attachment I to UIPL No. 16-20, Change 5. Section 2102(a)(3)(A)(ii)(I) of the CARES Act included 10 specific COVID-19 related reasons. The Department, under the authority provided by Section 2102(a)(3)(A)(ii)(I)(kk) of the CARES Act, has added additional COVID-19 related reasons; these are discussed in more detail in Section 4.a. of UIPL No. 16-20, Change 5. While three of these new COVID- Section III – Federal Award Findings and Questioned Costs (Continued) 19 related reasons were introduced to states with the publication of UIPL No. 16-20, Change 5 on February 25, 2021, all COVID-19 related reasons apply retroactively to the beginning of the PUA program. Additionally, as described in Section 4.b.i. of UIPL No. 16-20, Change 5, paraphrasing of the COVID-19 related reasons is not permissible; individuals must be permitted to select more than one COVID-19 related reason; individuals must be permitted to select different COVID-19 related reasons each week; and individuals must be permitted to file and select no COVID-19 related reasons. Federal Pandemic Unemployment Compensation (FPUC) – To be eligible for FPUC during the program dates described in Section 8 above, individuals must be eligible to receive at least $1 of underlying benefits for the week in question (including regular UC, UCFE, UCX, PEUC, PUA, EB, STC, TRA, DUA, and SEA). FPUC does not require the individual to submit a separate initial application or continued claim. Control: Per 2 CFR section 200.303(a), a 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 comply 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: CLA noted that ineligible claimants were being paid unemployment insurance. The Department of Labor and Workforce Development (Department) did not maintain an effective control environment over eligibility requirements of the New Jersey Local Office Online Payment System (NJLOOPS) for both FPUC and PUA. Context: Sixty claimants were selected for testing which included 24 claimants for Regular UC and Extended Benefits, 25 claimants for FPUC and 11 claimants for PUA. We noted the following exceptions: • FPUC: 4 of 25 claimants receiving benefits did not receive $1 of other benefits for the payment period. • PUA: 3 of 11 claimants receiving PUA did not identify a COVID-19 reason for their unemployment and were ineligible for the program. • PUA: The Department was unable to provide support for 2 of 11 claimants and eligibility could not be verified. Questioned costs: $3,202 - The total amount of benefits received by ineligible recipients: • FPUC: $1,800 • PUA: $1,402 Section III – Federal Award Findings and Questioned Costs (Continued) Cause: The Department began providing benefits to claimants before NJLOOPS had completed the eligibility determination process. Effect: Ineligible claimants received unemployment compensation benefits. Recommendation: We recommend the Department review and enhance procedures and controls to ensure that only eligible claimants receive unemployment compensation benefits. Views of responsible officials: The Department of Labor and Workforce Development (DLWD) has controls in place to only allow an FPUC payment to be made when an underlying Unemployment Insurance (UI) payment has also been processed. FPUC payments should not be issued to any claim without the underlying UI payment being made for the same week. The FPUC payments issued and noted as exceptions during eligibility testing will be reviewed independently by DLWD to determine if the payments issued were to eligible recipients or not. For the PUA exceptions noted during Eligibility testing, overall the DLWD issued PUA payments to over 680,000 claimants during the COVID-19 pandemic. DLWD had controls in place to require a COVID related reason to make the claim PUA eligible and the weekly PUA certification required claimants to choose a COVID related reason for why they were out of work before they could get paid. The PUA payments in question will be reviewed independently by the DLWD to determine if the payments issued under PUA were appropriate or if they should have been paid instead under the regular UI program. DLWD corrective actions related to FPUC and PUA payments were fully implemented as of September 2023.

Reference Number: 2023-001 Prior Year Finding: 2022-003 Federal Agency: U.S. Department of Labor State Agency: Department of Labor and Workforce Development Federal Program: Unemployment Insurance, COVID-19 – Unemployment Insurance Assistance Listing Number: 17.225 Award Number and Year: UI-39337-23-55-A-34 (10/1/2022 – 12/31/2025), UI-37238-22-55-A-34 (10/1/2021 – 12/31/2024), UI-35663-21-55-A-34 (10/1/2020 – 12/31/2023), UI-35959-21-60-A-34 (1/1/2021 – 9/30/2022) Compliance Requirement: Eligibility Type of Finding Material Weakness in Internal Control Over Compliance, Material Noncompliance Criteria or specific requirement: Compliance: Regular Unemployment Compensation (UC) Program – Under state UC laws, a worker’s benefit rights depend on the amount of the worker’s wages and/or weeks of work in covered employment in a “base period.” While most states define the base period as the first four of the last five completed calendar quarters prior to the filing of the claim, other base periods may be used. To qualify for benefits, a claimant must have earned a certain amount of wages or have worked a certain number of weeks or calendar quarters within the base period or meet some combination of wage and employment requirements. Some states require a waiting period of one week of total or partial unemployment before UC is payable. A “waiting period” is a non-compensable period of unemployment in which the worker is otherwise eligible for benefits. To be eligible to receive UC, all states provide that a claimant must have been separated from suitable work for non-disqualifying reasons under state law (i.e., not because of such acts as leaving voluntarily without good cause or discharge for misconduct connected with work). After separation, he or she must be able and available for work, actively seeking work, legally authorized to work in the United States and must not have refused an offer of suitable work. Pandemic Unemployment Assistance (PUA) – PUA provides benefits to covered individuals, who are those individuals not eligible for regular unemployment compensation (UC or extended benefits under state or federal law or Pandemic Emergency Unemployment Compensation (PEUC), including those who have exhausted all rights to such benefits. Covered individuals also include self-employed, those seeking part-time employment, individuals lacking sufficient work history, and those who otherwise do not qualify for regular unemployment compensation or extended benefits under state or federal law or PEUC. PUA is payable to individuals who are ineligible for regular UC, and are unemployed, partially unemployed, or unable or unavailable to work due to one of the COVID-19 related reasons identified Attachment I to UIPL No. 16-20, Change 5. Section 2102(a)(3)(A)(ii)(I) of the CARES Act included 10 specific COVID-19 related reasons. The Department, under the authority provided by Section 2102(a)(3)(A)(ii)(I)(kk) of the CARES Act, has added additional COVID-19 related reasons; these are discussed in more detail in Section 4.a. of UIPL No. 16-20, Change 5. While three of these new COVID- Section III – Federal Award Findings and Questioned Costs (Continued) 19 related reasons were introduced to states with the publication of UIPL No. 16-20, Change 5 on February 25, 2021, all COVID-19 related reasons apply retroactively to the beginning of the PUA program. Additionally, as described in Section 4.b.i. of UIPL No. 16-20, Change 5, paraphrasing of the COVID-19 related reasons is not permissible; individuals must be permitted to select more than one COVID-19 related reason; individuals must be permitted to select different COVID-19 related reasons each week; and individuals must be permitted to file and select no COVID-19 related reasons. Federal Pandemic Unemployment Compensation (FPUC) – To be eligible for FPUC during the program dates described in Section 8 above, individuals must be eligible to receive at least $1 of underlying benefits for the week in question (including regular UC, UCFE, UCX, PEUC, PUA, EB, STC, TRA, DUA, and SEA). FPUC does not require the individual to submit a separate initial application or continued claim. Control: Per 2 CFR section 200.303(a), a 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 comply 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: CLA noted that ineligible claimants were being paid unemployment insurance. The Department of Labor and Workforce Development (Department) did not maintain an effective control environment over eligibility requirements of the New Jersey Local Office Online Payment System (NJLOOPS) for both FPUC and PUA. Context: Sixty claimants were selected for testing which included 24 claimants for Regular UC and Extended Benefits, 25 claimants for FPUC and 11 claimants for PUA. We noted the following exceptions: • FPUC: 4 of 25 claimants receiving benefits did not receive $1 of other benefits for the payment period. • PUA: 3 of 11 claimants receiving PUA did not identify a COVID-19 reason for their unemployment and were ineligible for the program. • PUA: The Department was unable to provide support for 2 of 11 claimants and eligibility could not be verified. Questioned costs: $3,202 - The total amount of benefits received by ineligible recipients: • FPUC: $1,800 • PUA: $1,402 Section III – Federal Award Findings and Questioned Costs (Continued) Cause: The Department began providing benefits to claimants before NJLOOPS had completed the eligibility determination process. Effect: Ineligible claimants received unemployment compensation benefits. Recommendation: We recommend the Department review and enhance procedures and controls to ensure that only eligible claimants receive unemployment compensation benefits. Views of responsible officials: The Department of Labor and Workforce Development (DLWD) has controls in place to only allow an FPUC payment to be made when an underlying Unemployment Insurance (UI) payment has also been processed. FPUC payments should not be issued to any claim without the underlying UI payment being made for the same week. The FPUC payments issued and noted as exceptions during eligibility testing will be reviewed independently by DLWD to determine if the payments issued were to eligible recipients or not. For the PUA exceptions noted during Eligibility testing, overall the DLWD issued PUA payments to over 680,000 claimants during the COVID-19 pandemic. DLWD had controls in place to require a COVID related reason to make the claim PUA eligible and the weekly PUA certification required claimants to choose a COVID related reason for why they were out of work before they could get paid. The PUA payments in question will be reviewed independently by the DLWD to determine if the payments issued under PUA were appropriate or if they should have been paid instead under the regular UI program. DLWD corrective actions related to FPUC and PUA payments were fully implemented as of September 2023.

93.525 - State Planning and Establishment Grant for the Affordable Care Act's Exchanges Criteria The Exchange is required to complete the timely preparation of the schedule of expenditures of federal awards (“schedule”) and submission of the audit to the federal clearinghouse and other applicable parties no later than nine months from the audit year end. Condition The Exchange did not complete the schedule in a timely manner, thus was unable to file the audit with the federal clearinghouse and other parties who receive the audit by the respective due dates or filing deadlines. Cause The Exchange had changes in key staffing positions, including the position responsible for managing the grant program that caused a delay in completion of the schedule and submission to the federal clearinghouse. Effect The schedule was not completed timely, delaying the submission to the federal clearinghouse. Perspective Information This finding represents an isolated problem. View of Responsible Official The Exchange is in agreement with this finding and will complete a corrective action plan within 45 days.

Reference Number: 2023-002 Prior Year Finding: 2022-005 Federal Agency: U.S. Department of Labor State Agency: Department of Labor and Workforce Development Federal Program: Unemployment Insurance, COVID-19 – Unemployment Insurance Assistance Listing Number: 17.225 Award Number and Year: UI-39337-23-55-A-34 (10/1/2022 – 12/31/2025), UI-37238-22-55-A-34 (10/1/2021 – 12/31/2024), UI-35663-21-55-A-34 (10/1/2020 – 12/31/2023), UI-35959-21-60-A-34 (1/1/2021 – 9/30/2022) Compliance Requirement: Special Tests and Provisions: UI Reemployment Programs: RESEA Type of Finding: Material Weakness in Internal Control over Compliance, Material Noncompliance Criteria or specific requirement: Compliance: Per 42 U.S. Code § 506 (a) The Secretary of Labor (in this section referred to as the “Secretary”) shall award grants under this section for a fiscal year to eligible States to conduct a program of reemployment services and eligibility assessments for individuals referred to reemployment services as described in section 503(j) of this title for weeks in such fiscal year for which such individuals receive unemployment compensation. Further, per 42 U.S. Code § 506 (c) (1), In carrying out a State program of reemployment services and eligibility assessments using grant funds awarded to the State under this section, a State shall use such funds only for interventions demonstrated to reduce the number of weeks for which program participants receive unemployment compensation by improving employment outcomes for program participants. The UI program serves as one of the principal “gateways” to the workforce system. It is often the first workforce program accessed by individuals who need workforce services. The WPRS and RESEA programs serve as UI’s primary programs that facilitate the reemployment needs of UI claimants. WPRS, which is mandated by Section 303(j) of the Social Security Act, is designed to identify UI claimants who are most likely to exhaust their benefits and need reemployment assistance to return to work, and refer them to appropriate reemployment services, such as: job search and job placement assistance; counseling; testing; provision of occupational and labor market information; and assessments. WPRS provides reemployment services to selected claimants through an early intervention process. The number of individuals served under WPRS is determined by the state (and/or local areas) based on its capacity to serve these individuals. UIPL No. 41-94 provides guidance on WPRS requirements. RESEA is authorized by Section 306 of the Social Security Act and builds on the success of RESEA’s predecessor, the former UI Reemployment and Eligibility Assessment (REA) program. RESEA uses an evidence-based integrated approach that combines an eligibility assessment for continuing UI eligibility and the provision of reemployment services. State administration of the RESEA is voluntary and under certain circumstances may be designed to also satisfy WPRS requirements. Operating guidance for the RESEA program is updated annually. UIPL 10-22 provides RESEA operating Guidance for FY 2022. Section III – Federal Award Findings and Questioned Costs (Continued) Control: Per 2 CFR section 200.303(a), a 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: The Department of Labor (Department) did not retain documentation required by the RESEA program to verify compliance with federal program regulations. Controls were not working sufficiently to document that a staff member at the Department with knowledge of the program reviewed eligibility requirements prior to admission of participants to the RESEA program. Context: The Department’s policy is that RESEA eligibility interviews must be conducted and eligibility review forms completed. Both steps are to be reviewed and signed by the participant and an Unemployment Insurance (UI) staff member who is knowledgeable of the program requirements. Sixty cases were selected for testing and the following exceptions were noted: • For 9 of 60 cases selected for testing, the Department was unable to provide a signed RESEA worksheet indicating the interview had been completed and the claimant was reviewed and approved by a UI supervisor. • For 1 of 60 cases selected for testing, the Department was unable to provide the signed worksheet nor the Notice to Claimant that included the RESEA eligibility conditions, requirements, benefits, and clear warnings regarding the consequences of failure to comply with program requirements. • For 1 of 60 cases selected for testing, the claimant did not complete all required RESEA forms. Questioned costs: Undetermined. Cause: The Department’s procedures and internal controls are not sufficient to ensure compliance with RESEA requirements. Effect: Without clear documentation supporting a participant’s eligibility and supervisory review, ineligible participants could go undetected and federal funds could be paid to recipients who do not qualify to participate in the RESEA program. Recommendation: We recommend that policies and procedures be implemented to ensure that internal controls over RESEA include retention of documentation of each participant’s eligibility and review and approval by a UI supervisor. Section III – Federal Award Findings and Questioned Costs (Continued) Views of responsible officials: The Reemployment Services and Eligibility Assessments (RESEA) policy and controls presently in place at the Department of Labor and Workforce Development (DLWD) require eligibility interviews to be conducted and eligibility review forms to be completed and signed by the participant and UI program representative. DLWD implemented a new process that allows staff to electronically obtain signatures through Simpligov, beginning June 2023. This process requires that staff obtain all necessary signatures before a RESEA claimant record is completed. Supervisors are assigned to monitor this process in order to mitigate the risk associated with missing information on any single RESEA customer registration. DLWD will monitor this process to ensure that all interviews are properly documented, and forms are signed and electronically uploaded to its electronic case management system of record for future reference. During the initial rollout of this process, there were records that didn’t migrate to the case management system of record. This issue has now been addressed through training. DLWD has also developed dashboards that will assist with monitoring data entry. Monthly reviews of RESEA data entry will be conducted to identify possible errors. These RESEA process changes that will be implemented by DLWD will ensure compliance with regulatory standards and assist with maintaining the integrity of its data management process.

Reference Number: 2023-002 Prior Year Finding: 2022-005 Federal Agency: U.S. Department of Labor State Agency: Department of Labor and Workforce Development Federal Program: Unemployment Insurance, COVID-19 – Unemployment Insurance Assistance Listing Number: 17.225 Award Number and Year: UI-39337-23-55-A-34 (10/1/2022 – 12/31/2025), UI-37238-22-55-A-34 (10/1/2021 – 12/31/2024), UI-35663-21-55-A-34 (10/1/2020 – 12/31/2023), UI-35959-21-60-A-34 (1/1/2021 – 9/30/2022) Compliance Requirement: Special Tests and Provisions: UI Reemployment Programs: RESEA Type of Finding: Material Weakness in Internal Control over Compliance, Material Noncompliance Criteria or specific requirement: Compliance: Per 42 U.S. Code § 506 (a) The Secretary of Labor (in this section referred to as the “Secretary”) shall award grants under this section for a fiscal year to eligible States to conduct a program of reemployment services and eligibility assessments for individuals referred to reemployment services as described in section 503(j) of this title for weeks in such fiscal year for which such individuals receive unemployment compensation. Further, per 42 U.S. Code § 506 (c) (1), In carrying out a State program of reemployment services and eligibility assessments using grant funds awarded to the State under this section, a State shall use such funds only for interventions demonstrated to reduce the number of weeks for which program participants receive unemployment compensation by improving employment outcomes for program participants. The UI program serves as one of the principal “gateways” to the workforce system. It is often the first workforce program accessed by individuals who need workforce services. The WPRS and RESEA programs serve as UI’s primary programs that facilitate the reemployment needs of UI claimants. WPRS, which is mandated by Section 303(j) of the Social Security Act, is designed to identify UI claimants who are most likely to exhaust their benefits and need reemployment assistance to return to work, and refer them to appropriate reemployment services, such as: job search and job placement assistance; counseling; testing; provision of occupational and labor market information; and assessments. WPRS provides reemployment services to selected claimants through an early intervention process. The number of individuals served under WPRS is determined by the state (and/or local areas) based on its capacity to serve these individuals. UIPL No. 41-94 provides guidance on WPRS requirements. RESEA is authorized by Section 306 of the Social Security Act and builds on the success of RESEA’s predecessor, the former UI Reemployment and Eligibility Assessment (REA) program. RESEA uses an evidence-based integrated approach that combines an eligibility assessment for continuing UI eligibility and the provision of reemployment services. State administration of the RESEA is voluntary and under certain circumstances may be designed to also satisfy WPRS requirements. Operating guidance for the RESEA program is updated annually. UIPL 10-22 provides RESEA operating Guidance for FY 2022. Section III – Federal Award Findings and Questioned Costs (Continued) Control: Per 2 CFR section 200.303(a), a 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: The Department of Labor (Department) did not retain documentation required by the RESEA program to verify compliance with federal program regulations. Controls were not working sufficiently to document that a staff member at the Department with knowledge of the program reviewed eligibility requirements prior to admission of participants to the RESEA program. Context: The Department’s policy is that RESEA eligibility interviews must be conducted and eligibility review forms completed. Both steps are to be reviewed and signed by the participant and an Unemployment Insurance (UI) staff member who is knowledgeable of the program requirements. Sixty cases were selected for testing and the following exceptions were noted: • For 9 of 60 cases selected for testing, the Department was unable to provide a signed RESEA worksheet indicating the interview had been completed and the claimant was reviewed and approved by a UI supervisor. • For 1 of 60 cases selected for testing, the Department was unable to provide the signed worksheet nor the Notice to Claimant that included the RESEA eligibility conditions, requirements, benefits, and clear warnings regarding the consequences of failure to comply with program requirements. • For 1 of 60 cases selected for testing, the claimant did not complete all required RESEA forms. Questioned costs: Undetermined. Cause: The Department’s procedures and internal controls are not sufficient to ensure compliance with RESEA requirements. Effect: Without clear documentation supporting a participant’s eligibility and supervisory review, ineligible participants could go undetected and federal funds could be paid to recipients who do not qualify to participate in the RESEA program. Recommendation: We recommend that policies and procedures be implemented to ensure that internal controls over RESEA include retention of documentation of each participant’s eligibility and review and approval by a UI supervisor. Section III – Federal Award Findings and Questioned Costs (Continued) Views of responsible officials: The Reemployment Services and Eligibility Assessments (RESEA) policy and controls presently in place at the Department of Labor and Workforce Development (DLWD) require eligibility interviews to be conducted and eligibility review forms to be completed and signed by the participant and UI program representative. DLWD implemented a new process that allows staff to electronically obtain signatures through Simpligov, beginning June 2023. This process requires that staff obtain all necessary signatures before a RESEA claimant record is completed. Supervisors are assigned to monitor this process in order to mitigate the risk associated with missing information on any single RESEA customer registration. DLWD will monitor this process to ensure that all interviews are properly documented, and forms are signed and electronically uploaded to its electronic case management system of record for future reference. During the initial rollout of this process, there were records that didn’t migrate to the case management system of record. This issue has now been addressed through training. DLWD has also developed dashboards that will assist with monitoring data entry. Monthly reviews of RESEA data entry will be conducted to identify possible errors. These RESEA process changes that will be implemented by DLWD will ensure compliance with regulatory standards and assist with maintaining the integrity of its data management process.

Reference Number: 2023-003 Prior Year Finding: No Federal Agency: U.S. Department of Labor State Agency: Department of Labor and Workforce Development Federal Program: Unemployment Insurance, COVID-19 – Unemployment Insurance Assistance Listing Number: 17.225 Award Number and Year: UI-39337-23-55-A-34 (10/1/2022 – 12/31/2025), UI-37238-22-55-A-34 (10/1/2021 – 12/31/2024), UI-35663-21-55-A-34 (10/1/2020 – 12/31/2023), UI-35959-21-60-A-34 (1/1/2021 – 9/30/2022) Compliance Requirement: Special Tests and Provisions – UI Benefit Payments Type of Finding: Material Weakness in Internal Control over Compliance, Material Noncompliance Criteria or specific requirement: Compliance: The State Workforce Agency (SWA) is required by 20 CFR section 602.11(d) to operate and maintain a quality control system. The Benefits Accuracy Measurement (BAM) program is DOL’s quality control system designed to assess the accuracy of UI benefit payments and denied claims, unless the SWA is exempted from such requirement (20 CFR section 602.22). The program estimates error rates, that is, numbers of claims improperly paid or denied, and dollar amounts of benefits improperly paid or denied, by projecting the results from investigations of statistically sound random samples to the universe of all claims paid and denied in a state. Specifically, the SWA’s BAM unit is required to draw a weekly sample of payments and denied claims, complete prompt, and in-depth investigations to determine if the administration of the UC program is consistent with state and federal law (20 CFR section 602.21(d)). As presented in the ET Handbook No. 395, the investigation involves a review of state agency records, as well as contacting the claimant, employers, and third parties (either in-person, by telephone, or by fax) to conduct new and original fact-finding related to all of the information pertinent to the paid or denied claim that was sampled. BAM investigators review cases for adherence to federal and state law as well as official policy. The following time limits are established for completion of all cases for the year. (The "year" includes all batches of weeks ending in the calendar year.): • a minimum of 70 percent of cases must be completed within 60 days of the week ending date of the batch; • 95 percent of cases must be completed within 90 days of the week ending date of the batch; • a minimum of 98 percent of cases for the year must be completed within 120 days of the ending date of the calendar year. Control: Per 2 CFR section 200.303(a), a 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 comply with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or Section III – Federal Award Findings and Questioned Costs (Continued) the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: The Department of Labor and Workforce Development (Department) was unable to provide documentation that case reviews were completed per the requirements of ET Handbook No. 395. Context: Forty cases were selected for testing, consisting of 20 Paid Benefit Claims and 20 Denied Claims. The following exceptions were noted: • 4 of 20 Paid Benefit Claims appear to have been reviewed, but the Department was unable to provide documentation that the case review had been completed and signed by appropriate staff. • 1 of 20 Paid Benefit Claims did not have evidence of case review. The Department was unable to provide a copy of the investigative report. • 8 of 20 Denied Claims appear to have been reviewed, but the Department was unable to provide documentation that the case review had been completed and signed by appropriate staff. • 1 of 20 Denied Claims did not have evidence of case review. The Department was unable to provide a copy of the investigative report. Questioned costs: Undetermined. Cause: The Department’s internal controls were not sufficient to ensure that BAM case reviews were completed and signed by appropriate staff. Effect: Noncompliance with BAM case investigation requirements could delay the detection and correction of inaccurate benefit payments and denied claims. Recommendation: We recommend the Department review and enhance procedures and controls to ensure that BAM case investigations are completed timely, that reviews are signed by appropriate staff, and that it maintains documentation supporting completion of the case reviews. Views of responsible officials: The Department of Labor and Workforce Development (DLWD) will continue to review and enhance controls to ensure that BAM quality control case investigations are completed timely, that reviews are signed as required by appropriate staff, and that all required case review supporting documentation is maintained in case files. DLWD corrective actions will be completed by September 30, 2024. For the PUA exceptions noted during Eligibility testing, overall the DLWD issued PUA payments to over 680,000 claimants during the COVID-19 pandemic. DLWD had controls in place to require a COVID related reason to make the claim PUA eligible and the weekly PUA certification required claimants to choose a COVID related reason for why they were out of work before they could get paid. The PUA payments in question will be reviewed independently by the DLWD to determine if the payments issued under PUA were appropriate or if they should have been paid instead under the regular UI program.

Reference Number: 2023-003 Prior Year Finding: No Federal Agency: U.S. Department of Labor State Agency: Department of Labor and Workforce Development Federal Program: Unemployment Insurance, COVID-19 – Unemployment Insurance Assistance Listing Number: 17.225 Award Number and Year: UI-39337-23-55-A-34 (10/1/2022 – 12/31/2025), UI-37238-22-55-A-34 (10/1/2021 – 12/31/2024), UI-35663-21-55-A-34 (10/1/2020 – 12/31/2023), UI-35959-21-60-A-34 (1/1/2021 – 9/30/2022) Compliance Requirement: Special Tests and Provisions – UI Benefit Payments Type of Finding: Material Weakness in Internal Control over Compliance, Material Noncompliance Criteria or specific requirement: Compliance: The State Workforce Agency (SWA) is required by 20 CFR section 602.11(d) to operate and maintain a quality control system. The Benefits Accuracy Measurement (BAM) program is DOL’s quality control system designed to assess the accuracy of UI benefit payments and denied claims, unless the SWA is exempted from such requirement (20 CFR section 602.22). The program estimates error rates, that is, numbers of claims improperly paid or denied, and dollar amounts of benefits improperly paid or denied, by projecting the results from investigations of statistically sound random samples to the universe of all claims paid and denied in a state. Specifically, the SWA’s BAM unit is required to draw a weekly sample of payments and denied claims, complete prompt, and in-depth investigations to determine if the administration of the UC program is consistent with state and federal law (20 CFR section 602.21(d)). As presented in the ET Handbook No. 395, the investigation involves a review of state agency records, as well as contacting the claimant, employers, and third parties (either in-person, by telephone, or by fax) to conduct new and original fact-finding related to all of the information pertinent to the paid or denied claim that was sampled. BAM investigators review cases for adherence to federal and state law as well as official policy. The following time limits are established for completion of all cases for the year. (The "year" includes all batches of weeks ending in the calendar year.): • a minimum of 70 percent of cases must be completed within 60 days of the week ending date of the batch; • 95 percent of cases must be completed within 90 days of the week ending date of the batch; • a minimum of 98 percent of cases for the year must be completed within 120 days of the ending date of the calendar year. Control: Per 2 CFR section 200.303(a), a 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 comply with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or Section III – Federal Award Findings and Questioned Costs (Continued) the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: The Department of Labor and Workforce Development (Department) was unable to provide documentation that case reviews were completed per the requirements of ET Handbook No. 395. Context: Forty cases were selected for testing, consisting of 20 Paid Benefit Claims and 20 Denied Claims. The following exceptions were noted: • 4 of 20 Paid Benefit Claims appear to have been reviewed, but the Department was unable to provide documentation that the case review had been completed and signed by appropriate staff. • 1 of 20 Paid Benefit Claims did not have evidence of case review. The Department was unable to provide a copy of the investigative report. • 8 of 20 Denied Claims appear to have been reviewed, but the Department was unable to provide documentation that the case review had been completed and signed by appropriate staff. • 1 of 20 Denied Claims did not have evidence of case review. The Department was unable to provide a copy of the investigative report. Questioned costs: Undetermined. Cause: The Department’s internal controls were not sufficient to ensure that BAM case reviews were completed and signed by appropriate staff. Effect: Noncompliance with BAM case investigation requirements could delay the detection and correction of inaccurate benefit payments and denied claims. Recommendation: We recommend the Department review and enhance procedures and controls to ensure that BAM case investigations are completed timely, that reviews are signed by appropriate staff, and that it maintains documentation supporting completion of the case reviews. Views of responsible officials: The Department of Labor and Workforce Development (DLWD) will continue to review and enhance controls to ensure that BAM quality control case investigations are completed timely, that reviews are signed as required by appropriate staff, and that all required case review supporting documentation is maintained in case files. DLWD corrective actions will be completed by September 30, 2024. For the PUA exceptions noted during Eligibility testing, overall the DLWD issued PUA payments to over 680,000 claimants during the COVID-19 pandemic. DLWD had controls in place to require a COVID related reason to make the claim PUA eligible and the weekly PUA certification required claimants to choose a COVID related reason for why they were out of work before they could get paid. The PUA payments in question will be reviewed independently by the DLWD to determine if the payments issued under PUA were appropriate or if they should have been paid instead under the regular UI program.

Reference Number: 2023-004 Prior Year Finding: 2022-004 Federal Agency: U.S. Department of Labor State Agency: Department of Labor and Workforce Development Federal Program: Unemployment Insurance, COVID-19 – Unemployment Insurance Assistance Listing Number: 17.225 Award Number and Year: UI-35663-21-55-A-34 (10/1/2020 – 12/31/2023), UI-35959-21-60-A-34 (1/1/2021 – 9/30/2022), UI-34073-20-55-A-34 (10/1/19 – 12/31/22), UI-32614-19-55-A-34 (10/1/18 – 12/31/21), UI-37238-22-55-A-34 (10/1/21 – 12/31/24), UI-39337-23-55-A-34 (10/1/2022 – 12/31/2025) Compliance Requirement: Reporting – ETA 9050 and ETA 9052 Type of Finding: Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance: The ETA 9050 – Time Lapse of All First Payments except Workshare report contains monthly information on first payment time lapse. This report concerns the time it takes states to pay benefits to claimants for the first compensable week of unemployment. First Payments are considered timely at 14/21 days, Interstate and Intrastate UI, UCFE, and UCX, full and partial weeks. The report is due in the ETA National Office on the 20th of the month following the month to which the data relates. The ETA 9052 – Nonmonetary Determination Time Lapse Detection report contains monthly information on the time it take states to issue nonmonetary determinations from the date the issues are first detected by the agency. Single-claimant and multi-claimant nonmonetary determinations are included in the report. Nonmonetary determinations made by organizational units such as Benefits Accuracy Measurement (BAM) and Benefit Payment Control (BPC) are also included in the report. Nonmonetary determinations are considered timely if completed within 21 days. The report is due in the ETA National Office on the 20th of the month following the month to which the data relates. Control: Per 2 CFR section 200.303(a), a 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 comply 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: Reports submitted by the Department of Labor and Workforce Development (Department) indicate that First Payment Time Lapse and Nonmonetary Determinations were untimely during FY 2023. Section III – Federal Award Findings and Questioned Costs (Continued) Context: Four ETA 9050 and four ETA 9052 reports were selected for testing for the months of September 2022, November 2022, February 2023, and May 2023. We noted the following exceptions: • ETA 9050: 4 of 4 reports indicate that First Payments were made in more than 14/21 days. • ETA 9052: 4 of 4 reports indicate that nonmonetary determinations were completed in more than 21 days. Questioned costs: None noted. Cause: The Department’s procedures and controls were not operating effectively to ensure that first payments and nonmonetary determinations were completed timely. Effect: First Payments and Nonmonetary Determinations were not completed timely as required by the program. Recommendation: We recommend that the Department review its policies and procedures to ensure that it makes first payments within 14/21 days and that nonmonetary determinations are completed within 21 days per program requirements. Views of responsible officials: The Department of Labor and Workforce Development (DLWD) continues to monitor all first payment and non-monetary time lapse figures in order to meet the established USDOL Acceptable Levels of Performance (ALP). As workloads return to normal levels after the increased activity from the COVID-19 pandemic related claims, greater emphasis will continue to be placed on meeting all ALPs. Specifically relating to first payments and the previously discussed issues with claimants verifying their identity before any payments can be made, the DLWD has made some internal changes to how returned verified IDs from our ID verification partner (ID.me) are handled. These modifications to the internal process used to clear verified IDs are expected to have a positive impact on overall time lapse numbers as verified claimants will not be delayed longer than they previously were under the old process. The month of April starts the new reporting year for these figures to USDOL and New Jersey expects to see significant increases to first payment and non-monetary time lapse figures by the third quarter of calendar year 2024.

Reference Number: 2023-004 Prior Year Finding: 2022-004 Federal Agency: U.S. Department of Labor State Agency: Department of Labor and Workforce Development Federal Program: Unemployment Insurance, COVID-19 – Unemployment Insurance Assistance Listing Number: 17.225 Award Number and Year: UI-35663-21-55-A-34 (10/1/2020 – 12/31/2023), UI-35959-21-60-A-34 (1/1/2021 – 9/30/2022), UI-34073-20-55-A-34 (10/1/19 – 12/31/22), UI-32614-19-55-A-34 (10/1/18 – 12/31/21), UI-37238-22-55-A-34 (10/1/21 – 12/31/24), UI-39337-23-55-A-34 (10/1/2022 – 12/31/2025) Compliance Requirement: Reporting – ETA 9050 and ETA 9052 Type of Finding: Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance: The ETA 9050 – Time Lapse of All First Payments except Workshare report contains monthly information on first payment time lapse. This report concerns the time it takes states to pay benefits to claimants for the first compensable week of unemployment. First Payments are considered timely at 14/21 days, Interstate and Intrastate UI, UCFE, and UCX, full and partial weeks. The report is due in the ETA National Office on the 20th of the month following the month to which the data relates. The ETA 9052 – Nonmonetary Determination Time Lapse Detection report contains monthly information on the time it take states to issue nonmonetary determinations from the date the issues are first detected by the agency. Single-claimant and multi-claimant nonmonetary determinations are included in the report. Nonmonetary determinations made by organizational units such as Benefits Accuracy Measurement (BAM) and Benefit Payment Control (BPC) are also included in the report. Nonmonetary determinations are considered timely if completed within 21 days. The report is due in the ETA National Office on the 20th of the month following the month to which the data relates. Control: Per 2 CFR section 200.303(a), a 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 comply 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: Reports submitted by the Department of Labor and Workforce Development (Department) indicate that First Payment Time Lapse and Nonmonetary Determinations were untimely during FY 2023. Section III – Federal Award Findings and Questioned Costs (Continued) Context: Four ETA 9050 and four ETA 9052 reports were selected for testing for the months of September 2022, November 2022, February 2023, and May 2023. We noted the following exceptions: • ETA 9050: 4 of 4 reports indicate that First Payments were made in more than 14/21 days. • ETA 9052: 4 of 4 reports indicate that nonmonetary determinations were completed in more than 21 days. Questioned costs: None noted. Cause: The Department’s procedures and controls were not operating effectively to ensure that first payments and nonmonetary determinations were completed timely. Effect: First Payments and Nonmonetary Determinations were not completed timely as required by the program. Recommendation: We recommend that the Department review its policies and procedures to ensure that it makes first payments within 14/21 days and that nonmonetary determinations are completed within 21 days per program requirements. Views of responsible officials: The Department of Labor and Workforce Development (DLWD) continues to monitor all first payment and non-monetary time lapse figures in order to meet the established USDOL Acceptable Levels of Performance (ALP). As workloads return to normal levels after the increased activity from the COVID-19 pandemic related claims, greater emphasis will continue to be placed on meeting all ALPs. Specifically relating to first payments and the previously discussed issues with claimants verifying their identity before any payments can be made, the DLWD has made some internal changes to how returned verified IDs from our ID verification partner (ID.me) are handled. These modifications to the internal process used to clear verified IDs are expected to have a positive impact on overall time lapse numbers as verified claimants will not be delayed longer than they previously were under the old process. The month of April starts the new reporting year for these figures to USDOL and New Jersey expects to see significant increases to first payment and non-monetary time lapse figures by the third quarter of calendar year 2024.

Reference Number: 2023-005 Prior Year Finding: 2022-006 Federal Agency: U.S. Department of Labor State Agency: Department of Labor and Workforce Development Federal Program: Unemployment Insurance, COVID-19 – Unemployment Insurance Assistance Listing Number: 17.225 Award Number and Year: UI-39337-23-55-A-34 (10/1/2022 – 12/31/2025), UI-37238-22-55-A-34 (10/1/2021 – 12/31/2024), UI-35663-21-55-A-34 (10/1/2020 – 12/31/2023), UI-35959-21-60-A-34 (1/1/2021 – 9/30/2022) Compliance Requirement: Information Technology General Controls Type of Finding: Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Control: Per 2 CFR section 200.303(a), a 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 comply 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). As part of an entity’s internal controls to reasonably ensure compliance over Federal laws and regulations, an entity must maintain an effective control environment over their information technology systems used to generate and process information to administer Federal programs in accordance with the respective rules and regulations that govern the program. Condition: The Department of Labor and Workforce Development (Department) did not maintain an effective control environment over change management of the New Jersey Local Office Online Payment System (NJLOOPS). Context: The NJLOOPS application is an essential system hosted within the Office of Information Technology’s (OIT) infrastructure used by the Department for unemployment insurance eligibility, claims, benefit calculations, and payments. NJLOOPS application management is provided by Department staff. We noted that the prior year finding for internal controls over change management was not corrected. Specifically, we noted that while tickets have been documented for the sample of changes tested for the NJLOOPS change management procedures, they do not maintain key information described in the change management policy such as programmatic work performed, testing, and approval of the effort for promotion to the Production environment. Auditors were able to obtain evidence of testing and approval for 1 of the 5 change samples selected for testing via email communication. Further, we noted that two individuals have the ability to develop and promote their own changes to production which poses a segregation of duties issue. Section III – Federal Award Findings and Questioned Costs (Continued) Questioned costs: Undetermined. Cause: Due to limitations on staffing and increased demand on IT resources due to the additional requirements of the pandemic's unemployment program, the agency was unable to comply with its internal change management procedures requirements. Effect: Noncompliance with the requirements of internal change management procedures and a lack of segregation of duties could increase the risk of potential unauthorized or unapproved changes occurring to the application. Recommendation: We recommend the Department follow the statewide change management policy and formally document the request, testing, and approval of all changes related to the NJLOOPS application. We further recommend that the Department implement segregation of duties controls to prevent the same user from developing, approving, and promoting a system change to the production environment. Views of responsible officials: The Department of Labor and Workforce Development’s (DLWD) Office of Information Management, Services & Solutions (OIMSS) will continue its efforts to ensure staff compliance with existing controls over program change controls for the New Jersey Local Office Online Payment System (NJLOOPs). DLWD’s efforts will continue to be guided by statewide change management best practices. OIMSS will add a Director-level approval step to the program promotion process that will validate that the required documentation has been uploaded to the change ticket. Except in circumstances involving emergency off-hours break fix resolution, separation of duties will be included as a check-off for approval to deploy program changes.

Reference Number: 2023-005 Prior Year Finding: 2022-006 Federal Agency: U.S. Department of Labor State Agency: Department of Labor and Workforce Development Federal Program: Unemployment Insurance, COVID-19 – Unemployment Insurance Assistance Listing Number: 17.225 Award Number and Year: UI-39337-23-55-A-34 (10/1/2022 – 12/31/2025), UI-37238-22-55-A-34 (10/1/2021 – 12/31/2024), UI-35663-21-55-A-34 (10/1/2020 – 12/31/2023), UI-35959-21-60-A-34 (1/1/2021 – 9/30/2022) Compliance Requirement: Information Technology General Controls Type of Finding: Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Control: Per 2 CFR section 200.303(a), a 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 comply 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). As part of an entity’s internal controls to reasonably ensure compliance over Federal laws and regulations, an entity must maintain an effective control environment over their information technology systems used to generate and process information to administer Federal programs in accordance with the respective rules and regulations that govern the program. Condition: The Department of Labor and Workforce Development (Department) did not maintain an effective control environment over change management of the New Jersey Local Office Online Payment System (NJLOOPS). Context: The NJLOOPS application is an essential system hosted within the Office of Information Technology’s (OIT) infrastructure used by the Department for unemployment insurance eligibility, claims, benefit calculations, and payments. NJLOOPS application management is provided by Department staff. We noted that the prior year finding for internal controls over change management was not corrected. Specifically, we noted that while tickets have been documented for the sample of changes tested for the NJLOOPS change management procedures, they do not maintain key information described in the change management policy such as programmatic work performed, testing, and approval of the effort for promotion to the Production environment. Auditors were able to obtain evidence of testing and approval for 1 of the 5 change samples selected for testing via email communication. Further, we noted that two individuals have the ability to develop and promote their own changes to production which poses a segregation of duties issue. Section III – Federal Award Findings and Questioned Costs (Continued) Questioned costs: Undetermined. Cause: Due to limitations on staffing and increased demand on IT resources due to the additional requirements of the pandemic's unemployment program, the agency was unable to comply with its internal change management procedures requirements. Effect: Noncompliance with the requirements of internal change management procedures and a lack of segregation of duties could increase the risk of potential unauthorized or unapproved changes occurring to the application. Recommendation: We recommend the Department follow the statewide change management policy and formally document the request, testing, and approval of all changes related to the NJLOOPS application. We further recommend that the Department implement segregation of duties controls to prevent the same user from developing, approving, and promoting a system change to the production environment. Views of responsible officials: The Department of Labor and Workforce Development’s (DLWD) Office of Information Management, Services & Solutions (OIMSS) will continue its efforts to ensure staff compliance with existing controls over program change controls for the New Jersey Local Office Online Payment System (NJLOOPs). DLWD’s efforts will continue to be guided by statewide change management best practices. OIMSS will add a Director-level approval step to the program promotion process that will validate that the required documentation has been uploaded to the change ticket. Except in circumstances involving emergency off-hours break fix resolution, separation of duties will be included as a check-off for approval to deploy program changes.

Reference Number: 2023-006 Prior Year Finding: 2022-007 Federal Agency: U.S. Department of Labor State Agency: Department of Labor and Workforce Development Federal Program: WIOA Cluster Assistance Listing Number: 17.258, 17.259, 17.278 Award Number and Year: AA-33245-19-55-A-34 (7/1/2019 – 9/30/2022), AA-34783-20-55-A-34 (7/1/2020 – 9/30/2023), AA-36334-21-55-A-34 (7/1/2021 – 9/30/2024), AA-38544-22-55-A-34 (7/1/2022 – 6/30/2025) Compliance Requirement: Reporting – Federal Funding Accountability and Transparency Act (FFATA) Type of Finding: Material Weakness in Internal Control Over Compliance, Material Non-compliance Criteria or specific requirement: Compliance: Per the Federal Funding Accountability and Transparency Act (FFATA), prime (direct) recipients of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Reports must be filed in FSRS by the end of the month following the month in which the prime recipient awards any sub-grant greater than or equal to $30,000. If the initial award is below $30,000 but subsequent grant modifications result in a total award equal to or over $30,000, the award will be subject to the reporting requirements as of the date the award exceeds $30,000. If the initial award equals or exceeds $30,000 but funding is subsequently de-obligated such that the total award amount falls below $30,000, the award continues to be subject to FFATA reporting requirements. The following key data elements must be reported: Subawardee Name and Unique Entity ID (UEI) number; Amount of Subaward (inclusive of modifications); Subaward Obligation/Action Date; Date of Report Submission; Subaward Number; Project Description; and Names and Compensation of Highly Compensated Officers. (Names and Compensation of Highly Compensated Officers must only be reported when the entity in the preceding fiscal year received 80 percent or more of its annual gross revenues in Federal awards; and $25,000,000 or more in annual gross revenues from Federal awards; and the public does not have access to this information about the compensation of the senior executives of the entity through periodic reports filed under section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. §§ 78m(a), 78o(d)) or section 6104 of the Internal Revenue Code of 1986.) Control: Per 2 CFR section 200.303(a), a 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 comply 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). Section III – Federal Award Findings and Questioned Costs (Continued) Condition: The Department of Labor and Workforce Development (Department) did not report subaward information timely to FSRS. Context: Six of eight subawards selected for testing were not reported timely to FSRS. The subawards were issued on 8/31/2022 and were not reported to FSRS until 3/1/2023, or 182 days late. SEE SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR CHART/TABLE Cause: The Department’s internal controls were not sufficient to ensure that subawards were reported timely to FSRS during FY 2023. Effect: Subawards were not reported to FSRS in accordance with FFATA requirements. Questioned costs: None noted. Recommendation: We recommend that the Department develop internal controls and procedures to ensure that all required subawards are reported timely to FSRS no later than the end of the month following the month of issuance in accordance with FFATA reporting requirements. Views of responsible officials: The Department of Labor and Workforce Development (DLWD) transitioned from a manual contract agreement process to a web-based grant administration system in recent years that employs the System for Administering Grants Electronically (SAGE) and IntelliGrants (IGX) applications. The DLWD FFATA Reporting Unit has access to these automated systems and monitors them on a monthly basis to identify when new subaward contracts/agreements are approved in order to report required data in the FFATA system timely. DLWD corrective actions regarding FFATA reporting are expected to be fully implemented as of June 30, 2024.

Reference Number: 2023-006 Prior Year Finding: 2022-007 Federal Agency: U.S. Department of Labor State Agency: Department of Labor and Workforce Development Federal Program: WIOA Cluster Assistance Listing Number: 17.258, 17.259, 17.278 Award Number and Year: AA-33245-19-55-A-34 (7/1/2019 – 9/30/2022), AA-34783-20-55-A-34 (7/1/2020 – 9/30/2023), AA-36334-21-55-A-34 (7/1/2021 – 9/30/2024), AA-38544-22-55-A-34 (7/1/2022 – 6/30/2025) Compliance Requirement: Reporting – Federal Funding Accountability and Transparency Act (FFATA) Type of Finding: Material Weakness in Internal Control Over Compliance, Material Non-compliance Criteria or specific requirement: Compliance: Per the Federal Funding Accountability and Transparency Act (FFATA), prime (direct) recipients of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Reports must be filed in FSRS by the end of the month following the month in which the prime recipient awards any sub-grant greater than or equal to $30,000. If the initial award is below $30,000 but subsequent grant modifications result in a total award equal to or over $30,000, the award will be subject to the reporting requirements as of the date the award exceeds $30,000. If the initial award equals or exceeds $30,000 but funding is subsequently de-obligated such that the total award amount falls below $30,000, the award continues to be subject to FFATA reporting requirements. The following key data elements must be reported: Subawardee Name and Unique Entity ID (UEI) number; Amount of Subaward (inclusive of modifications); Subaward Obligation/Action Date; Date of Report Submission; Subaward Number; Project Description; and Names and Compensation of Highly Compensated Officers. (Names and Compensation of Highly Compensated Officers must only be reported when the entity in the preceding fiscal year received 80 percent or more of its annual gross revenues in Federal awards; and $25,000,000 or more in annual gross revenues from Federal awards; and the public does not have access to this information about the compensation of the senior executives of the entity through periodic reports filed under section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. §§ 78m(a), 78o(d)) or section 6104 of the Internal Revenue Code of 1986.) Control: Per 2 CFR section 200.303(a), a 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 comply 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). Section III – Federal Award Findings and Questioned Costs (Continued) Condition: The Department of Labor and Workforce Development (Department) did not report subaward information timely to FSRS. Context: Six of eight subawards selected for testing were not reported timely to FSRS. The subawards were issued on 8/31/2022 and were not reported to FSRS until 3/1/2023, or 182 days late. SEE SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR CHART/TABLE Cause: The Department’s internal controls were not sufficient to ensure that subawards were reported timely to FSRS during FY 2023. Effect: Subawards were not reported to FSRS in accordance with FFATA requirements. Questioned costs: None noted. Recommendation: We recommend that the Department develop internal controls and procedures to ensure that all required subawards are reported timely to FSRS no later than the end of the month following the month of issuance in accordance with FFATA reporting requirements. Views of responsible officials: The Department of Labor and Workforce Development (DLWD) transitioned from a manual contract agreement process to a web-based grant administration system in recent years that employs the System for Administering Grants Electronically (SAGE) and IntelliGrants (IGX) applications. The DLWD FFATA Reporting Unit has access to these automated systems and monitors them on a monthly basis to identify when new subaward contracts/agreements are approved in order to report required data in the FFATA system timely. DLWD corrective actions regarding FFATA reporting are expected to be fully implemented as of June 30, 2024.

Reference Number: 2023-007 Prior Year Finding: No Federal Agency: U.S. Department of Education State Agency: Department of Human Services Federal Program: Rehabilitation Services - Vocational Rehabilitation Grants to States Assistance Listing Number: 84.126 Award Number and Year: H126A230044 (10/1/2022-9/30/2023) H126A230044-A (10/1/2022-9/30/2023) H126A230044-B (10/1/2022-9/30/2023) H126A210043 (10/1/2020-9/30/2022) H126A220043-22C (10/1/2021-9/30/2022) H126A230043 (10/1/2022-9/30/2023) Compliance Requirement: Allowable Costs/Cost Principles Type of Finding: Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance – Per 2 CFR § 200.430 (a), costs of compensation are allowable to the extent that they satisfy the specific requirements of this part, and that the total compensation for individual employees: (1) Is reasonable for the services rendered and conforms to the established written policy of the non-Federal entity consistently applied to both Federal and non-Federal activities; (2) Follows an appointment made in accordance with a non-Federal entity's laws or rules or written policies and meets the requirements of Federal statute, where applicable; and (3) Is determined and supported as provided in paragraph (i) of this section, Standards for Documentation of Personnel Expenses, when applicable. Per 2 CFR § 200.430 (i), charges to federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: • Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated, • Be incorporated into the official records of the non-Federal entity, • Reasonably reflect the total activity for which the employee is compensated by the non-Federal entity, not exceeding 100% of compensated activities, • Encompass both federally assisted, and all other activities compensated by the non-Federal entity on an integrated basis, but may include the use of subsidiary records as defined in the non-Federal entity's written policy, • Comply with the established accounting policies and practices of the non-Federal entity, • Support the distribution of the employee's salary or wages among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. Section III – Federal Award Findings and Questioned Costs (Continued) Control – Per 2 CFR section 200.303(a), a 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 comply with the 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: The Department of Human Services (Department) charged unallowable payroll costs to the program. Context: For one of forty samples selected for testing, the Department made an overpayment to an employee of $113.00 in salary and wages. Cause: Controls were not operating effectively to ensure that allowable payroll costs were charged to the program. A step increase was improperly applied to the employee which resulted in an overpayment of salary and wages. Effect: Unallowable employee salaries and wages were charged to the program. Questioned costs: $113.00, the amount of the overpayment. Recommendation: The Department should review procedures and controls to ensure that only allowable time and effort costs are charged to the program. Views of responsible officials: The Department of Human Services (DHS), Central Office Payroll group will run reports biweekly to determine if any employees are on a leave without pay status greater than 10 days. This added reporting function will ensure that all DHS employees who are on a leave of absence without pay beyond 10 days have their PMIS histories updated upon each extension and return to work.

Reference Number: 2023-007 Prior Year Finding: No Federal Agency: U.S. Department of Education State Agency: Department of Human Services Federal Program: Rehabilitation Services - Vocational Rehabilitation Grants to States Assistance Listing Number: 84.126 Award Number and Year: H126A230044 (10/1/2022-9/30/2023) H126A230044-A (10/1/2022-9/30/2023) H126A230044-B (10/1/2022-9/30/2023) H126A210043 (10/1/2020-9/30/2022) H126A220043-22C (10/1/2021-9/30/2022) H126A230043 (10/1/2022-9/30/2023) Compliance Requirement: Allowable Costs/Cost Principles Type of Finding: Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance – Per 2 CFR § 200.430 (a), costs of compensation are allowable to the extent that they satisfy the specific requirements of this part, and that the total compensation for individual employees: (1) Is reasonable for the services rendered and conforms to the established written policy of the non-Federal entity consistently applied to both Federal and non-Federal activities; (2) Follows an appointment made in accordance with a non-Federal entity's laws or rules or written policies and meets the requirements of Federal statute, where applicable; and (3) Is determined and supported as provided in paragraph (i) of this section, Standards for Documentation of Personnel Expenses, when applicable. Per 2 CFR § 200.430 (i), charges to federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: • Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated, • Be incorporated into the official records of the non-Federal entity, • Reasonably reflect the total activity for which the employee is compensated by the non-Federal entity, not exceeding 100% of compensated activities, • Encompass both federally assisted, and all other activities compensated by the non-Federal entity on an integrated basis, but may include the use of subsidiary records as defined in the non-Federal entity's written policy, • Comply with the established accounting policies and practices of the non-Federal entity, • Support the distribution of the employee's salary or wages among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. Section III – Federal Award Findings and Questioned Costs (Continued) Control – Per 2 CFR section 200.303(a), a 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 comply with the 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: The Department of Human Services (Department) charged unallowable payroll costs to the program. Context: For one of forty samples selected for testing, the Department made an overpayment to an employee of $113.00 in salary and wages. Cause: Controls were not operating effectively to ensure that allowable payroll costs were charged to the program. A step increase was improperly applied to the employee which resulted in an overpayment of salary and wages. Effect: Unallowable employee salaries and wages were charged to the program. Questioned costs: $113.00, the amount of the overpayment. Recommendation: The Department should review procedures and controls to ensure that only allowable time and effort costs are charged to the program. Views of responsible officials: The Department of Human Services (DHS), Central Office Payroll group will run reports biweekly to determine if any employees are on a leave without pay status greater than 10 days. This added reporting function will ensure that all DHS employees who are on a leave of absence without pay beyond 10 days have their PMIS histories updated upon each extension and return to work.

Reference Number: 2023-008 Prior Year Finding: No Federal Agency: U.S. Department of Health and Human Services State Agency: Department of Human Services Federal Program: Rehabilitation Services - Vocational Rehabilitation Grants to States Assistance Listing Number: 84.126 Award Number and Year: H126A230044 (10/1/2022-9/30/2023) H126A230044-A (10/1/2022-9/30/2023) H126A230044-B (10/1/2022-9/30/2023) H126A210043 (10/1/2020-9/30/2022) H126A220043-22C (10/1/2021-9/30/2022) H126A230043 (10/1/2022-9/30/2023) Compliance Requirement: Reporting – Federal Funding Accountability and Transparency Act (FFATA) Type of Finding Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance: Per the Federal Funding Accountability and Transparency Act (FFATA), prime (direct) recipients of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Reports must be filed in FSRS by the end of the month following the month in which the prime recipient awards any sub-grant greater than or equal to $30,000. If the initial award is below $30,000 but subsequent grant modifications result in a total award equal to or over $30,000, the award will be subject to the reporting requirements as of the date the award exceeds $30,000. If the initial award equals or exceeds $30,000 but funding is subsequently de-obligated such that the total award amount falls below $30,000, the award continues to be subject to FFATA reporting requirements. The following key data elements must be reported: Subawardee Name and Unique Entity ID (UEI) number; Amount of Subaward (inclusive of modifications); Subaward Obligation/Action Date; Date of Report Submission; Subaward Number; Project Description; and Names and Compensation of Highly Compensated Officers. (Names and Compensation of Highly Compensated Officers must only be reported when the entity in the preceding fiscal year received 80 percent or more of its annual gross revenues in Federal awards; and $25,000,000 or more in annual gross revenues from Federal awards; and the public does not have access to this information about the compensation of the senior executives of the entity through periodic reports filed under section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. §§ 78m(a), 78o(d)) or section 6104 of the Internal Revenue Code of 1986.) Section III – Federal Award Findings and Questioned Costs (Continued) Control: Per 2 CFR section 200.303(a), a 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 comply 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: Subaward information was not reported timely to FSRS by the Department of Human Services (Department). Context: Eight of eight subawards selected for testing were not reported to FSRS. Specifically, we noted the following: • Eight of eight subawards were issued on 8/16/2022 but were not reported to FSRS until 3/10/2023 or approximately 161 days after required by FFATA requirements. SEE SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR CHART/TABLE Cause: The Department did not establish effective procedures or internal controls over FFATA requirements to ensure that subawards were reported to FSRS. Effect: Subawards were not reported to FSRS in accordance with FFATA requirements. Questioned costs: None noted. Recommendation: We recommend that the Department develop procedures and internal controls to ensure that all required subawards are reported to FSRS no later than the end of the month following the month of issuance in accordance with FFATA reporting requirements. Section III – Federal Award Findings and Questioned Costs (Continued) Views of responsible officials: The Department of Labor and Workforce Development (DLWD), as the prime recipient of the federal awards, will ensure that all first-tier subawards made to entities totaling $30,000 or greater will be entered timely into the FSRS in accordance with FFATA reporting requirements. The audit sample selections in question were based on manual DLWD notice of awards that were not communicated correctly to staff who are responsible for entering the required subaward information into FSRS. Going forward, DLWD staff who are responsible for entering data into the FSRS will be copied on all emails containing the manual notice of award(s) once the notice is signed by the DLWD Commissioner. These email communications will trigger the information to be entered into the FSRS.

Reference Number: 2023-008 Prior Year Finding: No Federal Agency: U.S. Department of Health and Human Services State Agency: Department of Human Services Federal Program: Rehabilitation Services - Vocational Rehabilitation Grants to States Assistance Listing Number: 84.126 Award Number and Year: H126A230044 (10/1/2022-9/30/2023) H126A230044-A (10/1/2022-9/30/2023) H126A230044-B (10/1/2022-9/30/2023) H126A210043 (10/1/2020-9/30/2022) H126A220043-22C (10/1/2021-9/30/2022) H126A230043 (10/1/2022-9/30/2023) Compliance Requirement: Reporting – Federal Funding Accountability and Transparency Act (FFATA) Type of Finding Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance: Per the Federal Funding Accountability and Transparency Act (FFATA), prime (direct) recipients of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Reports must be filed in FSRS by the end of the month following the month in which the prime recipient awards any sub-grant greater than or equal to $30,000. If the initial award is below $30,000 but subsequent grant modifications result in a total award equal to or over $30,000, the award will be subject to the reporting requirements as of the date the award exceeds $30,000. If the initial award equals or exceeds $30,000 but funding is subsequently de-obligated such that the total award amount falls below $30,000, the award continues to be subject to FFATA reporting requirements. The following key data elements must be reported: Subawardee Name and Unique Entity ID (UEI) number; Amount of Subaward (inclusive of modifications); Subaward Obligation/Action Date; Date of Report Submission; Subaward Number; Project Description; and Names and Compensation of Highly Compensated Officers. (Names and Compensation of Highly Compensated Officers must only be reported when the entity in the preceding fiscal year received 80 percent or more of its annual gross revenues in Federal awards; and $25,000,000 or more in annual gross revenues from Federal awards; and the public does not have access to this information about the compensation of the senior executives of the entity through periodic reports filed under section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. §§ 78m(a), 78o(d)) or section 6104 of the Internal Revenue Code of 1986.) Section III – Federal Award Findings and Questioned Costs (Continued) Control: Per 2 CFR section 200.303(a), a 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 comply 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: Subaward information was not reported timely to FSRS by the Department of Human Services (Department). Context: Eight of eight subawards selected for testing were not reported to FSRS. Specifically, we noted the following: • Eight of eight subawards were issued on 8/16/2022 but were not reported to FSRS until 3/10/2023 or approximately 161 days after required by FFATA requirements. SEE SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR CHART/TABLE Cause: The Department did not establish effective procedures or internal controls over FFATA requirements to ensure that subawards were reported to FSRS. Effect: Subawards were not reported to FSRS in accordance with FFATA requirements. Questioned costs: None noted. Recommendation: We recommend that the Department develop procedures and internal controls to ensure that all required subawards are reported to FSRS no later than the end of the month following the month of issuance in accordance with FFATA reporting requirements. Section III – Federal Award Findings and Questioned Costs (Continued) Views of responsible officials: The Department of Labor and Workforce Development (DLWD), as the prime recipient of the federal awards, will ensure that all first-tier subawards made to entities totaling $30,000 or greater will be entered timely into the FSRS in accordance with FFATA reporting requirements. The audit sample selections in question were based on manual DLWD notice of awards that were not communicated correctly to staff who are responsible for entering the required subaward information into FSRS. Going forward, DLWD staff who are responsible for entering data into the FSRS will be copied on all emails containing the manual notice of award(s) once the notice is signed by the DLWD Commissioner. These email communications will trigger the information to be entered into the FSRS.

Reference Number: 2023-009 Prior Year Finding: No Federal Agency: U.S. Department of Education State Agency: Department of Education Federal Program: Supporting Effective Instruction State Grants Assistance Listing Number: 84.367 Award Number and Year: S367A200029 (7/1/2020-9/30/23) Compliance Requirement: Reporting – Federal Funding Accountability and Transparency Act (FFATA) Type of Finding Material Weakness in Internal Control Over Compliance, Material Non-compliance Criteria or specific requirement: Compliance: Per the Federal Funding Accountability and Transparency Act (FFATA), prime (direct) recipients of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Reports must be filed in FSRS by the end of the month following the month in which the prime recipient awards any sub-grant greater than or equal to $30,000. If the initial award is below $30,000 but subsequent grant modifications result in a total award equal to or over $30,000, the award will be subject to the reporting requirements as of the date the award exceeds $30,000. If the initial award equals or exceeds $30,000 but funding is subsequently de-obligated such that the total award amount falls below $30,000, the award continues to be subject to FFATA reporting requirements. The following key data elements must be reported: Sub awardee Name and Data Universal Numbering System (DUNS) number; Amount of Subaward (inclusive of modifications); Subaward Obligation/Action Date; Date of Report Submission; Subaward Number; Project Description; and Names and Compensation of Highly Compensated Officers. (Names and Compensation of Highly Compensated Officers must only be reported when the entity in the preceding fiscal year received 80 percent or more of its annual gross revenues in Federal awards; and $25,000,000 or more in annual gross revenues from Federal awards; and the public does not have access to this information about the compensation of the senior executives of the entity through periodic reports filed under section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. §§ 78m(a), 78o(d)) or section 6104 of the Internal Revenue Code of 1986.) Control: Per 2 CFR section 200.303(a), a 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 comply 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). Section III – Federal Award Findings and Questioned Costs (Continued) Condition: The Department of Education (Department) did not report subaward information to FSRS during FY 2023. Context: Forty of forty subawards selected for testing were not reported to FSRS. Reports were due no later than 8/31/2022 but were not reported to FSRS until after they were selected by auditors for testing. SEE SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR CHART/TABLE Cause: The Department’s procedures and internal controls were not sufficient to ensure that subawards were reported to FSRS. Effect: Subawards were not reported to FSRS in accordance with FFATA requirements. Questioned costs: None noted. Recommendation: We recommend that the Department develop internal controls and procedures to ensure that all required subawards are reported timely to FSRS no later than the end of the month following the month of issuance in accordance with FFATA reporting requirements. Views of responsible officials: The New Jersey Department of Education (NJDOE) Office of Grants Management (OGM) understands the need to be compliant with FFATA reporting in accordance with the Uniform Guidance. Internal controls and processes are in place to ensure NJDOE’s FFATA reporting process is working efficiently and timely. This noncompliance finding is not due to a lack of controls within NJDOE but lies squarely on system issues at SAM.gov and the FFATA Subaward Reporting System (FSRS) sites and until the issues listed below are corrected on these federal system sites, NJDOE will continue to be noncompliant with timely FFATA reporting. Issues with the SAM.gov and FSRS sites: • SAM.gov has approved NJDOE’s local education agency (LEA) registrations without a ZIP+4, but FSRS reporting system for FFATA uploads requires ZIP+4 for each LEA. The two systems use the same database, which means information registered on SAM.gov feeds directly into the Section III – Federal Award Findings and Questioned Costs (Continued) FSRS system. However, because FSRS batch uploads require a ZIP+4, those LEAs that were approved by SAM.gov without a ZIP+4 during the registration process, are rejected from the FFATA report batch upload. There is an option to manually load each LEA and their details into the system, but the process becomes incredibly time consuming, given the 700+ LEAs in the state, the number of federal awards granted, and the steps for identifying & removing rejected LEAs from the batch upload. • Issues NJDOE has with SAM.gov and FSRS have been shared with the federal helpdesk and a USED representative without avail, as the systematic issue remains unresolved and continues to delay our FFATA reporting process. • There are several rural LEAs in the state that do not have a ZIP+4. These LEAs will continue to be rejected from the batch upload, delaying our FFATA reporting process, if SAM.gov and FSRS do not come up with a viable solution. • There were a number of LEAs that were continuously rejected from the upload by FSRS for no obvious reasons. The error message received was the same exact error we receive for incorrect zip codes. After spending much time investigating the cause with the helpdesk support, it was identified that FSRS did not update their system to reflect the Congressional District code changes during New Jersey’s redistricting process. • The FSRS system rejects batch uploads if a single lower-case SAM UEIs is entered in the batch file. However, SAM.gov search box and the FSRS manual uploads are not case sensitive. Batch uploads are the only place where SAM UEIs are case sensitive. Further, this information is not included in any of the FSRS User Guides or manuals. I have shared this with the FSRS helpdesk, but no solution was provided. Again, this discrepancy in their system affects and delays our FFATA reporting processes. NJDOE dedicated personnel, including the director of OGM, continuously work with SAM.gov, FSRS system, and both system sites’ help desks, to bring to light the issues mentioned above in order to express the urgent need for corrective actions at the federal system sites to allow for timely FFATA reporting. In addition internal controls and procedures are in place at NJDOE related to FFATA reporting and corrective actions are constantly performed in real time to perform the below NJDOE Internal Controls and Procedures. Some of these procedures include reviewing internal SAM applications and troubleshooting with NJDOE’s local education agencies (LEAs) to correct data in the application and resubmit to the federal reporting system sites with more detail included below. NJDOE Internal Controls and Procedures: • Due to the large number of LEAs in the state (700+), each FFATA report must be submitted via batch upload, which saves an enormous amount of time it takes to input data manually for every single LEA, for every grant. To address this need and to expedite the process, our vendor has created a reporting tool that generates a FFATA batch report. • We have been contacting the federal helpdesk to address the issues on their sites and asking for support. Some of those tickets were closed without providing any support and most were not helpful. • We have created and implemented an in-house System for Award Management (SAM) application, mandatory for all of our federal grant recipients. This was done specifically for FFATA reporting purposes to ensure data in these applications are directly tied to the FFATA batch reports. Section III – Federal Award Findings and Questioned Costs (Continued) • The SAM applications go through a thorough review process, where data entered by the districts is compared with the data registered with SAM.gov (applicants are required to upload a copy of their Entity Overview Record, issued by SAM.gov). • SAM applications are returned for changes whenever an applicant has entered data that is inconsistent with data on SAM.gov (i.e.. Incorrect SAM UEI, incorrect zip code, incorrect zip+4, incorrect City name). • We have asked many of our districts to contact SAM.gov and update their physical address information to include the full 9-digit zip code, which was SAM.gov reviewers’ oversight. Our school districts have commented that this process can take months. • We are communicating with our districts/applicants on a daily basis through the review summary checklist, outlining the changes that must be made, as well as by email and phone. • We have implemented an automatic messaging system, where applicants are reminded to update their SAM registration expiration date, multiple times a month leading up to their expiration date. Due to the system discrepancy in the FSRS system’s batch upload, we had to create a workaround pertaining to the district’s SAM UEIs. As stated above, SAM UEIs, in batch FFATA reports, are case sensitive while not case sensitive anywhere else in the two system sites. We have updated our instructions in NJDOE’s SAM application and have added another layer of application review, to ensure that all UEIs entered are in all capital letters. Because the federal helpdesk has ignored this discrepancy and did not resolve the issue, we are obligated to take additional steps and spend additional time on FFATA batch reports.

Reference Number: 2023-009 Prior Year Finding: No Federal Agency: U.S. Department of Education State Agency: Department of Education Federal Program: Supporting Effective Instruction State Grants Assistance Listing Number: 84.367 Award Number and Year: S367A200029 (7/1/2020-9/30/23) Compliance Requirement: Reporting – Federal Funding Accountability and Transparency Act (FFATA) Type of Finding Material Weakness in Internal Control Over Compliance, Material Non-compliance Criteria or specific requirement: Compliance: Per the Federal Funding Accountability and Transparency Act (FFATA), prime (direct) recipients of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Reports must be filed in FSRS by the end of the month following the month in which the prime recipient awards any sub-grant greater than or equal to $30,000. If the initial award is below $30,000 but subsequent grant modifications result in a total award equal to or over $30,000, the award will be subject to the reporting requirements as of the date the award exceeds $30,000. If the initial award equals or exceeds $30,000 but funding is subsequently de-obligated such that the total award amount falls below $30,000, the award continues to be subject to FFATA reporting requirements. The following key data elements must be reported: Sub awardee Name and Data Universal Numbering System (DUNS) number; Amount of Subaward (inclusive of modifications); Subaward Obligation/Action Date; Date of Report Submission; Subaward Number; Project Description; and Names and Compensation of Highly Compensated Officers. (Names and Compensation of Highly Compensated Officers must only be reported when the entity in the preceding fiscal year received 80 percent or more of its annual gross revenues in Federal awards; and $25,000,000 or more in annual gross revenues from Federal awards; and the public does not have access to this information about the compensation of the senior executives of the entity through periodic reports filed under section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. §§ 78m(a), 78o(d)) or section 6104 of the Internal Revenue Code of 1986.) Control: Per 2 CFR section 200.303(a), a 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 comply 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). Section III – Federal Award Findings and Questioned Costs (Continued) Condition: The Department of Education (Department) did not report subaward information to FSRS during FY 2023. Context: Forty of forty subawards selected for testing were not reported to FSRS. Reports were due no later than 8/31/2022 but were not reported to FSRS until after they were selected by auditors for testing. SEE SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR CHART/TABLE Cause: The Department’s procedures and internal controls were not sufficient to ensure that subawards were reported to FSRS. Effect: Subawards were not reported to FSRS in accordance with FFATA requirements. Questioned costs: None noted. Recommendation: We recommend that the Department develop internal controls and procedures to ensure that all required subawards are reported timely to FSRS no later than the end of the month following the month of issuance in accordance with FFATA reporting requirements. Views of responsible officials: The New Jersey Department of Education (NJDOE) Office of Grants Management (OGM) understands the need to be compliant with FFATA reporting in accordance with the Uniform Guidance. Internal controls and processes are in place to ensure NJDOE’s FFATA reporting process is working efficiently and timely. This noncompliance finding is not due to a lack of controls within NJDOE but lies squarely on system issues at SAM.gov and the FFATA Subaward Reporting System (FSRS) sites and until the issues listed below are corrected on these federal system sites, NJDOE will continue to be noncompliant with timely FFATA reporting. Issues with the SAM.gov and FSRS sites: • SAM.gov has approved NJDOE’s local education agency (LEA) registrations without a ZIP+4, but FSRS reporting system for FFATA uploads requires ZIP+4 for each LEA. The two systems use the same database, which means information registered on SAM.gov feeds directly into the Section III – Federal Award Findings and Questioned Costs (Continued) FSRS system. However, because FSRS batch uploads require a ZIP+4, those LEAs that were approved by SAM.gov without a ZIP+4 during the registration process, are rejected from the FFATA report batch upload. There is an option to manually load each LEA and their details into the system, but the process becomes incredibly time consuming, given the 700+ LEAs in the state, the number of federal awards granted, and the steps for identifying & removing rejected LEAs from the batch upload. • Issues NJDOE has with SAM.gov and FSRS have been shared with the federal helpdesk and a USED representative without avail, as the systematic issue remains unresolved and continues to delay our FFATA reporting process. • There are several rural LEAs in the state that do not have a ZIP+4. These LEAs will continue to be rejected from the batch upload, delaying our FFATA reporting process, if SAM.gov and FSRS do not come up with a viable solution. • There were a number of LEAs that were continuously rejected from the upload by FSRS for no obvious reasons. The error message received was the same exact error we receive for incorrect zip codes. After spending much time investigating the cause with the helpdesk support, it was identified that FSRS did not update their system to reflect the Congressional District code changes during New Jersey’s redistricting process. • The FSRS system rejects batch uploads if a single lower-case SAM UEIs is entered in the batch file. However, SAM.gov search box and the FSRS manual uploads are not case sensitive. Batch uploads are the only place where SAM UEIs are case sensitive. Further, this information is not included in any of the FSRS User Guides or manuals. I have shared this with the FSRS helpdesk, but no solution was provided. Again, this discrepancy in their system affects and delays our FFATA reporting processes. NJDOE dedicated personnel, including the director of OGM, continuously work with SAM.gov, FSRS system, and both system sites’ help desks, to bring to light the issues mentioned above in order to express the urgent need for corrective actions at the federal system sites to allow for timely FFATA reporting. In addition internal controls and procedures are in place at NJDOE related to FFATA reporting and corrective actions are constantly performed in real time to perform the below NJDOE Internal Controls and Procedures. Some of these procedures include reviewing internal SAM applications and troubleshooting with NJDOE’s local education agencies (LEAs) to correct data in the application and resubmit to the federal reporting system sites with more detail included below. NJDOE Internal Controls and Procedures: • Due to the large number of LEAs in the state (700+), each FFATA report must be submitted via batch upload, which saves an enormous amount of time it takes to input data manually for every single LEA, for every grant. To address this need and to expedite the process, our vendor has created a reporting tool that generates a FFATA batch report. • We have been contacting the federal helpdesk to address the issues on their sites and asking for support. Some of those tickets were closed without providing any support and most were not helpful. • We have created and implemented an in-house System for Award Management (SAM) application, mandatory for all of our federal grant recipients. This was done specifically for FFATA reporting purposes to ensure data in these applications are directly tied to the FFATA batch reports. Section III – Federal Award Findings and Questioned Costs (Continued) • The SAM applications go through a thorough review process, where data entered by the districts is compared with the data registered with SAM.gov (applicants are required to upload a copy of their Entity Overview Record, issued by SAM.gov). • SAM applications are returned for changes whenever an applicant has entered data that is inconsistent with data on SAM.gov (i.e.. Incorrect SAM UEI, incorrect zip code, incorrect zip+4, incorrect City name). • We have asked many of our districts to contact SAM.gov and update their physical address information to include the full 9-digit zip code, which was SAM.gov reviewers’ oversight. Our school districts have commented that this process can take months. • We are communicating with our districts/applicants on a daily basis through the review summary checklist, outlining the changes that must be made, as well as by email and phone. • We have implemented an automatic messaging system, where applicants are reminded to update their SAM registration expiration date, multiple times a month leading up to their expiration date. Due to the system discrepancy in the FSRS system’s batch upload, we had to create a workaround pertaining to the district’s SAM UEIs. As stated above, SAM UEIs, in batch FFATA reports, are case sensitive while not case sensitive anywhere else in the two system sites. We have updated our instructions in NJDOE’s SAM application and have added another layer of application review, to ensure that all UEIs entered are in all capital letters. Because the federal helpdesk has ignored this discrepancy and did not resolve the issue, we are obligated to take additional steps and spend additional time on FFATA batch reports.

Reference Number: 2023-010 Prior Year Finding: No Federal Agency: U.S. Department of Education State Agency: Department of Education Federal Program: COVID-19 - Elementary and Secondary School Emergency Relief (ESSER) Fund, COVID-19 - Coronavirus Response and Relief Supplemental Appropriations Act, 2021 – Emergency Assistance to Non-Public Schools (CRRSA EANS) program, COVID-19 - American Rescue Plan -Elementary and Secondary School Emergency Relief (ARP ESSER) Assistance Listing Number: 84.425D,R,U Award Number and Year: S425D200027 (5/1/2020-9/30/2022) S425R210031 (2/22/2021-9/30/2022) S425U210027 (3/24/2021-9/30/2023) Compliance Requirement: Reporting – Federal Funding Accountability and Transparency Act (FFATA) Type of Finding Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance: Per the Federal Funding Accountability and Transparency Act (FFATA), prime (direct) recipients of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Reports must be filed in FSRS by the end of the month following the month in which the prime recipient awards any sub-grant greater than or equal to $30,000. If the initial award is below $30,000 but subsequent grant modifications result in a total award equal to or over $30,000, the award will be subject to the reporting requirements as of the date the award exceeds $30,000. If the initial award equals or exceeds $30,000 but funding is subsequently de-obligated such that the total award amount falls below $30,000, the award continues to be subject to FFATA reporting requirements. The following key data elements must be reported: Sub awardee Name and Data Universal Numbering System (DUNS) number; Amount of Subaward (inclusive of modifications); Subaward Obligation/Action Date; Date of Report Submission; Subaward Number; Project Description; and Names and Compensation of Highly Compensated Officers. (Names and Compensation of Highly Compensated Officers must only be reported when the entity in the preceding fiscal year received 80 percent or more of its annual gross revenues in Federal awards; and $25,000,000 or more in annual gross revenues from Federal awards; and the public does not have access to this information about the compensation of the senior executives of the entity through periodic reports filed under section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. §§ 78m(a), 78o(d)) or section 6104 of the Internal Revenue Code of 1986.) Section III – Federal Award Findings and Questioned Costs (Continued) Control: Per 2 CFR section 200.303(a), a 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 comply 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: The Department of Education (Department) did not report subaward information timely to FSRS during FY 2023. Context: Sixty out of sixty subawards selected for testing were due on 8/31/2022 and were not reported to FSRS until 11/3/2022, or 76 days late. SEE SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR CHART/TABLE Cause: The Department’s internal controls were not sufficient to ensure that subawards were reported timely to FSRS during FY 2023. Effect: Subawards were not reported to FSRS in accordance with FFATA requirements. Questioned costs: None noted. Recommendation: We recommend that the Department develop internal controls and procedures to ensure that all required subawards are reported timely to FSRS no later than the end of the month following the month of issuance in accordance with FFATA reporting requirements. Views of responsible officials: The New Jersey Department of Education (NJDOE) Office of Grants Management (OGM) understands the need to be compliant with FFATA reporting in accordance with the Uniform Guidance. Internal controls and processes are in place to ensure NJDOE’s FFATA reporting process is working efficiently and timely. This noncompliance finding is not due to a lack of controls within NJDOE but lies squarely on system issues at SAM.gov and the FFATA Subaward Reporting System (FSRS) sites and until the Section III – Federal Award Findings and Questioned Costs (Continued) issues listed below are corrected on these federal system sites, NJDOE will continue to be noncompliant with timely FFATA reporting. Issues with the SAM.gov and FSRS sites: • SAM.gov has approved NJDOE’s local education agency (LEA) registrations without a ZIP+4, but FSRS reporting system for FFATA uploads requires ZIP+4 for each LEA. The two systems use the same database, which means information registered on SAM.gov feeds directly into the FSRS system. However, because FSRS batch uploads require a ZIP+4, those LEAs that were approved by SAM.gov without a ZIP+4 during the registration process, are rejected from the FFATA report batch upload. There is an option to manually load each LEA and their details into the system, but the process becomes incredibly time consuming, given the 700+ LEAs in the state, the number of federal awards granted, and the steps for identifying & removing rejected LEAs from the batch upload. • Issues NJDOE has with SAM.gov and FSRS have been shared with the federal helpdesk and a USED representative without avail, as the systematic issue remains unresolved and continues to delay our FFATA reporting process. • There are several rural LEAs in the state that do not have a ZIP+4. These LEAs will continue to be rejected from the batch upload, delaying our FFATA reporting process, if SAM.gov and FSRS do not come up with a viable solution. • There were a number of LEAs that were continuously rejected from the upload by FSRS for no obvious reasons. The error message received was the same exact error we receive for incorrect zip codes. After spending much time investigating the cause with the helpdesk support, it was identified that FSRS did not update their system to reflect the Congressional District code changes during New Jersey’s redistricting process. • The FSRS system rejects batch uploads if a single lower-case SAM UEIs is entered in the batch file. However, SAM.gov search box and the FSRS manual uploads are not case sensitive. Batch uploads are the only place where SAM UEIs are case sensitive. Further, this information is not included in any of the FSRS User Guides or manuals. I have shared this with the FSRS helpdesk, but no solution was provided. Again, this discrepancy in their system affects and delays our FFATA reporting processes. NJDOE dedicated personnel, including the director of OGM, continuously work with SAM.gov, FSRS system, and both system sites’ help desks, to bring to light the issues mentioned above in order to express the urgent need for corrective actions at the federal system sites to allow for timely FFATA reporting. In addition internal controls and procedures are in place at NJDOE related to FFATA reporting and corrective actions are constantly performed in real time to perform the below NJDOE Internal Controls and Procedures. Some of these procedures include reviewing internal SAM applications and troubleshooting with NJDOE’s local education agencies (LEAs) to correct data in the application and resubmit to the federal reporting system sites with more detail included below. NJDOE Internal Controls and Procedures: • Due to the large number of LEAs in the state (700+), each FFATA report must be submitted via batch upload, which saves an enormous amount of time it takes to input data manually for every single LEA, for every grant. To address this need and to expedite the process, our vendor has created a reporting tool that generates a FFATA batch report. Section III – Federal Award Findings and Questioned Costs (Continued) • We have been contacting the federal helpdesk to address the issues on their sites and asking for support. Some of those tickets were closed without providing any support and most were not helpful. • We have created and implemented an in-house System for Award Management (SAM) application, mandatory for all of our federal grant recipients. This was done specifically for FFATA reporting purposes to ensure data in these applications are directly tied to the FFATA batch reports. • The SAM applications go through a thorough review process, where data entered by the districts is compared with the data registered with SAM.gov (applicants are required to upload a copy of their Entity Overview Record, issued by SAM.gov). • SAM applications are returned for changes whenever an applicant has entered data that is inconsistent with data on SAM.gov (i.e.. Incorrect SAM UEI, incorrect zip code, incorrect zip+4, incorrect City name). • We have asked many of our districts to contact SAM.gov and update their physical address information to include the full 9-digit zip code, which was SAM.gov reviewers’ oversight. Our school districts have commented that this process can take months. • We are communicating with our districts/applicants on a daily basis through the review summary checklist, outlining the changes that must be made, as well as by email and phone. • We have implemented an automatic messaging system, where applicants are reminded to update their SAM registration expiration date, multiple times a month leading up to their expiration date. Due to the system discrepancy in the FSRS system’s batch upload, we had to create a workaround pertaining to the district’s SAM UEIs. As stated above, SAM UEIs, in batch FFATA reports, are case sensitive while not case sensitive anywhere else in the two system sites. We have updated our instructions in NJDOE’s SAM application and have added another layer of application review, to ensure that all UEIs entered are in all capital letters. Because the federal helpdesk has ignored this discrepancy and did not resolve the issue, we are obligated to take additional steps and spend additional time on FFATA batch reports.

Reference Number: 2023-010 Prior Year Finding: No Federal Agency: U.S. Department of Education State Agency: Department of Education Federal Program: COVID-19 - Elementary and Secondary School Emergency Relief (ESSER) Fund, COVID-19 - Coronavirus Response and Relief Supplemental Appropriations Act, 2021 – Emergency Assistance to Non-Public Schools (CRRSA EANS) program, COVID-19 - American Rescue Plan -Elementary and Secondary School Emergency Relief (ARP ESSER) Assistance Listing Number: 84.425D,R,U Award Number and Year: S425D200027 (5/1/2020-9/30/2022) S425R210031 (2/22/2021-9/30/2022) S425U210027 (3/24/2021-9/30/2023) Compliance Requirement: Reporting – Federal Funding Accountability and Transparency Act (FFATA) Type of Finding Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance: Per the Federal Funding Accountability and Transparency Act (FFATA), prime (direct) recipients of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Reports must be filed in FSRS by the end of the month following the month in which the prime recipient awards any sub-grant greater than or equal to $30,000. If the initial award is below $30,000 but subsequent grant modifications result in a total award equal to or over $30,000, the award will be subject to the reporting requirements as of the date the award exceeds $30,000. If the initial award equals or exceeds $30,000 but funding is subsequently de-obligated such that the total award amount falls below $30,000, the award continues to be subject to FFATA reporting requirements. The following key data elements must be reported: Sub awardee Name and Data Universal Numbering System (DUNS) number; Amount of Subaward (inclusive of modifications); Subaward Obligation/Action Date; Date of Report Submission; Subaward Number; Project Description; and Names and Compensation of Highly Compensated Officers. (Names and Compensation of Highly Compensated Officers must only be reported when the entity in the preceding fiscal year received 80 percent or more of its annual gross revenues in Federal awards; and $25,000,000 or more in annual gross revenues from Federal awards; and the public does not have access to this information about the compensation of the senior executives of the entity through periodic reports filed under section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. §§ 78m(a), 78o(d)) or section 6104 of the Internal Revenue Code of 1986.) Section III – Federal Award Findings and Questioned Costs (Continued) Control: Per 2 CFR section 200.303(a), a 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 comply 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: The Department of Education (Department) did not report subaward information timely to FSRS during FY 2023. Context: Sixty out of sixty subawards selected for testing were due on 8/31/2022 and were not reported to FSRS until 11/3/2022, or 76 days late. SEE SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR CHART/TABLE Cause: The Department’s internal controls were not sufficient to ensure that subawards were reported timely to FSRS during FY 2023. Effect: Subawards were not reported to FSRS in accordance with FFATA requirements. Questioned costs: None noted. Recommendation: We recommend that the Department develop internal controls and procedures to ensure that all required subawards are reported timely to FSRS no later than the end of the month following the month of issuance in accordance with FFATA reporting requirements. Views of responsible officials: The New Jersey Department of Education (NJDOE) Office of Grants Management (OGM) understands the need to be compliant with FFATA reporting in accordance with the Uniform Guidance. Internal controls and processes are in place to ensure NJDOE’s FFATA reporting process is working efficiently and timely. This noncompliance finding is not due to a lack of controls within NJDOE but lies squarely on system issues at SAM.gov and the FFATA Subaward Reporting System (FSRS) sites and until the Section III – Federal Award Findings and Questioned Costs (Continued) issues listed below are corrected on these federal system sites, NJDOE will continue to be noncompliant with timely FFATA reporting. Issues with the SAM.gov and FSRS sites: • SAM.gov has approved NJDOE’s local education agency (LEA) registrations without a ZIP+4, but FSRS reporting system for FFATA uploads requires ZIP+4 for each LEA. The two systems use the same database, which means information registered on SAM.gov feeds directly into the FSRS system. However, because FSRS batch uploads require a ZIP+4, those LEAs that were approved by SAM.gov without a ZIP+4 during the registration process, are rejected from the FFATA report batch upload. There is an option to manually load each LEA and their details into the system, but the process becomes incredibly time consuming, given the 700+ LEAs in the state, the number of federal awards granted, and the steps for identifying & removing rejected LEAs from the batch upload. • Issues NJDOE has with SAM.gov and FSRS have been shared with the federal helpdesk and a USED representative without avail, as the systematic issue remains unresolved and continues to delay our FFATA reporting process. • There are several rural LEAs in the state that do not have a ZIP+4. These LEAs will continue to be rejected from the batch upload, delaying our FFATA reporting process, if SAM.gov and FSRS do not come up with a viable solution. • There were a number of LEAs that were continuously rejected from the upload by FSRS for no obvious reasons. The error message received was the same exact error we receive for incorrect zip codes. After spending much time investigating the cause with the helpdesk support, it was identified that FSRS did not update their system to reflect the Congressional District code changes during New Jersey’s redistricting process. • The FSRS system rejects batch uploads if a single lower-case SAM UEIs is entered in the batch file. However, SAM.gov search box and the FSRS manual uploads are not case sensitive. Batch uploads are the only place where SAM UEIs are case sensitive. Further, this information is not included in any of the FSRS User Guides or manuals. I have shared this with the FSRS helpdesk, but no solution was provided. Again, this discrepancy in their system affects and delays our FFATA reporting processes. NJDOE dedicated personnel, including the director of OGM, continuously work with SAM.gov, FSRS system, and both system sites’ help desks, to bring to light the issues mentioned above in order to express the urgent need for corrective actions at the federal system sites to allow for timely FFATA reporting. In addition internal controls and procedures are in place at NJDOE related to FFATA reporting and corrective actions are constantly performed in real time to perform the below NJDOE Internal Controls and Procedures. Some of these procedures include reviewing internal SAM applications and troubleshooting with NJDOE’s local education agencies (LEAs) to correct data in the application and resubmit to the federal reporting system sites with more detail included below. NJDOE Internal Controls and Procedures: • Due to the large number of LEAs in the state (700+), each FFATA report must be submitted via batch upload, which saves an enormous amount of time it takes to input data manually for every single LEA, for every grant. To address this need and to expedite the process, our vendor has created a reporting tool that generates a FFATA batch report. Section III – Federal Award Findings and Questioned Costs (Continued) • We have been contacting the federal helpdesk to address the issues on their sites and asking for support. Some of those tickets were closed without providing any support and most were not helpful. • We have created and implemented an in-house System for Award Management (SAM) application, mandatory for all of our federal grant recipients. This was done specifically for FFATA reporting purposes to ensure data in these applications are directly tied to the FFATA batch reports. • The SAM applications go through a thorough review process, where data entered by the districts is compared with the data registered with SAM.gov (applicants are required to upload a copy of their Entity Overview Record, issued by SAM.gov). • SAM applications are returned for changes whenever an applicant has entered data that is inconsistent with data on SAM.gov (i.e.. Incorrect SAM UEI, incorrect zip code, incorrect zip+4, incorrect City name). • We have asked many of our districts to contact SAM.gov and update their physical address information to include the full 9-digit zip code, which was SAM.gov reviewers’ oversight. Our school districts have commented that this process can take months. • We are communicating with our districts/applicants on a daily basis through the review summary checklist, outlining the changes that must be made, as well as by email and phone. • We have implemented an automatic messaging system, where applicants are reminded to update their SAM registration expiration date, multiple times a month leading up to their expiration date. Due to the system discrepancy in the FSRS system’s batch upload, we had to create a workaround pertaining to the district’s SAM UEIs. As stated above, SAM UEIs, in batch FFATA reports, are case sensitive while not case sensitive anywhere else in the two system sites. We have updated our instructions in NJDOE’s SAM application and have added another layer of application review, to ensure that all UEIs entered are in all capital letters. Because the federal helpdesk has ignored this discrepancy and did not resolve the issue, we are obligated to take additional steps and spend additional time on FFATA batch reports.

Reference Number: 2023-011 Prior Year Finding: No Federal Agency: U.S. Department of Health and Human Services State Agency: Department of Human Services Federal Program: Aging Cluster and COVID-19 Aging Cluster Assistance Listing Number: 93.044, 93.045, 93.053 Award Number and Year: 2101NJOASS (10/1/2020 – 9/30/2022) 2101NJOANS (10/1/2020 – 9/30/2022) 2101NJSSC6 (4/1/2021 – 9/30/2024) 2101NJHDC6 (4/1/2021 – 9/3/2024) 2101NJOANS (10/1/2020 – 9/30/2022) 2201NJOASS (10/1/2021 – 9/30/2023) 2201NJOACM (10/1/2021 – 9/30/2023) 2201NJOAHD (10/1/2021-9/30/2023) 2201NJOAPH (10/1/2021-9/30/2023) 2201NJOAFC (10/1/2021-9/30/2023) 2301NJOACM (10/1/2022 – 9/30/2024) Compliance Requirement: Subrecipient Monitoring Type of Finding: Material Weakness in Internal Control Over Compliance, Material Non-compliance Criteria or specific requirement: Compliance – Per 2 CFR section 200.332(a), all pass-through entities must ensure that every subaward is clearly identified to the subrecipient as a subaward and includes the following information 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. Required information includes: i. Subrecipient name (which must match the name associated with its unique entity identifier); ii. Subrecipient's unique entity identifier; iii. Federal Award Identification Number (FAIN); iv. Federal Award Date (see the definition of Federal award date in § 200.1 of this part) of award to the recipient by the Federal agency; v. Subaward Period of Performance Start and End Date; vi. Subaward Budget Period Start and End Date; vii. Amount of Federal Funds Obligated by this action by the pass-through entity to the subrecipient; viii. Total Amount of Federal Funds Obligated to the subrecipient by the pass-through entity including the current financial obligation; ix. Total Amount of the Federal Award committed to the subrecipient by the pass-through entity; x. Federal award project description, as required to be responsive to the Federal Funding Accountability and Transparency Act (FFATA); xi. Name of Federal awarding agency, pass-through entity, and contact information for awarding official of the Pass-through entity; Section III – Federal Award Findings and Questioned Costs (Continued) xii. Assistance Listings number and Title; the pass-through entity must identify the dollar amount made available under each Federal award and the Assistance Listings Number at time of disbursement; xiii. Identification of whether the award is R&D; and xiv. Indirect cost rate for the Federal award (including if the de minimis rate is charged) per section 200.414. Control – Per 2 CFR section 200.303(a), a 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: Subawards issued by the Department of Human Services (Department) did not include all required federal award information. Context: For 8 of 8 subawards selected for testing, the following required information was not provided to the subrecipient at the time of award issuance: (iii) Federal Award Identification Number (FAIN); (iv) Federal Award Date (see the definition of Federal award date in § 200.1 of this part) of award to the recipient by the Federal agency; (viii) Total Amount of Federal Funds Obligated to the subrecipient by the pass-through entity including the current financial obligation; (ix) Total Amount of the Federal Award committed to the subrecipient by the pass-through entity; (xiii) Identification of whether the award is R&D; and (xiv) Indirect cost rate for the Federal award (including if the de minimis rate is charged) per §200.414 Questioned costs: None noted. Cause: The Department’s procedures were not sufficient to ensure the subawards were issued in compliance with Federal requirements. Internal controls did not prevent or detect the errors. Effect: Excluding the required federal grant award information at the time of the subaward may cause subrecipients and their auditors to be uninformed about specific program and other regulations that apply to the funds they receive. There is also the potential for subrecipients to have incomplete Schedules of Expenditures of Federal Awards (SEFA) in their Single Audit reports, and federal funds may not be properly audited at the subrecipient level in accordance with the Uniform Guidance. Section III – Federal Award Findings and Questioned Costs (Continued) Recommendation: The Department should review and enhance internal controls and procedures to ensure that all required information is included in subawards. Views of responsible officials: The Division of Aging Services (DoAS) will comply with the pass-through entity and subrecipient monitoring requirements under the federal Uniform Guidance as per CFR § 200.332(a). The DoAS will provide all required information to the subrecipient at the time of award issuance. This subaward notice will be posted as a miscellaneous attachment to contracts in the Division's System for Administering Grants Electronically (SAGE), or via mail, fax or email to those subawards not administered in SAGE. DoAS plans to complete and update this information on SAGE within 60 days.

Reference Number: 2023-011 Prior Year Finding: No Federal Agency: U.S. Department of Health and Human Services State Agency: Department of Human Services Federal Program: Aging Cluster and COVID-19 Aging Cluster Assistance Listing Number: 93.044, 93.045, 93.053 Award Number and Year: 2101NJOASS (10/1/2020 – 9/30/2022) 2101NJOANS (10/1/2020 – 9/30/2022) 2101NJSSC6 (4/1/2021 – 9/30/2024) 2101NJHDC6 (4/1/2021 – 9/3/2024) 2101NJOANS (10/1/2020 – 9/30/2022) 2201NJOASS (10/1/2021 – 9/30/2023) 2201NJOACM (10/1/2021 – 9/30/2023) 2201NJOAHD (10/1/2021-9/30/2023) 2201NJOAPH (10/1/2021-9/30/2023) 2201NJOAFC (10/1/2021-9/30/2023) 2301NJOACM (10/1/2022 – 9/30/2024) Compliance Requirement: Subrecipient Monitoring Type of Finding: Material Weakness in Internal Control Over Compliance, Material Non-compliance Criteria or specific requirement: Compliance – Per 2 CFR section 200.332(a), all pass-through entities must ensure that every subaward is clearly identified to the subrecipient as a subaward and includes the following information 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. Required information includes: i. Subrecipient name (which must match the name associated with its unique entity identifier); ii. Subrecipient's unique entity identifier; iii. Federal Award Identification Number (FAIN); iv. Federal Award Date (see the definition of Federal award date in § 200.1 of this part) of award to the recipient by the Federal agency; v. Subaward Period of Performance Start and End Date; vi. Subaward Budget Period Start and End Date; vii. Amount of Federal Funds Obligated by this action by the pass-through entity to the subrecipient; viii. Total Amount of Federal Funds Obligated to the subrecipient by the pass-through entity including the current financial obligation; ix. Total Amount of the Federal Award committed to the subrecipient by the pass-through entity; x. Federal award project description, as required to be responsive to the Federal Funding Accountability and Transparency Act (FFATA); xi. Name of Federal awarding agency, pass-through entity, and contact information for awarding official of the Pass-through entity; Section III – Federal Award Findings and Questioned Costs (Continued) xii. Assistance Listings number and Title; the pass-through entity must identify the dollar amount made available under each Federal award and the Assistance Listings Number at time of disbursement; xiii. Identification of whether the award is R&D; and xiv. Indirect cost rate for the Federal award (including if the de minimis rate is charged) per section 200.414. Control – Per 2 CFR section 200.303(a), a 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: Subawards issued by the Department of Human Services (Department) did not include all required federal award information. Context: For 8 of 8 subawards selected for testing, the following required information was not provided to the subrecipient at the time of award issuance: (iii) Federal Award Identification Number (FAIN); (iv) Federal Award Date (see the definition of Federal award date in § 200.1 of this part) of award to the recipient by the Federal agency; (viii) Total Amount of Federal Funds Obligated to the subrecipient by the pass-through entity including the current financial obligation; (ix) Total Amount of the Federal Award committed to the subrecipient by the pass-through entity; (xiii) Identification of whether the award is R&D; and (xiv) Indirect cost rate for the Federal award (including if the de minimis rate is charged) per §200.414 Questioned costs: None noted. Cause: The Department’s procedures were not sufficient to ensure the subawards were issued in compliance with Federal requirements. Internal controls did not prevent or detect the errors. Effect: Excluding the required federal grant award information at the time of the subaward may cause subrecipients and their auditors to be uninformed about specific program and other regulations that apply to the funds they receive. There is also the potential for subrecipients to have incomplete Schedules of Expenditures of Federal Awards (SEFA) in their Single Audit reports, and federal funds may not be properly audited at the subrecipient level in accordance with the Uniform Guidance. Section III – Federal Award Findings and Questioned Costs (Continued) Recommendation: The Department should review and enhance internal controls and procedures to ensure that all required information is included in subawards. Views of responsible officials: The Division of Aging Services (DoAS) will comply with the pass-through entity and subrecipient monitoring requirements under the federal Uniform Guidance as per CFR § 200.332(a). The DoAS will provide all required information to the subrecipient at the time of award issuance. This subaward notice will be posted as a miscellaneous attachment to contracts in the Division's System for Administering Grants Electronically (SAGE), or via mail, fax or email to those subawards not administered in SAGE. DoAS plans to complete and update this information on SAGE within 60 days.

Reference Number: 2023-012 Prior Year Finding: 2022-012 Federal Agency: U.S. Department of Health and Human Services State Agency: Department of Human Services Federal Program: Aging Cluster and COVID-19 Aging Cluster Assistance Listing Number: 93.044, 93.045, 93.053 Award Number and Year: 2101NJOASS (10/1/2020 – 9/30/2022) 2101NJOANS (10/1/2020 – 9/30/2022) 2101NJSSC6 (4/1/2021 – 9/30/2024) 2101NJHDC6 (4/1/2021 – 9/3/2024) 2101NJOANS (10/1/2020 – 9/30/2022) 2201NJOASS (10/1/2021 – 9/30/2023) 2201NJOACM (10/1/2021 – 9/30/2023) 2201NJOAHD (10/1/2021-9/30/2023) 2201NJOAPH (10/1/2021-9/30/2023) 2201NJOAFC (10/1/2021-9/30/2023) 2301NJOACM (10/1/2022 – 9/30/2024) Compliance Requirement: Reporting – Federal Funding Accountability and Transparency Act (FFATA) Type of Finding Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance: Per the Federal Funding Accountability and Transparency Act (FFATA), prime (direct) recipients of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Reports must be filed in FSRS by the end of the month following the month in which the prime recipient awards any sub-grant greater than or equal to $30,000. If the initial award is below $30,000 but subsequent grant modifications result in a total award equal to or over $30,000, the award will be subject to the reporting requirements as of the date the award exceeds $30,000. If the initial award equals or exceeds $30,000 but funding is subsequently de-obligated such that the total award amount falls below $30,000, the award continues to be subject to FFATA reporting requirements. The following key data elements must be reported: Subawardee Name and Data Universal Numbering System (DUNS) number; Amount of Subaward (inclusive of modifications); Subaward Obligation/Action Date; Date of Report Submission; Subaward Number; Project Description; and Names and Compensation of Highly Compensated Officers. (Names and Compensation of Highly Compensated Officers must only be reported when the entity in the preceding fiscal year received 80 percent or more of its annual gross revenues in Federal awards; and $25,000,000 or more in annual gross revenues from Federal awards; and the public does not have access to this information about the compensation of the senior executives of the entity through periodic reports filed under section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. §§ 78m(a), 78o(d)) or section 6104 of the Internal Revenue Code of 1986.) Section III – Federal Award Findings and Questioned Costs (Continued) Control: Per 2 CFR section 200.303(a), a 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 comply 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: The Department of Human Services (Department) did not report subaward information to FSRS timely during FY 2023. Context: Zero of eight subawards selected for testing were reported to FSRS timely. The subawards were issued in January 2023 and were not reported to FSRS until July 2023. SEE SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR CHART/TABLE Cause: The Department’s procedures were not sufficient to ensure that subaward information was reported timely to FSRS. Internal controls did not prevent or detect the errors. Effect: Subawards were not reported to FSRS in accordance with FFATA requirements. Questioned costs: None noted. Recommendation: We recommend that the Department enhance its controls and procedures to ensure that all required subawards are reported timely to FSRS no later than the end of the month following the month of issuance. Views of responsible officials: The Department of Human Services, Division of Aging Services (DoAS) continues to work towards attaining full compliance with Federal Funding Accountability and Transparency Act (FFATA) requirements. The DoAS continues to consult with the Department and/or other DHS Division fiscal leadership to finalize the FFATA procedures. These procedures shall include creating a list of all active first-tier subawards of federal funds DoAS has issued at $30,000 or more. The list will include all the Section III – Federal Award Findings and Questioned Costs (Continued) data fields required for FFATA reporting. DoAS grants management members will ensure each of the identified subawards is entered on the Federal Subaward Reporting System (FSRS) website. DoAS will also revise internal procedures to ensure all future subawards of $30,000 or more are entered on FSRS within 30 days of award.

Reference Number: 2023-012 Prior Year Finding: 2022-012 Federal Agency: U.S. Department of Health and Human Services State Agency: Department of Human Services Federal Program: Aging Cluster and COVID-19 Aging Cluster Assistance Listing Number: 93.044, 93.045, 93.053 Award Number and Year: 2101NJOASS (10/1/2020 – 9/30/2022) 2101NJOANS (10/1/2020 – 9/30/2022) 2101NJSSC6 (4/1/2021 – 9/30/2024) 2101NJHDC6 (4/1/2021 – 9/3/2024) 2101NJOANS (10/1/2020 – 9/30/2022) 2201NJOASS (10/1/2021 – 9/30/2023) 2201NJOACM (10/1/2021 – 9/30/2023) 2201NJOAHD (10/1/2021-9/30/2023) 2201NJOAPH (10/1/2021-9/30/2023) 2201NJOAFC (10/1/2021-9/30/2023) 2301NJOACM (10/1/2022 – 9/30/2024) Compliance Requirement: Reporting – Federal Funding Accountability and Transparency Act (FFATA) Type of Finding Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance: Per the Federal Funding Accountability and Transparency Act (FFATA), prime (direct) recipients of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Reports must be filed in FSRS by the end of the month following the month in which the prime recipient awards any sub-grant greater than or equal to $30,000. If the initial award is below $30,000 but subsequent grant modifications result in a total award equal to or over $30,000, the award will be subject to the reporting requirements as of the date the award exceeds $30,000. If the initial award equals or exceeds $30,000 but funding is subsequently de-obligated such that the total award amount falls below $30,000, the award continues to be subject to FFATA reporting requirements. The following key data elements must be reported: Subawardee Name and Data Universal Numbering System (DUNS) number; Amount of Subaward (inclusive of modifications); Subaward Obligation/Action Date; Date of Report Submission; Subaward Number; Project Description; and Names and Compensation of Highly Compensated Officers. (Names and Compensation of Highly Compensated Officers must only be reported when the entity in the preceding fiscal year received 80 percent or more of its annual gross revenues in Federal awards; and $25,000,000 or more in annual gross revenues from Federal awards; and the public does not have access to this information about the compensation of the senior executives of the entity through periodic reports filed under section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. §§ 78m(a), 78o(d)) or section 6104 of the Internal Revenue Code of 1986.) Section III – Federal Award Findings and Questioned Costs (Continued) Control: Per 2 CFR section 200.303(a), a 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 comply 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: The Department of Human Services (Department) did not report subaward information to FSRS timely during FY 2023. Context: Zero of eight subawards selected for testing were reported to FSRS timely. The subawards were issued in January 2023 and were not reported to FSRS until July 2023. SEE SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR CHART/TABLE Cause: The Department’s procedures were not sufficient to ensure that subaward information was reported timely to FSRS. Internal controls did not prevent or detect the errors. Effect: Subawards were not reported to FSRS in accordance with FFATA requirements. Questioned costs: None noted. Recommendation: We recommend that the Department enhance its controls and procedures to ensure that all required subawards are reported timely to FSRS no later than the end of the month following the month of issuance. Views of responsible officials: The Department of Human Services, Division of Aging Services (DoAS) continues to work towards attaining full compliance with Federal Funding Accountability and Transparency Act (FFATA) requirements. The DoAS continues to consult with the Department and/or other DHS Division fiscal leadership to finalize the FFATA procedures. These procedures shall include creating a list of all active first-tier subawards of federal funds DoAS has issued at $30,000 or more. The list will include all the Section III – Federal Award Findings and Questioned Costs (Continued) data fields required for FFATA reporting. DoAS grants management members will ensure each of the identified subawards is entered on the Federal Subaward Reporting System (FSRS) website. DoAS will also revise internal procedures to ensure all future subawards of $30,000 or more are entered on FSRS within 30 days of award.

Reference Number: 2023-013 Prior Year Finding: 2022-013 Federal Agency: U.S. Department of Health and Human Services State Agency: Department of Health Federal Program: Immunization Cooperative Agreements, COVID-19 - Immunization Cooperative Agreements Assistance Listing Number: 93.268 Award Number and Year: NH23IP922594 (7/1/19 – 6/30/24) Compliance Requirement: Reporting – Federal Funding Accountability and Transparency Act (FFATA) Type of Finding Material Weakness in Internal Control Over Compliance, Material Noncompliance Criteria or specific requirement: Compliance: Per the Federal Funding Accountability and Transparency Act (FFATA), prime (direct) recipients of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Reports must be filed in FSRS by the end of the month following the month in which the prime recipient awards any sub-grant greater than or equal to $30,000. If the initial award is below $30,000 but subsequent grant modifications result in a total award equal to or over $30,000, the award will be subject to the reporting requirements as of the date the award exceeds $30,000. If the initial award equals or exceeds $30,000 but funding is subsequently de-obligated such that the total award amount falls below $30,000, the award continues to be subject to FFATA reporting requirements. The following key data elements must be reported: Subawardee Name and Unique Entity ID (UEI) number; Amount of Subaward (inclusive of modifications); Subaward Obligation/Action Date; Date of Report Submission; Subaward Number; Project Description; and Names and Compensation of Highly Compensated Officers. (Names and Compensation of Highly Compensated Officers must only be reported when the entity in the preceding fiscal year received 80 percent or more of its annual gross revenues in Federal awards; and $25,000,000 or more in annual gross revenues from Federal awards; and the public does not have access to this information about the compensation of the senior executives of the entity through periodic reports filed under section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. §§ 78m(a), 78o(d)) or section 6104 of the Internal Revenue Code of 1986.) Control: Per 2 CFR section 200.303(a), a 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 comply 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). Section III – Federal Award Findings and Questioned Costs (Continued) Condition: Subaward information was not reported to FSRS by the Department of Health (Department). Context: Twelve of thirteen subawards selected for testing were not reported to FSRS. Specifically, we noted the following: • 8 of 13 subawards were issued on 7/1/2021 and they were not reported to FSRS until 7/20/2023, or approximately two years late. • 3 of 13 subawards was issued on 4/1/2022 and were reported to FSRS on 7/20/2023 and 9/22/2023, or 14 to 17 months late. • 1 of 13 subawards was issued on 12/19/2022 and was not reported to FSRS until 6/7/2023, or approximately five months late. SEE SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR CHART/TABLE Cause: The Department did not allocate personnel nor establish procedures or controls for FFATA reporting. Effect: Subawards were not reported to FSRS in accordance with FFATA requirements. Questioned costs: None noted. Recommendation: We recommend that the Department develop procedures and internal controls to ensure that all required subawards are reported timely to FSRS no later than the end of the month following the month of issuance in accordance with FFATA reporting requirements. Views of responsible officials: The Department of Health’s (DOH) Vaccine Preventable Disease Program (VPDP) is in compliance with the Federal Funding Accountability and Transparency Act (FFATA) requirements with regard to reporting all active first-tier subawards of federal COVID-19 funds that DOH divisions have issued totaling $30,000 or greater under this Cooperative Agreement and COVID-19 Supplemental. However, it is not in compliance with regard to reporting required subaward data in FSRS by the end of the month following the month in which DOH has made the subawards totaling $30,000 or greater. Section III – Federal Award Findings and Questioned Costs (Continued) The VPDP will continue to follow the DOH policy set forth in FMC 22-05 and report to FSRS all active first-tier subawards of federal COVID-19 funds DOH divisions have issued at $30,000 or greater under the COVID-19 Supplementals. The VPDP fiscal/grants leadership team will strive to ensure each of the identified subawards is entered on the FFATA Subaward Reporting System (FSRS) website by the end of the month following the month that DOH has made the subawards. VPDP will continue its efforts to bring the gap in reporting to FSRS down from five months presently to within the specified FFATA submission deadlines denoted above. VPDP also has on boarded a full-time Contract Administrator 2 who will be responsible for reporting FFATA data into FSRS for the Immunization Cooperative Agreement.

Reference Number: 2023-013 Prior Year Finding: 2022-013 Federal Agency: U.S. Department of Health and Human Services State Agency: Department of Health Federal Program: Immunization Cooperative Agreements, COVID-19 - Immunization Cooperative Agreements Assistance Listing Number: 93.268 Award Number and Year: NH23IP922594 (7/1/19 – 6/30/24) Compliance Requirement: Reporting – Federal Funding Accountability and Transparency Act (FFATA) Type of Finding Material Weakness in Internal Control Over Compliance, Material Noncompliance Criteria or specific requirement: Compliance: Per the Federal Funding Accountability and Transparency Act (FFATA), prime (direct) recipients of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Reports must be filed in FSRS by the end of the month following the month in which the prime recipient awards any sub-grant greater than or equal to $30,000. If the initial award is below $30,000 but subsequent grant modifications result in a total award equal to or over $30,000, the award will be subject to the reporting requirements as of the date the award exceeds $30,000. If the initial award equals or exceeds $30,000 but funding is subsequently de-obligated such that the total award amount falls below $30,000, the award continues to be subject to FFATA reporting requirements. The following key data elements must be reported: Subawardee Name and Unique Entity ID (UEI) number; Amount of Subaward (inclusive of modifications); Subaward Obligation/Action Date; Date of Report Submission; Subaward Number; Project Description; and Names and Compensation of Highly Compensated Officers. (Names and Compensation of Highly Compensated Officers must only be reported when the entity in the preceding fiscal year received 80 percent or more of its annual gross revenues in Federal awards; and $25,000,000 or more in annual gross revenues from Federal awards; and the public does not have access to this information about the compensation of the senior executives of the entity through periodic reports filed under section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. §§ 78m(a), 78o(d)) or section 6104 of the Internal Revenue Code of 1986.) Control: Per 2 CFR section 200.303(a), a 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 comply 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). Section III – Federal Award Findings and Questioned Costs (Continued) Condition: Subaward information was not reported to FSRS by the Department of Health (Department). Context: Twelve of thirteen subawards selected for testing were not reported to FSRS. Specifically, we noted the following: • 8 of 13 subawards were issued on 7/1/2021 and they were not reported to FSRS until 7/20/2023, or approximately two years late. • 3 of 13 subawards was issued on 4/1/2022 and were reported to FSRS on 7/20/2023 and 9/22/2023, or 14 to 17 months late. • 1 of 13 subawards was issued on 12/19/2022 and was not reported to FSRS until 6/7/2023, or approximately five months late. SEE SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR CHART/TABLE Cause: The Department did not allocate personnel nor establish procedures or controls for FFATA reporting. Effect: Subawards were not reported to FSRS in accordance with FFATA requirements. Questioned costs: None noted. Recommendation: We recommend that the Department develop procedures and internal controls to ensure that all required subawards are reported timely to FSRS no later than the end of the month following the month of issuance in accordance with FFATA reporting requirements. Views of responsible officials: The Department of Health’s (DOH) Vaccine Preventable Disease Program (VPDP) is in compliance with the Federal Funding Accountability and Transparency Act (FFATA) requirements with regard to reporting all active first-tier subawards of federal COVID-19 funds that DOH divisions have issued totaling $30,000 or greater under this Cooperative Agreement and COVID-19 Supplemental. However, it is not in compliance with regard to reporting required subaward data in FSRS by the end of the month following the month in which DOH has made the subawards totaling $30,000 or greater. Section III – Federal Award Findings and Questioned Costs (Continued) The VPDP will continue to follow the DOH policy set forth in FMC 22-05 and report to FSRS all active first-tier subawards of federal COVID-19 funds DOH divisions have issued at $30,000 or greater under the COVID-19 Supplementals. The VPDP fiscal/grants leadership team will strive to ensure each of the identified subawards is entered on the FFATA Subaward Reporting System (FSRS) website by the end of the month following the month that DOH has made the subawards. VPDP will continue its efforts to bring the gap in reporting to FSRS down from five months presently to within the specified FFATA submission deadlines denoted above. VPDP also has on boarded a full-time Contract Administrator 2 who will be responsible for reporting FFATA data into FSRS for the Immunization Cooperative Agreement.

Reference Number: 2023-014 Prior Year Finding: 2022-015 Federal Agency: U.S. Department of Health and Human Services State Agency: Department of Health Federal Program: Epidemiology and Laboratory Capacity for Infectious Diseases (ELC), COVID-19 - Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) Assistance Listing Number: 93.323 Award Number and Year: 6NU50CK000525 (8/1/2019 – 7/31/2024), 6NU50CK000525 (8/1/2019 – 7/31/2024), 6NU50CK000525-02-03 (8/1/2020 - 7/31/2024), 5NU50CK000525-03-00 (8/1/2019 – 7/31/2024) Compliance Requirement: Reporting – Federal Funding Accountability and Transparency Act (FFATA) Type of Finding Material Weakness in Internal Control Over Compliance, Material Non-compliance Criteria or specific requirement: Compliance: Per the Federal Funding Accountability and Transparency Act (FFATA), prime (direct) recipients of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Reports must be filed in FSRS by the end of the month following the month in which the prime recipient awards any sub-grant greater than or equal to $30,000. If the initial award is below $30,000 but subsequent grant modifications result in a total award equal to or over $30,000, the award will be subject to the reporting requirements as of the date the award exceeds $30,000. If the initial award equals or exceeds $30,000 but funding is subsequently de-obligated such that the total award amount falls below $30,000, the award continues to be subject to FFATA reporting requirements. The following key data elements must be reported: Subawardee Name and Unique Entity ID (UEI) number; Amount of Subaward (inclusive of modifications); Subaward Obligation/Action Date; Date of Report Submission; Subaward Number; Project Description; and Names and Compensation of Highly Compensated Officers. (Names and Compensation of Highly Compensated Officers must only be reported when the entity in the preceding fiscal year received 80 percent or more of its annual gross revenues in Federal awards; and $25,000,000 or more in annual gross revenues from Federal awards; and the public does not have access to this information about the compensation of the senior executives of the entity through periodic reports filed under section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. §§ 78m(a), 78o(d)) or section 6104 of the Internal Revenue Code of 1986.) Control: Per 2 CFR section 200.303(a), a 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 comply 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). Section III – Federal Award Findings and Questioned Costs (Continued) Condition: Subaward information was not reported to FSRS in accordance with FFATA requirements. Context: Twenty-seven subawards were selected for testing. The Department of Health (DOH) is the primary recipient of program funding and, therefore, has overall responsibility for activities funded by the program. In addition to issuing subawards as the prime recipient, DOH also entered into an agreement with the Department of Education (DOE) to issue subawards to public and non-public schools on their behalf. Of the twenty-seven subawards selected for testing, twenty-three were issued by DOH and four were issued by DOE. The following exceptions were noted: • Four of twenty-seven subawards selected for testing were not reported to FSRS. DOE issued the subawards but was unable to provide copies of the subaward agreements or evidence that the subawards had been reported to FSRS. Therefore, the dollar amount of subawards not reported is undetermined. • Ten of twenty-seven subawards selected for testing were not reported timely to FSRS. DOH reported the subawards to FSRS from 21 to 543 days late. SEE SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR CHART/TABLE Cause: DOH did not implement procedures or controls to ensure that subawards it issued were reported to FSRS timely. The agreement between DOH and DOE did not clearly state DOE’s responsibilities to maintain copies of subaward agreements and report those subawards to FSRS. In its oversight role, DOH did not review documentation maintained by DOE to ensure compliance with FFATA requirements. Effect: Subawards were not reported to FSRS in accordance with FFATA requirements. Questioned costs: None noted. Recommendation: We recommend that DOH develop procedures and internal controls to ensure that all required subawards are reported to FSRS no later than the end of the month following the month of issuance in accordance with FFATA reporting requirements. We further recommend that DOH develop procedures and controls over its agreements with other departments to ensure that FFATA reporting requirements are met. Section III – Federal Award Findings and Questioned Costs (Continued) Views of responsible officials: Based on the Corrective Action Plan (CAP) developed for the prior year FY 2022 audit finding cited for FFATA reporting, the Department of Health (DOH) Grants Unit, with coordination from the Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) fiscal staff, added a new function to the System for Administering Grants Electronically (SAGE) that pulls all subaward data for the ELC program using the program’s 93.323 federal Assistance Listing Number (ALN). Thus, the CAP implemented in September 2022 for the prior year FY 2022 audit finding includes SAGE now pulling the subaward data for the entire ELC program by the ALN number and enables the ELC fiscal staff to access all ELC subawards within the DOH. ELC fiscal staff also has a task reminder set to report at the end of each month, enter subaward information into the FFATA Subaward Reporting System (FSRS), and upload each report submitted to the SharePoint ELC Document Library at the end of each month. As per the original CAP created under the FY 2022 audit, FFATA information for ELC subawards were entered into FSRS beginning on September 1, 2022 and DOH actions and efforts have continued to ensure compliance going forward.

Reference Number: 2023-014 Prior Year Finding: 2022-015 Federal Agency: U.S. Department of Health and Human Services State Agency: Department of Health Federal Program: Epidemiology and Laboratory Capacity for Infectious Diseases (ELC), COVID-19 - Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) Assistance Listing Number: 93.323 Award Number and Year: 6NU50CK000525 (8/1/2019 – 7/31/2024), 6NU50CK000525 (8/1/2019 – 7/31/2024), 6NU50CK000525-02-03 (8/1/2020 - 7/31/2024), 5NU50CK000525-03-00 (8/1/2019 – 7/31/2024) Compliance Requirement: Reporting – Federal Funding Accountability and Transparency Act (FFATA) Type of Finding Material Weakness in Internal Control Over Compliance, Material Non-compliance Criteria or specific requirement: Compliance: Per the Federal Funding Accountability and Transparency Act (FFATA), prime (direct) recipients of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Reports must be filed in FSRS by the end of the month following the month in which the prime recipient awards any sub-grant greater than or equal to $30,000. If the initial award is below $30,000 but subsequent grant modifications result in a total award equal to or over $30,000, the award will be subject to the reporting requirements as of the date the award exceeds $30,000. If the initial award equals or exceeds $30,000 but funding is subsequently de-obligated such that the total award amount falls below $30,000, the award continues to be subject to FFATA reporting requirements. The following key data elements must be reported: Subawardee Name and Unique Entity ID (UEI) number; Amount of Subaward (inclusive of modifications); Subaward Obligation/Action Date; Date of Report Submission; Subaward Number; Project Description; and Names and Compensation of Highly Compensated Officers. (Names and Compensation of Highly Compensated Officers must only be reported when the entity in the preceding fiscal year received 80 percent or more of its annual gross revenues in Federal awards; and $25,000,000 or more in annual gross revenues from Federal awards; and the public does not have access to this information about the compensation of the senior executives of the entity through periodic reports filed under section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. §§ 78m(a), 78o(d)) or section 6104 of the Internal Revenue Code of 1986.) Control: Per 2 CFR section 200.303(a), a 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 comply 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). Section III – Federal Award Findings and Questioned Costs (Continued) Condition: Subaward information was not reported to FSRS in accordance with FFATA requirements. Context: Twenty-seven subawards were selected for testing. The Department of Health (DOH) is the primary recipient of program funding and, therefore, has overall responsibility for activities funded by the program. In addition to issuing subawards as the prime recipient, DOH also entered into an agreement with the Department of Education (DOE) to issue subawards to public and non-public schools on their behalf. Of the twenty-seven subawards selected for testing, twenty-three were issued by DOH and four were issued by DOE. The following exceptions were noted: • Four of twenty-seven subawards selected for testing were not reported to FSRS. DOE issued the subawards but was unable to provide copies of the subaward agreements or evidence that the subawards had been reported to FSRS. Therefore, the dollar amount of subawards not reported is undetermined. • Ten of twenty-seven subawards selected for testing were not reported timely to FSRS. DOH reported the subawards to FSRS from 21 to 543 days late. SEE SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR CHART/TABLE Cause: DOH did not implement procedures or controls to ensure that subawards it issued were reported to FSRS timely. The agreement between DOH and DOE did not clearly state DOE’s responsibilities to maintain copies of subaward agreements and report those subawards to FSRS. In its oversight role, DOH did not review documentation maintained by DOE to ensure compliance with FFATA requirements. Effect: Subawards were not reported to FSRS in accordance with FFATA requirements. Questioned costs: None noted. Recommendation: We recommend that DOH develop procedures and internal controls to ensure that all required subawards are reported to FSRS no later than the end of the month following the month of issuance in accordance with FFATA reporting requirements. We further recommend that DOH develop procedures and controls over its agreements with other departments to ensure that FFATA reporting requirements are met. Section III – Federal Award Findings and Questioned Costs (Continued) Views of responsible officials: Based on the Corrective Action Plan (CAP) developed for the prior year FY 2022 audit finding cited for FFATA reporting, the Department of Health (DOH) Grants Unit, with coordination from the Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) fiscal staff, added a new function to the System for Administering Grants Electronically (SAGE) that pulls all subaward data for the ELC program using the program’s 93.323 federal Assistance Listing Number (ALN). Thus, the CAP implemented in September 2022 for the prior year FY 2022 audit finding includes SAGE now pulling the subaward data for the entire ELC program by the ALN number and enables the ELC fiscal staff to access all ELC subawards within the DOH. ELC fiscal staff also has a task reminder set to report at the end of each month, enter subaward information into the FFATA Subaward Reporting System (FSRS), and upload each report submitted to the SharePoint ELC Document Library at the end of each month. As per the original CAP created under the FY 2022 audit, FFATA information for ELC subawards were entered into FSRS beginning on September 1, 2022 and DOH actions and efforts have continued to ensure compliance going forward.

Reference Number: 2023-015 Prior Year Finding: No Federal Agency: U.S. Department of Health and Human Services State Agency: Department of Health Federal Program: Epidemiology and Laboratory Capacity for Infectious Diseases (ELC), COVID-19 - Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) Assistance Listing Number: 93.323 Award Number and Year: 6NU50CK000525 (8/1/2019 – 7/31/2024), 6NU50CK000525 (8/1/2019 – 7/31/2024), 6NU50CK000525-02-03 (8/1/2020 - 7/31/2024), 5NU50CK000525-03-00 (8/1/2019 – 7/31/2024) Compliance Requirement: Subrecipient Monitoring Type of Finding: Material Weakness in Internal Control over Compliance, Material Noncompliance Criteria or specific requirement: Compliance – Per 2 CFR section 200.332(a), all pass-through entities must ensure that every subaward is clearly identified to the subrecipient as a subaward and includes information 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. 2 CFR section 200.332 also states that pass-through entities must: (d) Evaluate each subrecipient's risk of noncompliance with Federal statutes, 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, which may include consideration of such factors as: 1) The subrecipient's prior experience with the same or similar subawards; 2) The results of previous audits including whether or not the subrecipient receives a Single Audit in accordance with Subpart F - Audit Requirements of this part, and the extent to which the same or similar subaward has been audited as a major program; 3) Whether the subrecipient has new personnel or new or substantially changed systems; 4) The extent and results of Federal awarding agency monitoring (e.g., if the subrecipient also receives Federal awards directly from a Federal awarding agency). (e) 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: (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. Section III – Federal Award Findings and Questioned Costs (Continued) (3) Issuing a management decision for audit findings pertaining to the Federal award provided to the subrecipient from the pass-through entity as required by § 200.521 Management decision. (f) Verify that every subrecipient is audited as required by Subpart F - Audit Requirements of this part when it is expected that the subrecipient's Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in § 200.501 Audit requirements. Control – Per 2 CFR section 200.303(a), a 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: Documentation of subaward agreements and monitoring activities was not maintained and was not available for audit. Context: The Department of Health (DOH) is the primary recipient of program funding and, therefore, has overall responsibility for activities funded by the program. DOH entered into an agreement with the Department of Education (DOE) to issue subawards to public and non-public schools on their behalf. Six of twenty-six subrecipients selected for testing received subawards issued by DOE. DOE was unable to provide copies of subaward agreements or documentation that subrecipient monitoring activities had been performed. Therefore, auditors were unable to verify compliance with Federal requirements for these subawards. Questioned costs: Undetermined. Cause: The agreement between DOH and DOE did not clearly state DOE’s responsibilities for subaward issuance and monitoring. As a result, DOE did not maintain copies of subaward agreements, nor was it able to provide documentation that it had performed risk assessments or monitoring activities for these subrecipients. In its oversight role, DOH did not review documentation maintained by DOE to ensure compliance with Federal subrecipient monitoring requirements. Effect: Auditors were unable to verify that subawards were issued in accordance with Federal requirements, that the subrecipients were eligible to receive program funding, nor that the subrecipients had been adequately monitored. Section III – Federal Award Findings and Questioned Costs (Continued) Recommendation: DOH should review and enhance internal controls and procedures regarding agreements with other State departments to issue subawards on its behalf. Agreements should clearly define the responsibilities of other departments to ensure compliance with all Federal requirements. DOH should also periodically review the documentation maintained by other departments that issue subawards on its behalf to ensure it is adequate and is available for audit. DOE should review and enhance internal controls and procedures to ensure that it maintains copies of all subaward agreements, that proper subrecipient monitoring is conducted, and that evaluation of independent audits is performed for all subrecipients. Documentation of subrecipient monitoring activities should be readily available for audit. Views of responsible officials: The Department of Health (DOH) will enhance its internal controls and procedures, regarding federal subawards issued by other New Jersey State departments and agencies on behalf of DOH. The Department’s Memorandum of Agreement (MOA) and Memorandum of Understanding (MOU) documents will be updated and enhanced to list and define the specific responsibilities and requirements of other departments and pass-through entities more clearly when issuing subawards with federal funding derived from DOH. If necessary, the updated MOA/MOU documents may also include an Exhibit specific to Subrecipient Monitoring, containing the federal Uniform Guidance compliance requirements including mandatory reporting of subgrantee performance indicators and listing records retention requirements for all documentation of monitored subrecipient activities.

Reference Number: 2023-015 Prior Year Finding: No Federal Agency: U.S. Department of Health and Human Services State Agency: Department of Health Federal Program: Epidemiology and Laboratory Capacity for Infectious Diseases (ELC), COVID-19 - Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) Assistance Listing Number: 93.323 Award Number and Year: 6NU50CK000525 (8/1/2019 – 7/31/2024), 6NU50CK000525 (8/1/2019 – 7/31/2024), 6NU50CK000525-02-03 (8/1/2020 - 7/31/2024), 5NU50CK000525-03-00 (8/1/2019 – 7/31/2024) Compliance Requirement: Subrecipient Monitoring Type of Finding: Material Weakness in Internal Control over Compliance, Material Noncompliance Criteria or specific requirement: Compliance – Per 2 CFR section 200.332(a), all pass-through entities must ensure that every subaward is clearly identified to the subrecipient as a subaward and includes information 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. 2 CFR section 200.332 also states that pass-through entities must: (d) Evaluate each subrecipient's risk of noncompliance with Federal statutes, 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, which may include consideration of such factors as: 1) The subrecipient's prior experience with the same or similar subawards; 2) The results of previous audits including whether or not the subrecipient receives a Single Audit in accordance with Subpart F - Audit Requirements of this part, and the extent to which the same or similar subaward has been audited as a major program; 3) Whether the subrecipient has new personnel or new or substantially changed systems; 4) The extent and results of Federal awarding agency monitoring (e.g., if the subrecipient also receives Federal awards directly from a Federal awarding agency). (e) 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: (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. Section III – Federal Award Findings and Questioned Costs (Continued) (3) Issuing a management decision for audit findings pertaining to the Federal award provided to the subrecipient from the pass-through entity as required by § 200.521 Management decision. (f) Verify that every subrecipient is audited as required by Subpart F - Audit Requirements of this part when it is expected that the subrecipient's Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in § 200.501 Audit requirements. Control – Per 2 CFR section 200.303(a), a 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: Documentation of subaward agreements and monitoring activities was not maintained and was not available for audit. Context: The Department of Health (DOH) is the primary recipient of program funding and, therefore, has overall responsibility for activities funded by the program. DOH entered into an agreement with the Department of Education (DOE) to issue subawards to public and non-public schools on their behalf. Six of twenty-six subrecipients selected for testing received subawards issued by DOE. DOE was unable to provide copies of subaward agreements or documentation that subrecipient monitoring activities had been performed. Therefore, auditors were unable to verify compliance with Federal requirements for these subawards. Questioned costs: Undetermined. Cause: The agreement between DOH and DOE did not clearly state DOE’s responsibilities for subaward issuance and monitoring. As a result, DOE did not maintain copies of subaward agreements, nor was it able to provide documentation that it had performed risk assessments or monitoring activities for these subrecipients. In its oversight role, DOH did not review documentation maintained by DOE to ensure compliance with Federal subrecipient monitoring requirements. Effect: Auditors were unable to verify that subawards were issued in accordance with Federal requirements, that the subrecipients were eligible to receive program funding, nor that the subrecipients had been adequately monitored. Section III – Federal Award Findings and Questioned Costs (Continued) Recommendation: DOH should review and enhance internal controls and procedures regarding agreements with other State departments to issue subawards on its behalf. Agreements should clearly define the responsibilities of other departments to ensure compliance with all Federal requirements. DOH should also periodically review the documentation maintained by other departments that issue subawards on its behalf to ensure it is adequate and is available for audit. DOE should review and enhance internal controls and procedures to ensure that it maintains copies of all subaward agreements, that proper subrecipient monitoring is conducted, and that evaluation of independent audits is performed for all subrecipients. Documentation of subrecipient monitoring activities should be readily available for audit. Views of responsible officials: The Department of Health (DOH) will enhance its internal controls and procedures, regarding federal subawards issued by other New Jersey State departments and agencies on behalf of DOH. The Department’s Memorandum of Agreement (MOA) and Memorandum of Understanding (MOU) documents will be updated and enhanced to list and define the specific responsibilities and requirements of other departments and pass-through entities more clearly when issuing subawards with federal funding derived from DOH. If necessary, the updated MOA/MOU documents may also include an Exhibit specific to Subrecipient Monitoring, containing the federal Uniform Guidance compliance requirements including mandatory reporting of subgrantee performance indicators and listing records retention requirements for all documentation of monitored subrecipient activities.

Reference Number: 2023-016 Prior Year Finding: No Federal Agency: U.S. Department of Health and Human Services State Agency: Department of Human Services Federal Program: Temporary Assistance for Needy Families Assistance Listing Number: 93.558 Award Number and Year: 230INJTANF-00 (10/1/2022-9/30/2023) 230INJTANF-01 (10/1/2022-9/30/2023) 230INJTANF-02 (10/1/2022-9/30/2023) Compliance Requirement: Reporting – Federal Funding Accountability and Transparency Act (FFATA) Type of Finding: Material Weakness in Internal Control Over Compliance, Material Non-compliance Criteria or specific requirement: Compliance: Per the Federal Funding Accountability and Transparency Act (FFATA), prime (direct) recipients of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Reports must be filed in FSRS by the end of the month following the month in which the prime recipient awards any sub-grant greater than or equal to $30,000. If the initial award is below $30,000 but subsequent grant modifications result in a total award equal to or over $30,000, the award will be subject to the reporting requirements as of the date the award exceeds $30,000. If the initial award equals or exceeds $30,000 but funding is subsequently de-obligated such that the total award amount falls below $30,000, the award continues to be subject to FFATA reporting requirements. The following key data elements must be reported: Subawardee Name and Data Universal Numbering System (DUNS) number; Amount of Subaward (inclusive of modifications); Subaward Obligation/Action Date; Date of Report Submission; Subaward Number; Project Description; and Names and Compensation of Highly Compensated Officers. (Names and Compensation of Highly Compensated Officers must only be reported when the entity in the preceding fiscal year received 80 percent or more of its annual gross revenues in Federal awards; and $25,000,000 or more in annual gross revenues from Federal awards; and the public does not have access to this information about the compensation of the senior executives of the entity through periodic reports filed under section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. §§ 78m(a), 78o(d)) or section 6104 of the Internal Revenue Code of 1986.) Control: Per 2 CFR section 200.303(a), a 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 comply 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). Section III – Federal Award Findings and Questioned Costs (Continued) Condition: Subaward information was not reported to FSRS during FY 2023. Context: Zero of twenty-two subrecipients selected for testing were reported to FSRS during FY 2023. Total subawards tested were $12,764,925.00, and $0 was reported as required by FFATA requirements. SEE SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR CHART/TABLE Cause: The Department was unaware of FFATA reporting requirements and did not report subaward information to FSRS during FY 2023. Effect: Subawards were not reported to FSRS in accordance with FFATA requirements. Questioned costs: None noted. Recommendation: We recommend that the Department develop internal controls and procedures to ensure that FFATA reporting requirements are met. We further recommend the Department develop controls and procedures to ensure that all required subawards are reported accurately and timely to FSRS no later than the end of the month following the month of issuance. Views of responsible officials: The Department of Human Services’ Division of Family Development (DFD) agrees with the audit finding regarding the required submission of subawards to the FFATA Subaward Reporting System (FSRS). Due to the complexity and time required to compile and report FFATA subaward data, the DFD is in the process of creating a new full-time equivalent position (FTE) for this required federal reporting task. In accordance with the finding recommendation, the DFD will develop internal controls and procedures to ensure the timely reporting of all required subawards to FSRS. An initial review of the FSRS by DFD fiscal staff appeared to indicate that some federal grant award data that should be prepopulated by the awarding federal agency and available on the website was missing (e.g. Child Care M&M available; Discretionary not found). Staff will reach out to the necessary federal agencies to communicate Section III – Federal Award Findings and Questioned Costs (Continued) instances of missing federal award information in an effort to ensure that the DFD has the ability to input the required subaward information. DFD anticipates that the assessment and development of policy and procedures related to this task will take approximately three (3) months. Staff assignment, training, and submission of federal grant subaward information to the federal website will occur over the next state fiscal year.

Reference Number: 2023-016 Prior Year Finding: No Federal Agency: U.S. Department of Health and Human Services State Agency: Department of Human Services Federal Program: Temporary Assistance for Needy Families Assistance Listing Number: 93.558 Award Number and Year: 230INJTANF-00 (10/1/2022-9/30/2023) 230INJTANF-01 (10/1/2022-9/30/2023) 230INJTANF-02 (10/1/2022-9/30/2023) Compliance Requirement: Reporting – Federal Funding Accountability and Transparency Act (FFATA) Type of Finding: Material Weakness in Internal Control Over Compliance, Material Non-compliance Criteria or specific requirement: Compliance: Per the Federal Funding Accountability and Transparency Act (FFATA), prime (direct) recipients of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Reports must be filed in FSRS by the end of the month following the month in which the prime recipient awards any sub-grant greater than or equal to $30,000. If the initial award is below $30,000 but subsequent grant modifications result in a total award equal to or over $30,000, the award will be subject to the reporting requirements as of the date the award exceeds $30,000. If the initial award equals or exceeds $30,000 but funding is subsequently de-obligated such that the total award amount falls below $30,000, the award continues to be subject to FFATA reporting requirements. The following key data elements must be reported: Subawardee Name and Data Universal Numbering System (DUNS) number; Amount of Subaward (inclusive of modifications); Subaward Obligation/Action Date; Date of Report Submission; Subaward Number; Project Description; and Names and Compensation of Highly Compensated Officers. (Names and Compensation of Highly Compensated Officers must only be reported when the entity in the preceding fiscal year received 80 percent or more of its annual gross revenues in Federal awards; and $25,000,000 or more in annual gross revenues from Federal awards; and the public does not have access to this information about the compensation of the senior executives of the entity through periodic reports filed under section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. §§ 78m(a), 78o(d)) or section 6104 of the Internal Revenue Code of 1986.) Control: Per 2 CFR section 200.303(a), a 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 comply 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). Section III – Federal Award Findings and Questioned Costs (Continued) Condition: Subaward information was not reported to FSRS during FY 2023. Context: Zero of twenty-two subrecipients selected for testing were reported to FSRS during FY 2023. Total subawards tested were $12,764,925.00, and $0 was reported as required by FFATA requirements. SEE SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR CHART/TABLE Cause: The Department was unaware of FFATA reporting requirements and did not report subaward information to FSRS during FY 2023. Effect: Subawards were not reported to FSRS in accordance with FFATA requirements. Questioned costs: None noted. Recommendation: We recommend that the Department develop internal controls and procedures to ensure that FFATA reporting requirements are met. We further recommend the Department develop controls and procedures to ensure that all required subawards are reported accurately and timely to FSRS no later than the end of the month following the month of issuance. Views of responsible officials: The Department of Human Services’ Division of Family Development (DFD) agrees with the audit finding regarding the required submission of subawards to the FFATA Subaward Reporting System (FSRS). Due to the complexity and time required to compile and report FFATA subaward data, the DFD is in the process of creating a new full-time equivalent position (FTE) for this required federal reporting task. In accordance with the finding recommendation, the DFD will develop internal controls and procedures to ensure the timely reporting of all required subawards to FSRS. An initial review of the FSRS by DFD fiscal staff appeared to indicate that some federal grant award data that should be prepopulated by the awarding federal agency and available on the website was missing (e.g. Child Care M&M available; Discretionary not found). Staff will reach out to the necessary federal agencies to communicate Section III – Federal Award Findings and Questioned Costs (Continued) instances of missing federal award information in an effort to ensure that the DFD has the ability to input the required subaward information. DFD anticipates that the assessment and development of policy and procedures related to this task will take approximately three (3) months. Staff assignment, training, and submission of federal grant subaward information to the federal website will occur over the next state fiscal year.

Reference Number: 2023-017 Prior Year Finding: 2022-017 Federal Agency: U.S. Department of Health and Human Services State Agency: Department of Community Affairs Federal Program: Low-Income Home Energy Assistance, COVID-19 - Low-Income Home Energy Assistance Assistance Listing Number: 93.568 Award Number and Year: 2102NJE5C6 (3/11/21 – 9/30/22), 2202NJLIEA (10/1/21 – 9/30/22), 2001NJLIEA (10/1/19 – 9/30/22), 2302NJLIEA (10/1/2022 – 9/30/2024), 2302NJLIEI (10/1/2022 – 9/30/2024), 2202NJLIEA (10/1/2021 – 9/30/2023) Compliance Requirement: Reporting – Federal Funding Accountability and Transparency Act (FFATA) Type of Finding: Material Weakness in Internal Control Over Compliance, Material Non-compliance Criteria or specific requirement: Compliance: Per the Federal Funding Accountability and Transparency Act (FFATA), prime (direct) recipients of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Reports must be filed in FSRS by the end of the month following the month in which the prime recipient awards any sub-grant greater than or equal to $30,000. If the initial award is below $30,000 but subsequent grant modifications result in a total award equal to or over $30,000, the award will be subject to the reporting requirements as of the date the award exceeds $30,000. If the initial award equals or exceeds $30,000 but funding is subsequently de-obligated such that the total award amount falls below $30,000, the award continues to be subject to FFATA reporting requirements. The following key data elements must be reported: Subawardee Name and Data Universal Numbering System (DUNS) number; Amount of Subaward (inclusive of modifications); Subaward Obligation/Action Date; Date of Report Submission; Subaward Number; Project Description; and Names and Compensation of Highly Compensated Officers. (Names and Compensation of Highly Compensated Officers must only be reported when the entity in the preceding fiscal year received 80 percent or more of its annual gross revenues in Federal awards; and $25,000,000 or more in annual gross revenues from Federal awards; and the public does not have access to this information about the compensation of the senior executives of the entity through periodic reports filed under section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. §§ 78m(a), 78o(d)) or section 6104 of the Internal Revenue Code of 1986.) Control: Per 2 CFR section 200.303(a), a 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 comply 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). Section III – Federal Award Findings and Questioned Costs (Continued) Condition: The Department of Community Affairs (Department) did not report subaward information timely or accurately to FSRS during FY 2023. Context: Eight subawards were selected for testing and the following exceptions were noted: • For 1 of 8 subawards selected, the amount reported to FSRS did not match the subaward amount. The subaward was issued for $53,278 but the amount reported was $71,021,779. • For 1 of 8 subawards selected, the amount reported to FSRS did not match the subaward amount. The subaward was issued for $566,494 but the amount reported was $465,750. The Division did not report a subaward amendment of $100,744. • Zero of eight subawards selected for testing were reported to FSRS timely. The subawards were reported from 68 to 87 days late. SEE SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR CHART/TABLE Cause: The Department’s procedures were not sufficient to ensure that subawards were reported accurately and timely to FSRS. Internal controls did not prevent or detect the errors. Effect: Subawards were not reported to FSRS in accordance with FFATA requirements. Questioned costs: None noted. Recommendation: We recommend the Department evaluate its procedures and controls to ensure that subawards are reported accurately and timely to FSRS no later than the end of the month following the date of subaward issuance or amendment. Views of responsible officials: The Department of Community Affairs (DCA) has recently implemented timely reporting of required FFATA subaward data in the Federal Subaward Reporting System (FSRS). The FFATA reporting process is fully documented, and additional staff have been hired and trained on the process to further support the federal reporting functions. The FFATA reports identified by the auditors with inaccurate subaward amounts reported have also been corrected in FSRS.

Reference Number: 2023-017 Prior Year Finding: 2022-017 Federal Agency: U.S. Department of Health and Human Services State Agency: Department of Community Affairs Federal Program: Low-Income Home Energy Assistance, COVID-19 - Low-Income Home Energy Assistance Assistance Listing Number: 93.568 Award Number and Year: 2102NJE5C6 (3/11/21 – 9/30/22), 2202NJLIEA (10/1/21 – 9/30/22), 2001NJLIEA (10/1/19 – 9/30/22), 2302NJLIEA (10/1/2022 – 9/30/2024), 2302NJLIEI (10/1/2022 – 9/30/2024), 2202NJLIEA (10/1/2021 – 9/30/2023) Compliance Requirement: Reporting – Federal Funding Accountability and Transparency Act (FFATA) Type of Finding: Material Weakness in Internal Control Over Compliance, Material Non-compliance Criteria or specific requirement: Compliance: Per the Federal Funding Accountability and Transparency Act (FFATA), prime (direct) recipients of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Reports must be filed in FSRS by the end of the month following the month in which the prime recipient awards any sub-grant greater than or equal to $30,000. If the initial award is below $30,000 but subsequent grant modifications result in a total award equal to or over $30,000, the award will be subject to the reporting requirements as of the date the award exceeds $30,000. If the initial award equals or exceeds $30,000 but funding is subsequently de-obligated such that the total award amount falls below $30,000, the award continues to be subject to FFATA reporting requirements. The following key data elements must be reported: Subawardee Name and Data Universal Numbering System (DUNS) number; Amount of Subaward (inclusive of modifications); Subaward Obligation/Action Date; Date of Report Submission; Subaward Number; Project Description; and Names and Compensation of Highly Compensated Officers. (Names and Compensation of Highly Compensated Officers must only be reported when the entity in the preceding fiscal year received 80 percent or more of its annual gross revenues in Federal awards; and $25,000,000 or more in annual gross revenues from Federal awards; and the public does not have access to this information about the compensation of the senior executives of the entity through periodic reports filed under section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. §§ 78m(a), 78o(d)) or section 6104 of the Internal Revenue Code of 1986.) Control: Per 2 CFR section 200.303(a), a 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 comply 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). Section III – Federal Award Findings and Questioned Costs (Continued) Condition: The Department of Community Affairs (Department) did not report subaward information timely or accurately to FSRS during FY 2023. Context: Eight subawards were selected for testing and the following exceptions were noted: • For 1 of 8 subawards selected, the amount reported to FSRS did not match the subaward amount. The subaward was issued for $53,278 but the amount reported was $71,021,779. • For 1 of 8 subawards selected, the amount reported to FSRS did not match the subaward amount. The subaward was issued for $566,494 but the amount reported was $465,750. The Division did not report a subaward amendment of $100,744. • Zero of eight subawards selected for testing were reported to FSRS timely. The subawards were reported from 68 to 87 days late. SEE SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR CHART/TABLE Cause: The Department’s procedures were not sufficient to ensure that subawards were reported accurately and timely to FSRS. Internal controls did not prevent or detect the errors. Effect: Subawards were not reported to FSRS in accordance with FFATA requirements. Questioned costs: None noted. Recommendation: We recommend the Department evaluate its procedures and controls to ensure that subawards are reported accurately and timely to FSRS no later than the end of the month following the date of subaward issuance or amendment. Views of responsible officials: The Department of Community Affairs (DCA) has recently implemented timely reporting of required FFATA subaward data in the Federal Subaward Reporting System (FSRS). The FFATA reporting process is fully documented, and additional staff have been hired and trained on the process to further support the federal reporting functions. The FFATA reports identified by the auditors with inaccurate subaward amounts reported have also been corrected in FSRS.

Reference Number: 2023-018 Prior Year Finding: No Federal Agency: U.S. Department of Health and Human Services State Agency: Department of Community Affairs Federal Program: Low-Income Home Energy Assistance, COVID-19 - Low-Income Home Energy Assistance Assistance Listing Number: 93.568 Award Number and Year: 2102NJE5C6 (3/11/21 – 9/30/22), 2202NJLIEA (10/1/21 – 9/30/22), 2001NJLIEA (10/1/19 – 9/30/22), 2302NJLIEA (10/1/2022 – 9/30/2024), 2302NJLIEI (10/1/2022 – 9/30/2024), 2202NJLIEA (10/1/2021 – 9/30/2023) Compliance Requirement: Subrecipient Monitoring Type of Finding: Material Weakness in Internal Control Over Compliance, Material Non-compliance Criteria or specific requirement: Compliance – Per 2 CFR section 200.332(a), all pass-through entities must ensure that every subaward is clearly identified to the subrecipient as a subaward and includes the following information 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. Required information includes: xv. Subrecipient name (which must match the name associated with its unique entity identifier); xvi. Subrecipient's unique entity identifier; xvii. Federal Award Identification Number (FAIN); xviii. Federal Award Date (see the definition of Federal award date in § 200.1 of this part) of award to the recipient by the Federal agency; xix. Subaward Period of Performance Start and End Date; xx. Subaward Budget Period Start and End Date; xxi. Amount of Federal Funds Obligated by this action by the pass-through entity to the subrecipient; xxii. Total Amount of Federal Funds Obligated to the subrecipient by the pass-through entity including the current financial obligation; xxiii. Total Amount of the Federal Award committed to the subrecipient by the pass-through entity; xxiv. Federal award project description, as required to be responsive to the Federal Funding Accountability and Transparency Act (FFATA); xxv. Name of Federal awarding agency, pass-through entity, and contact information for awarding official of the Pass-through entity; xxvi. Assistance Listings number and Title; the pass-through entity must identify the dollar amount made available under each Federal award and the Assistance Listings Number at time of disbursement; xxvii. Identification of whether the award is R&D; and xxviii. Indirect cost rate for the Federal award (including if the de minimis rate is charged) per section 200.414. Section III – Federal Award Findings and Questioned Costs (Continued) Control – Per 2 CFR section 200.303(a), a 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: Subawards issued by the Department of Community Affairs (Department) did not include all required federal award information. Context: For 8 of 8 subawards selected for testing, the following required information was not provided to the subrecipient at the time of award issuance: (v) Federal Award Identification Number (FAIN); (vi) Federal Award Date (see the definition of Federal award date in § 200.1 of this part) of award to the recipient by the Federal agency; (x) Total Amount of Federal Funds Obligated to the subrecipient by the pass-through entity including the current financial obligation; (xi) Total Amount of the Federal Award committed to the subrecipient by the pass-through entity; (xii) Assistance Listings number and Title; the pass-through entity must identify the dollar amount made available under each Federal award and the Assistance Listings Number at time of disbursement; (xiii) Identification of whether the award is R&D; and (xiv) Indirect cost rate for the Federal award (including if the de minimis rate is charged) per §200.414 Questioned costs: None noted. Cause: The Department’s procedures were not sufficient to ensure the subawards were issued in compliance with Federal requirements. Internal controls did not prevent or detect the errors. Effect: Excluding the required federal grant award information at the time of the subaward may cause subrecipients and their auditors to be uninformed about specific program and other regulations that apply to the funds they receive. There is also the potential for subrecipients to have incomplete Schedules of Expenditures of Federal Awards (SEFA) in their Single Audit reports, and federal funds may not be properly audited at the subrecipient level in accordance with the Uniform Guidance. Recommendation: The Department should review and enhance internal controls and procedures to ensure that all required information is included in subawards. Section III – Federal Award Findings and Questioned Costs (Continued) Views of responsible officials: The Department of Community Affairs (DCA) has reviewed and enhanced internal controls and procedures to ensure that all required information, as per the federal Uniform Guidance pass-through entity requirements, is included in all new LIHEAP subaward contracts. These subaward agreement control enhancements have been implemented effective with the fiscal year 2024 contracts.

Reference Number: 2023-018 Prior Year Finding: No Federal Agency: U.S. Department of Health and Human Services State Agency: Department of Community Affairs Federal Program: Low-Income Home Energy Assistance, COVID-19 - Low-Income Home Energy Assistance Assistance Listing Number: 93.568 Award Number and Year: 2102NJE5C6 (3/11/21 – 9/30/22), 2202NJLIEA (10/1/21 – 9/30/22), 2001NJLIEA (10/1/19 – 9/30/22), 2302NJLIEA (10/1/2022 – 9/30/2024), 2302NJLIEI (10/1/2022 – 9/30/2024), 2202NJLIEA (10/1/2021 – 9/30/2023) Compliance Requirement: Subrecipient Monitoring Type of Finding: Material Weakness in Internal Control Over Compliance, Material Non-compliance Criteria or specific requirement: Compliance – Per 2 CFR section 200.332(a), all pass-through entities must ensure that every subaward is clearly identified to the subrecipient as a subaward and includes the following information 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. Required information includes: xv. Subrecipient name (which must match the name associated with its unique entity identifier); xvi. Subrecipient's unique entity identifier; xvii. Federal Award Identification Number (FAIN); xviii. Federal Award Date (see the definition of Federal award date in § 200.1 of this part) of award to the recipient by the Federal agency; xix. Subaward Period of Performance Start and End Date; xx. Subaward Budget Period Start and End Date; xxi. Amount of Federal Funds Obligated by this action by the pass-through entity to the subrecipient; xxii. Total Amount of Federal Funds Obligated to the subrecipient by the pass-through entity including the current financial obligation; xxiii. Total Amount of the Federal Award committed to the subrecipient by the pass-through entity; xxiv. Federal award project description, as required to be responsive to the Federal Funding Accountability and Transparency Act (FFATA); xxv. Name of Federal awarding agency, pass-through entity, and contact information for awarding official of the Pass-through entity; xxvi. Assistance Listings number and Title; the pass-through entity must identify the dollar amount made available under each Federal award and the Assistance Listings Number at time of disbursement; xxvii. Identification of whether the award is R&D; and xxviii. Indirect cost rate for the Federal award (including if the de minimis rate is charged) per section 200.414. Section III – Federal Award Findings and Questioned Costs (Continued) Control – Per 2 CFR section 200.303(a), a 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: Subawards issued by the Department of Community Affairs (Department) did not include all required federal award information. Context: For 8 of 8 subawards selected for testing, the following required information was not provided to the subrecipient at the time of award issuance: (v) Federal Award Identification Number (FAIN); (vi) Federal Award Date (see the definition of Federal award date in § 200.1 of this part) of award to the recipient by the Federal agency; (x) Total Amount of Federal Funds Obligated to the subrecipient by the pass-through entity including the current financial obligation; (xi) Total Amount of the Federal Award committed to the subrecipient by the pass-through entity; (xii) Assistance Listings number and Title; the pass-through entity must identify the dollar amount made available under each Federal award and the Assistance Listings Number at time of disbursement; (xiii) Identification of whether the award is R&D; and (xiv) Indirect cost rate for the Federal award (including if the de minimis rate is charged) per §200.414 Questioned costs: None noted. Cause: The Department’s procedures were not sufficient to ensure the subawards were issued in compliance with Federal requirements. Internal controls did not prevent or detect the errors. Effect: Excluding the required federal grant award information at the time of the subaward may cause subrecipients and their auditors to be uninformed about specific program and other regulations that apply to the funds they receive. There is also the potential for subrecipients to have incomplete Schedules of Expenditures of Federal Awards (SEFA) in their Single Audit reports, and federal funds may not be properly audited at the subrecipient level in accordance with the Uniform Guidance. Recommendation: The Department should review and enhance internal controls and procedures to ensure that all required information is included in subawards. Section III – Federal Award Findings and Questioned Costs (Continued) Views of responsible officials: The Department of Community Affairs (DCA) has reviewed and enhanced internal controls and procedures to ensure that all required information, as per the federal Uniform Guidance pass-through entity requirements, is included in all new LIHEAP subaward contracts. These subaward agreement control enhancements have been implemented effective with the fiscal year 2024 contracts.

Reference Number: 2023-019 Prior Year Finding: 2022-019 Federal Agency: U.S. Department of Health and Human Services State Agency: Department of Community Affairs Federal Program: Low-Income Home Energy Assistance, COVID-19 - Low-Income Home Energy Assistance Assistance Listing Number: 93.568 Award Number and Year: 2102NJE5C6 (3/11/21 – 9/30/22), 2202NJLIEA (10/1/21 – 9/30/22), 2001NJLIEA (10/1/19 – 9/30/22), 2302NJLIEA (10/1/2022 – 9/30/2024), 2302NJLIEI (10/1/2022 – 9/30/2024), 2202NJLIEA (10/1/2021 – 9/30/2023) Compliance Requirement: Reporting – Performance and Special Reporting Type of Finding Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance: Quarterly Performance and Management Report (OMB No. 0970-0589) – Grant recipients must submit data and information about LIHEAP during the current FY, including success, challenges, needs and innovations. The quarterly reports focus on assisted households, performance management, obligation of funding, changes made due to anticipated increase in energy bills, collaboration with other utility programs, and training and technical assistance needs. Annual Report on Households Assisted by LIHEAP (OMB No. 0970-0060) – As part of the application for block grant funds each year, a report is required for the preceding fiscal year of (1) the number and income levels of the households assisted for each component and any type of LHEAP assistance (heating, cooling, crisis, and weatherization); and (2) the number of households served that contained young children, elderly, or persons with disabilities, or any vulnerable household for each component. Territories with annual allotments of less than $200,000 and all Indian tribes are required to report only on the number of households served for each program component. Control: Per 2 CFR section 200.303(a), a 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 comply 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: The Department of Community Affairs (Department) did not submit performance and special reports timely. The LIHEAP Performance Management Report and Annual Report on Households Assisted by LIHEAP were submitted after their respective due dates. Section III – Federal Award Findings and Questioned Costs (Continued) Context: The following special reporting exceptions were noted: • One of two Quarterly Performance and Management Reports was not submitted timely. The report was due by 7/31/2023, but was not submitted until 8/10/2023, or 10 days late. • One of one Annual Report on Households Assisted by LIHEAP was not submitted timely. The report was due by 12/15/2023 but was not submitted until 12/19/2023, or 4 days late. Questioned costs: None noted. Cause: The Department’s procedures were not sufficient to ensure that the Annual Report on Households Assisted by LIHEAP and the Quarterly Performance and Management Report were submitted timely. Internal controls did not prevent or detect the errors. Effect: Delays in submission of annual performance and special reports could impact the Federal agency’s ability to manage the program, could result in delays in annual awards, and possible penalties or sanctions could be imposed by the grantor. Recommendation: We recommend that the Department review and enhance its procedures and internal controls to ensure that performance and special reports are submitted timely. Views of responsible officials: The Department of Community Affairs (DCA) Low-Income Home Energy Assistance Program (LIHEAP) staff have been fully trained to coordinate with the Applied Public Policy Research Institute for Study and Evaluation (APPRISE) and the federal U.S. Department of Health and Human Services (HHS) to ensure that all required reports are submitted timely. DCA has created a schedule of required reports that includes corresponding submission due dates and the process is designed to ensure adequate time is available to accommodate the necessary back and forth communications between DCA and APPRISE required to complete all reporting timely.

Reference Number: 2023-019 Prior Year Finding: 2022-019 Federal Agency: U.S. Department of Health and Human Services State Agency: Department of Community Affairs Federal Program: Low-Income Home Energy Assistance, COVID-19 - Low-Income Home Energy Assistance Assistance Listing Number: 93.568 Award Number and Year: 2102NJE5C6 (3/11/21 – 9/30/22), 2202NJLIEA (10/1/21 – 9/30/22), 2001NJLIEA (10/1/19 – 9/30/22), 2302NJLIEA (10/1/2022 – 9/30/2024), 2302NJLIEI (10/1/2022 – 9/30/2024), 2202NJLIEA (10/1/2021 – 9/30/2023) Compliance Requirement: Reporting – Performance and Special Reporting Type of Finding Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance: Quarterly Performance and Management Report (OMB No. 0970-0589) – Grant recipients must submit data and information about LIHEAP during the current FY, including success, challenges, needs and innovations. The quarterly reports focus on assisted households, performance management, obligation of funding, changes made due to anticipated increase in energy bills, collaboration with other utility programs, and training and technical assistance needs. Annual Report on Households Assisted by LIHEAP (OMB No. 0970-0060) – As part of the application for block grant funds each year, a report is required for the preceding fiscal year of (1) the number and income levels of the households assisted for each component and any type of LHEAP assistance (heating, cooling, crisis, and weatherization); and (2) the number of households served that contained young children, elderly, or persons with disabilities, or any vulnerable household for each component. Territories with annual allotments of less than $200,000 and all Indian tribes are required to report only on the number of households served for each program component. Control: Per 2 CFR section 200.303(a), a 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 comply 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: The Department of Community Affairs (Department) did not submit performance and special reports timely. The LIHEAP Performance Management Report and Annual Report on Households Assisted by LIHEAP were submitted after their respective due dates. Section III – Federal Award Findings and Questioned Costs (Continued) Context: The following special reporting exceptions were noted: • One of two Quarterly Performance and Management Reports was not submitted timely. The report was due by 7/31/2023, but was not submitted until 8/10/2023, or 10 days late. • One of one Annual Report on Households Assisted by LIHEAP was not submitted timely. The report was due by 12/15/2023 but was not submitted until 12/19/2023, or 4 days late. Questioned costs: None noted. Cause: The Department’s procedures were not sufficient to ensure that the Annual Report on Households Assisted by LIHEAP and the Quarterly Performance and Management Report were submitted timely. Internal controls did not prevent or detect the errors. Effect: Delays in submission of annual performance and special reports could impact the Federal agency’s ability to manage the program, could result in delays in annual awards, and possible penalties or sanctions could be imposed by the grantor. Recommendation: We recommend that the Department review and enhance its procedures and internal controls to ensure that performance and special reports are submitted timely. Views of responsible officials: The Department of Community Affairs (DCA) Low-Income Home Energy Assistance Program (LIHEAP) staff have been fully trained to coordinate with the Applied Public Policy Research Institute for Study and Evaluation (APPRISE) and the federal U.S. Department of Health and Human Services (HHS) to ensure that all required reports are submitted timely. DCA has created a schedule of required reports that includes corresponding submission due dates and the process is designed to ensure adequate time is available to accommodate the necessary back and forth communications between DCA and APPRISE required to complete all reporting timely.

Reference Number: 2023-020 Prior Year Finding: 2022-020 Federal Agency: U.S. Department of Health and Human Services State Agency: Department of Human Services Federal Program: CCDF Cluster, COVID-19 – CCDF Cluster Assistance Listing Number: 93.575, 93.596 Award Number and Year: 2301NJCCDD (10/1/2022 – 9/30/2025) 2301NJCCDF (10/1/2022 – 9/30/2025) 2201NJCCDF (10/1/2021 – 9/30/2024) 2201NJCCDD (10/1/2021 – 9/30/2024) 2101NJCCDF (10/1/2020 – 9/30/2023) 2101NJCCDF (10/1/2020 – 9/30/2023) 2101NJCCDF (10/1/2019 – 9/30/2022) 2001NJCCDF (10/1/2019 – 9/30/2022) 2101NJCSC6 (10/1/2020 – 9/30/2023) 2101NJCDC6 (10/1/2020 – 9/30/2024) Compliance Requirement: Reporting – Federal Funding Accountability and Transparency Act (FFATA) Type of Finding Material Weakness in Internal Control Over Compliance, Material Non-compliance Criteria or specific requirement: Compliance: Per the Federal Funding Accountability and Transparency Act (FFATA), prime (direct) recipients of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Reports must be filed in FSRS by the end of the month following the month in which the prime recipient awards any sub-grant greater than or equal to $30,000. If the initial award is below $30,000 but subsequent grant modifications result in a total award equal to or over $30,000, the award will be subject to the reporting requirements as of the date the award exceeds $30,000. If the initial award equals or exceeds $30,000 but funding is subsequently de-obligated such that the total award amount falls below $30,000, the award continues to be subject to FFATA reporting requirements. The following key data elements must be reported: Subawardee Name and Data Universal Numbering System (DUNS) number; Amount of Subaward (inclusive of modifications); Subaward Obligation/Action Date; Date of Report Submission; Subaward Number; Project Description; and Names and Compensation of Highly Compensated Officers. (Names and Compensation of Highly Compensated Officers must only be reported when the entity in the preceding fiscal year received 80 percent or more of its annual gross revenues in Federal awards; and $25,000,000 or more in annual gross revenues from Federal awards; and the public does not have access to this information about the compensation of the senior executives of the entity through periodic reports filed under section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. §§ 78m(a), 78o(d)) or section 6104 of the Internal Revenue Code of 1986.) Section III – Federal Award Findings and Questioned Costs (Continued) Control: Per 2 CFR section 200.303(a), a 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 comply 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: The Department of Human Services (Department) did not report subaward information to FSRS during FY 2023. Context: Zero of eight subawards selected for testing were reported to FSRS during FY 2023. Total subawards tested were $32,469,131, and $0 was reported as required by FFATA requirements. SEE SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR CHART/TABLE Cause: The Department was unaware of FFATA reporting requirements and did not report subaward information to FSRS during FY 2023. Effect: Subawards were not reported to FSRS in accordance with FFATA requirements. Questioned costs: None noted. Recommendation: We recommend that the Department develop internal controls and procedures to ensure that FFATA reporting requirements are met. We further recommend the Department develop controls and procedures to ensure that all required subawards are reported accurately and timely to FSRS no later than the end of the month following the month of issuance. Views of responsible officials: The Department of Human Services’ Division of Family Development (DFD) agrees with the audit finding regarding the required submission of subawards to the FFATA Subaward Reporting System (FSRS). Due to the complexity and time required to compile and report FFATA subaward data, the Section III – Federal Award Findings and Questioned Costs (Continued) DFD is in the process of creating a new full-time equivalent position (FTE) for this required federal reporting task. In accordance with the finding recommendation, the DFD will develop internal controls and procedures to ensure the timely reporting of all required subawards to FSRS. An initial review of the FSRS by DFD fiscal staff appeared to indicate that some federal grant award data that should be prepopulated by the awarding federal agency and available on the website was missing (e.g. Child Care M&M available; Discretionary not found). Staff will reach out to the necessary federal agencies to communicate instances of missing federal award information in an effort to ensure that the DFD has the ability to input the required subaward information. DFD anticipates that the assessment and development of policy and procedures related to this task will take approximately three (3) months. Staff assignment, training, and submission of federal grant subaward information to the federal website will occur over the next state fiscal year.

Reference Number: 2023-020 Prior Year Finding: 2022-020 Federal Agency: U.S. Department of Health and Human Services State Agency: Department of Human Services Federal Program: CCDF Cluster, COVID-19 – CCDF Cluster Assistance Listing Number: 93.575, 93.596 Award Number and Year: 2301NJCCDD (10/1/2022 – 9/30/2025) 2301NJCCDF (10/1/2022 – 9/30/2025) 2201NJCCDF (10/1/2021 – 9/30/2024) 2201NJCCDD (10/1/2021 – 9/30/2024) 2101NJCCDF (10/1/2020 – 9/30/2023) 2101NJCCDF (10/1/2020 – 9/30/2023) 2101NJCCDF (10/1/2019 – 9/30/2022) 2001NJCCDF (10/1/2019 – 9/30/2022) 2101NJCSC6 (10/1/2020 – 9/30/2023) 2101NJCDC6 (10/1/2020 – 9/30/2024) Compliance Requirement: Reporting – Federal Funding Accountability and Transparency Act (FFATA) Type of Finding Material Weakness in Internal Control Over Compliance, Material Non-compliance Criteria or specific requirement: Compliance: Per the Federal Funding Accountability and Transparency Act (FFATA), prime (direct) recipients of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Reports must be filed in FSRS by the end of the month following the month in which the prime recipient awards any sub-grant greater than or equal to $30,000. If the initial award is below $30,000 but subsequent grant modifications result in a total award equal to or over $30,000, the award will be subject to the reporting requirements as of the date the award exceeds $30,000. If the initial award equals or exceeds $30,000 but funding is subsequently de-obligated such that the total award amount falls below $30,000, the award continues to be subject to FFATA reporting requirements. The following key data elements must be reported: Subawardee Name and Data Universal Numbering System (DUNS) number; Amount of Subaward (inclusive of modifications); Subaward Obligation/Action Date; Date of Report Submission; Subaward Number; Project Description; and Names and Compensation of Highly Compensated Officers. (Names and Compensation of Highly Compensated Officers must only be reported when the entity in the preceding fiscal year received 80 percent or more of its annual gross revenues in Federal awards; and $25,000,000 or more in annual gross revenues from Federal awards; and the public does not have access to this information about the compensation of the senior executives of the entity through periodic reports filed under section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. §§ 78m(a), 78o(d)) or section 6104 of the Internal Revenue Code of 1986.) Section III – Federal Award Findings and Questioned Costs (Continued) Control: Per 2 CFR section 200.303(a), a 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 comply 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: The Department of Human Services (Department) did not report subaward information to FSRS during FY 2023. Context: Zero of eight subawards selected for testing were reported to FSRS during FY 2023. Total subawards tested were $32,469,131, and $0 was reported as required by FFATA requirements. SEE SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR CHART/TABLE Cause: The Department was unaware of FFATA reporting requirements and did not report subaward information to FSRS during FY 2023. Effect: Subawards were not reported to FSRS in accordance with FFATA requirements. Questioned costs: None noted. Recommendation: We recommend that the Department develop internal controls and procedures to ensure that FFATA reporting requirements are met. We further recommend the Department develop controls and procedures to ensure that all required subawards are reported accurately and timely to FSRS no later than the end of the month following the month of issuance. Views of responsible officials: The Department of Human Services’ Division of Family Development (DFD) agrees with the audit finding regarding the required submission of subawards to the FFATA Subaward Reporting System (FSRS). Due to the complexity and time required to compile and report FFATA subaward data, the Section III – Federal Award Findings and Questioned Costs (Continued) DFD is in the process of creating a new full-time equivalent position (FTE) for this required federal reporting task. In accordance with the finding recommendation, the DFD will develop internal controls and procedures to ensure the timely reporting of all required subawards to FSRS. An initial review of the FSRS by DFD fiscal staff appeared to indicate that some federal grant award data that should be prepopulated by the awarding federal agency and available on the website was missing (e.g. Child Care M&M available; Discretionary not found). Staff will reach out to the necessary federal agencies to communicate instances of missing federal award information in an effort to ensure that the DFD has the ability to input the required subaward information. DFD anticipates that the assessment and development of policy and procedures related to this task will take approximately three (3) months. Staff assignment, training, and submission of federal grant subaward information to the federal website will occur over the next state fiscal year.

Reference Number: 2023-021 Prior Year Finding: No Federal Agency: U.S. Department of Health and Human Services State Agency: Department of Human Services Federal Program: CCDF Cluster, COVID-19 – CCDF Cluster Assistance Listing Number: 93.575, 93.596 Award Number and Year: 2301NJCCDD (10/1/2022 – 9/30/2025) 2301NJCCDF (10/1/2022 – 9/30/2025) 2201NJCCDF (10/1/2021 – 9/30/2024) 2201NJCCDD (10/1/2021 – 9/30/2024) 2101NJCCDF (10/1/2020 – 9/30/2023) 2101NJCCDF (10/1/2020 – 9/30/2023) 2101NJCCDF (10/1/2019 – 9/30/2022) 2001NJCCDF (10/1/2019 – 9/30/2022) 2101NJCSC6 (10/1/2020 – 9/30/2023) 2101NJCDC6 (10/1/2020 – 9/30/2024) Compliance Requirement: Subrecipient Monitoring Type of Finding Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance – Per 2 CFR section 200.332(a), all pass-through entities must ensure that every subaward is clearly identified to the subrecipient as a subaward and includes information 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. 2 CFR section 200.332(d) states that pass-through entities 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: (4) Reviewing financial and performance reports required by the pass-through entity. (5) 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. (6) Issuing a management decision for audit findings pertaining to the Federal award provided to the subrecipient from the pass-through entity as required by § 200.521 Management decision. Section III – Federal Award Findings and Questioned Costs (Continued) Control – Per 2 CFR section 200.303(a), a 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: The Department of Human Services (Department) did not comply with subrecipient monitoring requirements for the program. Context: Eight subawards were selected for testing and the following exceptions were noted: • For 2 of 8 subawards selected for testing, the subaward did not include all required Federal Award information. The subawards were missing the Federal Award Date of award to the recipient by the Federal agency. • For 1 of 8 subawards selected for testing, the Department did not conduct an annual desk review for the award as required by the Department’s procedures. Questioned costs: None noted. Cause: The Department’s procedures were not effective to ensure that subawards were issued in compliance with Federal requirements, nor that subrecipient monitoring was performed timely in accordance with Departmental procedures. Internal controls did not prevent or detect the errors. Effect: Excluding the required federal grant award information at the time of the subaward may cause subrecipients and their auditors to be uninformed about specific program and other regulations that apply to the funds they receive. There is also the potential for subrecipients to have incomplete Schedules of Expenditures of Federal Awards (SEFA) in their Single Audit reports, and federal funds may not be properly audited at the subrecipient level in accordance with the Uniform Guidance. Not conducting during the award monitoring may result in a failure of the Division to detect that its subrecipients used subawards for unauthorized purposes, managed them in violation of the terms and conditions of the subawards, or that subaward performance goals were not achieved. Recommendation: The Department should review and enhance internal controls and procedures to ensure that all required information is included in subaward agreements and that proper subrecipient monitoring is performed. Section III – Federal Award Findings and Questioned Costs (Continued) Views of responsible officials: In accordance with the audit finding recommendation, the Department of Human Services’ Division of Family Development (DFD) will ensure that the applicable federal award date will be included with the contract award information as required by Uniform Guidance pass-through entity requirements. Subrecipient monitoring was performed in a timely manner in compliance with DHS Contract Policy with the exception of one subrecipient, NJSACC. NJSACC’s fiscal review documents are due back to DFD on April 15, 2024. Once received, DFD will schedule a fiscal review meeting with the agency and the entire process should be completed within one (1) month of receipt. In addition, DFD will review the current policy for clarity, reasonableness, and to ensure compliance.

Reference Number: 2023-021 Prior Year Finding: No Federal Agency: U.S. Department of Health and Human Services State Agency: Department of Human Services Federal Program: CCDF Cluster, COVID-19 – CCDF Cluster Assistance Listing Number: 93.575, 93.596 Award Number and Year: 2301NJCCDD (10/1/2022 – 9/30/2025) 2301NJCCDF (10/1/2022 – 9/30/2025) 2201NJCCDF (10/1/2021 – 9/30/2024) 2201NJCCDD (10/1/2021 – 9/30/2024) 2101NJCCDF (10/1/2020 – 9/30/2023) 2101NJCCDF (10/1/2020 – 9/30/2023) 2101NJCCDF (10/1/2019 – 9/30/2022) 2001NJCCDF (10/1/2019 – 9/30/2022) 2101NJCSC6 (10/1/2020 – 9/30/2023) 2101NJCDC6 (10/1/2020 – 9/30/2024) Compliance Requirement: Subrecipient Monitoring Type of Finding Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance – Per 2 CFR section 200.332(a), all pass-through entities must ensure that every subaward is clearly identified to the subrecipient as a subaward and includes information 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. 2 CFR section 200.332(d) states that pass-through entities 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: (4) Reviewing financial and performance reports required by the pass-through entity. (5) 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. (6) Issuing a management decision for audit findings pertaining to the Federal award provided to the subrecipient from the pass-through entity as required by § 200.521 Management decision. Section III – Federal Award Findings and Questioned Costs (Continued) Control – Per 2 CFR section 200.303(a), a 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: The Department of Human Services (Department) did not comply with subrecipient monitoring requirements for the program. Context: Eight subawards were selected for testing and the following exceptions were noted: • For 2 of 8 subawards selected for testing, the subaward did not include all required Federal Award information. The subawards were missing the Federal Award Date of award to the recipient by the Federal agency. • For 1 of 8 subawards selected for testing, the Department did not conduct an annual desk review for the award as required by the Department’s procedures. Questioned costs: None noted. Cause: The Department’s procedures were not effective to ensure that subawards were issued in compliance with Federal requirements, nor that subrecipient monitoring was performed timely in accordance with Departmental procedures. Internal controls did not prevent or detect the errors. Effect: Excluding the required federal grant award information at the time of the subaward may cause subrecipients and their auditors to be uninformed about specific program and other regulations that apply to the funds they receive. There is also the potential for subrecipients to have incomplete Schedules of Expenditures of Federal Awards (SEFA) in their Single Audit reports, and federal funds may not be properly audited at the subrecipient level in accordance with the Uniform Guidance. Not conducting during the award monitoring may result in a failure of the Division to detect that its subrecipients used subawards for unauthorized purposes, managed them in violation of the terms and conditions of the subawards, or that subaward performance goals were not achieved. Recommendation: The Department should review and enhance internal controls and procedures to ensure that all required information is included in subaward agreements and that proper subrecipient monitoring is performed. Section III – Federal Award Findings and Questioned Costs (Continued) Views of responsible officials: In accordance with the audit finding recommendation, the Department of Human Services’ Division of Family Development (DFD) will ensure that the applicable federal award date will be included with the contract award information as required by Uniform Guidance pass-through entity requirements. Subrecipient monitoring was performed in a timely manner in compliance with DHS Contract Policy with the exception of one subrecipient, NJSACC. NJSACC’s fiscal review documents are due back to DFD on April 15, 2024. Once received, DFD will schedule a fiscal review meeting with the agency and the entire process should be completed within one (1) month of receipt. In addition, DFD will review the current policy for clarity, reasonableness, and to ensure compliance.

Reference Number: 2023-022 Prior Year Finding: 2022-022 Federal Agency: U.S. Department of Health and Human Services State Agency: Department of Human Services Federal Program: Medicaid Cluster, COVID-19 - Medicaid Cluster, Children’s Health Insurance Program, COVID-19 - Children’s Health Insurance Program Assistance Listing Number: 93.775, 93.777, 93.778, 93.767 Award Number and Year: 2305NJ5MAP (10/1/2022 – 9/30/2023) 2305NJ5ADM (10/1/2022 – 9/30/2023) 2305NJ3002 (10/1/2022 – 9/30/2024) 2305NJ5021 (10/1/2022 – 9/30/2024) Compliance Requirement: Special Tests and Provisions: Managed Care Financial Audit Type of Finding Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance: Two types of audits are required for managed care: 1. Audited Financial Reports – The contract with each Managed Care Organization (MCO), Prepaid Inpatient Health Plan (PIHP), and Prepaid Ambulatory Health Plan (PAHP) must require them to submit to the state an audited financial report specific to the Medicaid contract on an annual basis. These audits must be conducted in accordance with generally accepted accounting principles and generally accepted auditing standards (42 CFR section 438.3(m)). 2. Periodic Audits – Effective no later than for rating periods for contracts starting on or after July 1, 2017, the state must periodically, but no less frequently than once every three years, conduct, or contract for an independent audit of the accuracy, truthfulness, and completeness of the encounter and financial data submitted by, or on behalf of each MCO, PIHP, and PAHP and post the results of these audits on its website (42 CFR section 438.602(e) and (g); May 6, 2016, Federal Register (81 FR 27497); OMB No. 0938-0920). Control: Per 2 CFR section 200.303(a), a 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 comply 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: The Department of Human Services (Department) received audit reports from its MCOs, but these reports were Agreed Upon Procedures (AUP) reports which were not conducted in accordance with generally accepted accounting principles and generally accepted auditing standards. Section III – Federal Award Findings and Questioned Costs (Continued) Context: Five of five MCO audit reports received by the Department were AUP reports. An AUP engagement is one in which a practitioner is engaged by a client to issue a report of findings based on specific procedures performed on subject matter. The client engages the practitioner to assist specified parties in evaluating subject matter or an assertion as a result of a need or needs of the specified parties. In an engagement performed under this section, the practitioner does not perform an examination or a review and does not provide an opinion or negative assurance. Therefore, AUP reports do not fulfill the requirement that the audit is conducted in accordance with generally accepted accounting principles and generally accepted auditing standards. Questioned costs: Undetermined. Cause: The Department held the opinion that AUP reports were sufficient to meet the requirement of obtaining a financial statement audit report per the flexibility given to States in Medicaid and CHIP Managed Care Final Rule (CMS-2390-F) Frequently Asked Question number Q10, dated November 10, 2016. Effect: The Department is unable to ensure that its MCOs were audited in accordance with generally accepted accounting principles and generally accepted auditing standards. Failure to obtain qualified audit reports from its MCOs would result in the Division of Medical Assistance and Human Services (DMAHS) being unaware of deficiencies, corrective action plans or unmet requirements which would be identified as a result of qualified audits. Recommendation: We recommend that DMAHS update its contracts with its MCOs to remove the language specifying the requirement for an audit conducted specifically in accordance with generally accepted accounting principles and generally accepted auditing standards and instead to specify that an AUP report is acceptable per guidance provided under Medicaid and CHIP Managed Care Final Rule (CMS-2390-F) Frequently Asked Question number Q10. Views of responsible officials: There is no change to the prior year corrective action plan provided by the Department of Human Services, Division of Medical Assistance and Health Services (DMAHS) as corrective actions have been fully implemented as of January 2023. Current Managed Care Organization (MCO) contracts no longer contain the language requiring an audit conducted specifically in accordance with generally accepted accounting principles and generally accepted auditing standards and now specify that AUP reports are acceptable. Section 7.25.1(B) of the MCO Contract was updated effective January 2023 and removed the language requiring audits in accordance with generally accepted accounting principles and generally accepted auditing standards, and specifies that an AUP report is acceptable per guidance provided under Medicaid and CHIP Managed Care Final Rule (CMS-2390-F) Frequently Asked Question number Q10.

Reference Number: 2023-022 Prior Year Finding: 2022-022 Federal Agency: U.S. Department of Health and Human Services State Agency: Department of Human Services Federal Program: Medicaid Cluster, COVID-19 - Medicaid Cluster, Children’s Health Insurance Program, COVID-19 - Children’s Health Insurance Program Assistance Listing Number: 93.775, 93.777, 93.778, 93.767 Award Number and Year: 2305NJ5MAP (10/1/2022 – 9/30/2023) 2305NJ5ADM (10/1/2022 – 9/30/2023) 2305NJ3002 (10/1/2022 – 9/30/2024) 2305NJ5021 (10/1/2022 – 9/30/2024) Compliance Requirement: Special Tests and Provisions: Managed Care Financial Audit Type of Finding Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance: Two types of audits are required for managed care: 1. Audited Financial Reports – The contract with each Managed Care Organization (MCO), Prepaid Inpatient Health Plan (PIHP), and Prepaid Ambulatory Health Plan (PAHP) must require them to submit to the state an audited financial report specific to the Medicaid contract on an annual basis. These audits must be conducted in accordance with generally accepted accounting principles and generally accepted auditing standards (42 CFR section 438.3(m)). 2. Periodic Audits – Effective no later than for rating periods for contracts starting on or after July 1, 2017, the state must periodically, but no less frequently than once every three years, conduct, or contract for an independent audit of the accuracy, truthfulness, and completeness of the encounter and financial data submitted by, or on behalf of each MCO, PIHP, and PAHP and post the results of these audits on its website (42 CFR section 438.602(e) and (g); May 6, 2016, Federal Register (81 FR 27497); OMB No. 0938-0920). Control: Per 2 CFR section 200.303(a), a 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 comply 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: The Department of Human Services (Department) received audit reports from its MCOs, but these reports were Agreed Upon Procedures (AUP) reports which were not conducted in accordance with generally accepted accounting principles and generally accepted auditing standards. Section III – Federal Award Findings and Questioned Costs (Continued) Context: Five of five MCO audit reports received by the Department were AUP reports. An AUP engagement is one in which a practitioner is engaged by a client to issue a report of findings based on specific procedures performed on subject matter. The client engages the practitioner to assist specified parties in evaluating subject matter or an assertion as a result of a need or needs of the specified parties. In an engagement performed under this section, the practitioner does not perform an examination or a review and does not provide an opinion or negative assurance. Therefore, AUP reports do not fulfill the requirement that the audit is conducted in accordance with generally accepted accounting principles and generally accepted auditing standards. Questioned costs: Undetermined. Cause: The Department held the opinion that AUP reports were sufficient to meet the requirement of obtaining a financial statement audit report per the flexibility given to States in Medicaid and CHIP Managed Care Final Rule (CMS-2390-F) Frequently Asked Question number Q10, dated November 10, 2016. Effect: The Department is unable to ensure that its MCOs were audited in accordance with generally accepted accounting principles and generally accepted auditing standards. Failure to obtain qualified audit reports from its MCOs would result in the Division of Medical Assistance and Human Services (DMAHS) being unaware of deficiencies, corrective action plans or unmet requirements which would be identified as a result of qualified audits. Recommendation: We recommend that DMAHS update its contracts with its MCOs to remove the language specifying the requirement for an audit conducted specifically in accordance with generally accepted accounting principles and generally accepted auditing standards and instead to specify that an AUP report is acceptable per guidance provided under Medicaid and CHIP Managed Care Final Rule (CMS-2390-F) Frequently Asked Question number Q10. Views of responsible officials: There is no change to the prior year corrective action plan provided by the Department of Human Services, Division of Medical Assistance and Health Services (DMAHS) as corrective actions have been fully implemented as of January 2023. Current Managed Care Organization (MCO) contracts no longer contain the language requiring an audit conducted specifically in accordance with generally accepted accounting principles and generally accepted auditing standards and now specify that AUP reports are acceptable. Section 7.25.1(B) of the MCO Contract was updated effective January 2023 and removed the language requiring audits in accordance with generally accepted accounting principles and generally accepted auditing standards, and specifies that an AUP report is acceptable per guidance provided under Medicaid and CHIP Managed Care Final Rule (CMS-2390-F) Frequently Asked Question number Q10.

Reference Number: 2023-023 Prior Year Finding: No Federal Agency: U.S. Department of Health and Human Services State Agency: Department of Human Services Federal Program: Medicaid Cluster, COVID-19 - Medicaid Cluster Assistance Listing Number: 93.775, 93.777, 93.778 Award Number and Year: 2305NJ5MAP (10/1/2022 – 9/30/2023) 2305NJ5ADM (10/1/2022 – 9/30/2023) Compliance Requirement: Reporting – CMS-64 Type of Finding Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance: CMS-64, Quarterly Statement of Expenditures for the Medical Assistance Program (OMB No. 0938-1265) – Required to be used in lieu of the SF-425, Federal Financial Report (for all components of the cluster other administrative costs of the state MFCUs), prepared quarterly, and submitted electronically to CMS within 30 days after the end of the quarter. Control: Per 2 CFR section 200.303(a), a 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 comply 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: The Department of Human Services (Department) did not file the CMS-64 report timely. Context: One of two CMS-64 reports selected for testing was not filed timely. The report for the 12/31/2022 quarter was due 1/30/2023 but was submitted 2/9/2023, or 10 days late. Questioned costs: Undetermined. Cause: The Department’s procedures were not sufficient to ensure that CMS-64 reports were filed timely. Internal controls did not prevent or detect the error. Effect: Failure to submit CMS-64 reports timely could impact the Federal Agency’s ability to oversee the program. Section III – Federal Award Findings and Questioned Costs (Continued) Recommendation: We recommend that the Department enhance its procedures and controls to ensure that CMS-64 reports are filed timely, no later than 30 days after the end of each quarter. Views of responsible officials: With regard to the late quarterly CMS 64 report submission noted in the audit finding, the Department of Human Services, Division of Medical Assistance and Health Services (DMAHS) notified the Center for Medicaid Services (CMS) in advance that the report for the December 31, 2022 quarter would be filed after the due date. DMHAS is working to streamline reporting of the CMS-64 by improving automation where possible in order to adhere to the due date. However, as in the case of the report for quarter ending December 31, 2022, the DMAHS places strong emphasis on the accuracy and integrity of its quarterly CMS-64 reporting, which may at times lead to submission after the required due date. In the event this occurs, the DMAHS will continue to notify CMS in advance when reports will be submitted after the due date.

Reference Number: 2023-023 Prior Year Finding: No Federal Agency: U.S. Department of Health and Human Services State Agency: Department of Human Services Federal Program: Medicaid Cluster, COVID-19 - Medicaid Cluster Assistance Listing Number: 93.775, 93.777, 93.778 Award Number and Year: 2305NJ5MAP (10/1/2022 – 9/30/2023) 2305NJ5ADM (10/1/2022 – 9/30/2023) Compliance Requirement: Reporting – CMS-64 Type of Finding Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance: CMS-64, Quarterly Statement of Expenditures for the Medical Assistance Program (OMB No. 0938-1265) – Required to be used in lieu of the SF-425, Federal Financial Report (for all components of the cluster other administrative costs of the state MFCUs), prepared quarterly, and submitted electronically to CMS within 30 days after the end of the quarter. Control: Per 2 CFR section 200.303(a), a 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 comply 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: The Department of Human Services (Department) did not file the CMS-64 report timely. Context: One of two CMS-64 reports selected for testing was not filed timely. The report for the 12/31/2022 quarter was due 1/30/2023 but was submitted 2/9/2023, or 10 days late. Questioned costs: Undetermined. Cause: The Department’s procedures were not sufficient to ensure that CMS-64 reports were filed timely. Internal controls did not prevent or detect the error. Effect: Failure to submit CMS-64 reports timely could impact the Federal Agency’s ability to oversee the program. Section III – Federal Award Findings and Questioned Costs (Continued) Recommendation: We recommend that the Department enhance its procedures and controls to ensure that CMS-64 reports are filed timely, no later than 30 days after the end of each quarter. Views of responsible officials: With regard to the late quarterly CMS 64 report submission noted in the audit finding, the Department of Human Services, Division of Medical Assistance and Health Services (DMAHS) notified the Center for Medicaid Services (CMS) in advance that the report for the December 31, 2022 quarter would be filed after the due date. DMHAS is working to streamline reporting of the CMS-64 by improving automation where possible in order to adhere to the due date. However, as in the case of the report for quarter ending December 31, 2022, the DMAHS places strong emphasis on the accuracy and integrity of its quarterly CMS-64 reporting, which may at times lead to submission after the required due date. In the event this occurs, the DMAHS will continue to notify CMS in advance when reports will be submitted after the due date.

Reference Number: 2023-024 Prior Year Finding: No Federal Agency: U.S. Department of Health and Human Services State Agency: Department of Human Services Federal Program: Opioid STR Assistance Listing Number: 93.788 Award Number and Year: H79T1083317 (9/3/2020 – 9/29/2023), H79T1085743 (9/30/2022 – 9/29/2024) Compliance Requirement: Reporting – Federal Funding Accountability and Transparency Act (FFATA) Type of Finding Material Weakness in Internal Control Over Compliance, Material Non-compliance Criteria or specific requirement: Compliance: Per the Federal Funding Accountability and Transparency Act (FFATA), prime (direct) recipients of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Reports must be filed in FSRS by the end of the month following the month in which the prime recipient awards any sub-grant greater than or equal to $30,000. If the initial award is below $30,000 but subsequent grant modifications result in a total award equal to or over $30,000, the award will be subject to the reporting requirements as of the date the award exceeds $30,000. If the initial award equals or exceeds $30,000 but funding is subsequently de-obligated such that the total award amount falls below $30,000, the award continues to be subject to FFATA reporting requirements. The following key data elements must be reported: Subawardee Name and Data Universal Numbering System (DUNS) number; Amount of Subaward (inclusive of modifications); Subaward Obligation/Action Date; Date of Report Submission; Subaward Number; Project Description; and Names and Compensation of Highly Compensated Officers. (Names and Compensation of Highly Compensated Officers must only be reported when the entity in the preceding fiscal year received 80 percent or more of its annual gross revenues in Federal awards; and $25,000,000 or more in annual gross revenues from Federal awards; and the public does not have access to this information about the compensation of the senior executives of the entity through periodic reports filed under section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. §§ 78m(a), 78o(d)) or section 6104 of the Internal Revenue Code of 1986.) Control: Per 2 CFR section 200.303(a), a 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 comply 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). Section III – Federal Award Findings and Questioned Costs (Continued) Condition: The Department of Health (Department) did not report subaward information to FSRS during FY 2023. Context: Zero of ten subawards selected for testing were reported to FSRS during FY 2023. Total subawards tested were $6,500,401, and $0 was reported as required by FFATA requirements. SEE SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR CHART/TABLE Cause: The Department did not develop procedures and controls to ensure subawards were reported to FSRS. Effect: Subawards were not reported to FSRS in accordance with FFATA requirements. Questioned costs: None noted. Recommendation: We recommend that the Department develop internal controls and procedures to ensure that FFATA reporting requirements are met. We further recommend the Department develop controls and procedures to ensure that all required subawards are reported accurately and timely to FSRS no later than the end of the month following the month of issuance. Views of responsible officials: The Department of Human Services, Division of Mental Health and Addiction Services (DMHAS) agrees that for fiscal year 2023 there were no Federal Funding Accountability & Transparency Act (FFATA) reporting procedures in place. It is important to note however, that DMHAS provided adequate support for subrecipient payments to each of the selected samples and corresponding dollar amounts. DMHAS was unable to comply with the FFATA reporting requirements due to insufficient staffing levels, the significant volume of data and effort required, and the significant demands and operational challenges precipitated by the Covid-19 Public Health Emergency. DMHAS will develop a formal policy with procedures to comply with FFATA reporting requirements. More specifically, the policy will identify all FFATA reporting requirements consistent with the law, and dictate standard operating procedures, including ongoing monitoring and progress reporting. DMHAS’s policy and practices will rely upon, and comport with, the applicable materials and Awardee User resources available at: https://www.fsrs.gov/ and https://www.fsrs.gov/documents/FSRS_Awardee_User_Guide.pdf. Section III – Federal Award Findings and Questioned Costs (Continued) DMHAS procedures will ensure the reporting of all first-tier subawards of $30,000 or more to the FSRS with all required FFATA data elements included. DMHAS will hire at least one (1) additional staff for the requisite data entry. The new staff member will be situated in the DMHAS Fiscal Unit, and will report directly to, and be under the supervision of the Fiscal Unit Budget Manager. One hundred percent of the new hire’s effort will be dedicated to FFATA reporting and data entry. DMHAS began the new hire process on or about March 22, 2024, and anticipates that the new hire will be on boarded in approximately ninety (90) days. In addition, the DMHAS Fiscal Unit Contract Manager (or the Contract Manager’s designated staff) will work with the Budget Manager and the FFATA new hire to assist with the collection and verification of the requisite Subrecipient data that must be entered into the FSRS portal. DMHAS will require all staff with FFATA reporting duties to complete the available online trainings. Furthermore, designated staff will be required to complete a FFATA Access Request Form that will be reviewed and approved by the DMHAS Chief Financial Officer. Designated staff shall also be subject to fixed Eligibility Criteria (e.g. completion of all IT Security Trainings, FFATA training(s), current DHS Confidentiality and Non-Disclosure Agreement, etc.). Access will be revoked if a Disqualifying Event such as separation of employment or failure to complete training occurs. DMHAS conferred recently with DHS, the designated grant recipient, and secured from DHS the requisite FSRS login credentials. DMHAS Fiscal logged into the reporting system and began work on a process description. DMHAS is committed to FFATA compliance, is prioritizing FFATA policy, procedures and reporting, and is making a good faith effort to comply. DMHAS will ensure that the requisite sub-award data is entered timely (no later than the end of the month following the month of issuance) into the FSRS portal, beginning January 1, 2025. In the event DMHAS cannot complete timely data entry into FSRS because of system issues outside of its control (e.g. the underlying federal award does not appear in FSRS), DMHAS will keep a record of the requisite data and document its efforts.

Reference Number: 2023-024 Prior Year Finding: No Federal Agency: U.S. Department of Health and Human Services State Agency: Department of Human Services Federal Program: Opioid STR Assistance Listing Number: 93.788 Award Number and Year: H79T1083317 (9/3/2020 – 9/29/2023), H79T1085743 (9/30/2022 – 9/29/2024) Compliance Requirement: Reporting – Federal Funding Accountability and Transparency Act (FFATA) Type of Finding Material Weakness in Internal Control Over Compliance, Material Non-compliance Criteria or specific requirement: Compliance: Per the Federal Funding Accountability and Transparency Act (FFATA), prime (direct) recipients of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Reports must be filed in FSRS by the end of the month following the month in which the prime recipient awards any sub-grant greater than or equal to $30,000. If the initial award is below $30,000 but subsequent grant modifications result in a total award equal to or over $30,000, the award will be subject to the reporting requirements as of the date the award exceeds $30,000. If the initial award equals or exceeds $30,000 but funding is subsequently de-obligated such that the total award amount falls below $30,000, the award continues to be subject to FFATA reporting requirements. The following key data elements must be reported: Subawardee Name and Data Universal Numbering System (DUNS) number; Amount of Subaward (inclusive of modifications); Subaward Obligation/Action Date; Date of Report Submission; Subaward Number; Project Description; and Names and Compensation of Highly Compensated Officers. (Names and Compensation of Highly Compensated Officers must only be reported when the entity in the preceding fiscal year received 80 percent or more of its annual gross revenues in Federal awards; and $25,000,000 or more in annual gross revenues from Federal awards; and the public does not have access to this information about the compensation of the senior executives of the entity through periodic reports filed under section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. §§ 78m(a), 78o(d)) or section 6104 of the Internal Revenue Code of 1986.) Control: Per 2 CFR section 200.303(a), a 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 comply 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). Section III – Federal Award Findings and Questioned Costs (Continued) Condition: The Department of Health (Department) did not report subaward information to FSRS during FY 2023. Context: Zero of ten subawards selected for testing were reported to FSRS during FY 2023. Total subawards tested were $6,500,401, and $0 was reported as required by FFATA requirements. SEE SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR CHART/TABLE Cause: The Department did not develop procedures and controls to ensure subawards were reported to FSRS. Effect: Subawards were not reported to FSRS in accordance with FFATA requirements. Questioned costs: None noted. Recommendation: We recommend that the Department develop internal controls and procedures to ensure that FFATA reporting requirements are met. We further recommend the Department develop controls and procedures to ensure that all required subawards are reported accurately and timely to FSRS no later than the end of the month following the month of issuance. Views of responsible officials: The Department of Human Services, Division of Mental Health and Addiction Services (DMHAS) agrees that for fiscal year 2023 there were no Federal Funding Accountability & Transparency Act (FFATA) reporting procedures in place. It is important to note however, that DMHAS provided adequate support for subrecipient payments to each of the selected samples and corresponding dollar amounts. DMHAS was unable to comply with the FFATA reporting requirements due to insufficient staffing levels, the significant volume of data and effort required, and the significant demands and operational challenges precipitated by the Covid-19 Public Health Emergency. DMHAS will develop a formal policy with procedures to comply with FFATA reporting requirements. More specifically, the policy will identify all FFATA reporting requirements consistent with the law, and dictate standard operating procedures, including ongoing monitoring and progress reporting. DMHAS’s policy and practices will rely upon, and comport with, the applicable materials and Awardee User resources available at: https://www.fsrs.gov/ and https://www.fsrs.gov/documents/FSRS_Awardee_User_Guide.pdf. Section III – Federal Award Findings and Questioned Costs (Continued) DMHAS procedures will ensure the reporting of all first-tier subawards of $30,000 or more to the FSRS with all required FFATA data elements included. DMHAS will hire at least one (1) additional staff for the requisite data entry. The new staff member will be situated in the DMHAS Fiscal Unit, and will report directly to, and be under the supervision of the Fiscal Unit Budget Manager. One hundred percent of the new hire’s effort will be dedicated to FFATA reporting and data entry. DMHAS began the new hire process on or about March 22, 2024, and anticipates that the new hire will be on boarded in approximately ninety (90) days. In addition, the DMHAS Fiscal Unit Contract Manager (or the Contract Manager’s designated staff) will work with the Budget Manager and the FFATA new hire to assist with the collection and verification of the requisite Subrecipient data that must be entered into the FSRS portal. DMHAS will require all staff with FFATA reporting duties to complete the available online trainings. Furthermore, designated staff will be required to complete a FFATA Access Request Form that will be reviewed and approved by the DMHAS Chief Financial Officer. Designated staff shall also be subject to fixed Eligibility Criteria (e.g. completion of all IT Security Trainings, FFATA training(s), current DHS Confidentiality and Non-Disclosure Agreement, etc.). Access will be revoked if a Disqualifying Event such as separation of employment or failure to complete training occurs. DMHAS conferred recently with DHS, the designated grant recipient, and secured from DHS the requisite FSRS login credentials. DMHAS Fiscal logged into the reporting system and began work on a process description. DMHAS is committed to FFATA compliance, is prioritizing FFATA policy, procedures and reporting, and is making a good faith effort to comply. DMHAS will ensure that the requisite sub-award data is entered timely (no later than the end of the month following the month of issuance) into the FSRS portal, beginning January 1, 2025. In the event DMHAS cannot complete timely data entry into FSRS because of system issues outside of its control (e.g. the underlying federal award does not appear in FSRS), DMHAS will keep a record of the requisite data and document its efforts.

Reference Number: 2023-025 Prior Year Finding: No Federal Agency: U.S. Department of Health and Human Services State Agency: Department of Human Services Federal Program: Opioid STR Assistance Listing Number: 93.788 Award Number and Year: H79T1083317 (9/3/2020 – 9/29/2023), H79T1085743 (9/30/2022 – 9/29/2024) Compliance Requirement: Subrecipient Monitoring Type of Finding Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance – Per 2 CFR section 200.332(a), all pass-through entities must ensure that every subaward is clearly identified to the subrecipient as a subaward and includes information 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. Control – Per 2 CFR section 200.303(a), a 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: The Department of Human Services (Department) did not include all required information in subaward agreements. Context: Ten subawards were selected for testing and the following exceptions were noted: • For 10 of 10 subawards selected for testing, the Federal Award Date of award to the recipient by the Federal agency was omitted from the subaward agreement. • For 2 of 10 subawards selected for testing, the subrecipient’s unique entity identifier was not obtained and was omitted from the subaward agreement. Questioned costs: None noted. Cause: The Department’s procedures were not effective to ensure that subawards were issued in compliance with Federal requirements. Internal controls did not prevent or detect the errors. Section III – Federal Award Findings and Questioned Costs (Continued) Effect: Excluding the required federal grant award information at the time of the subaward may cause subrecipients and their auditors to be uninformed about specific program and other regulations that apply to the funds they receive. There is also the potential for subrecipients to have incomplete Schedules of Expenditures of Federal Awards (SEFA) in their Single Audit reports, and federal funds may not be properly audited at the subrecipient level in accordance with the Uniform Guidance. Recommendation: The Department should review and enhance internal controls and procedures to ensure that all required information is included in subaward agreements. Views of responsible officials: The Department of Human Services, Division of Mental Health and Addiction Services (DMHAS) agrees that for fiscal year 2023 it did not provide at the time of subaward one (1) of the fourteen (14) elements required by the federal Uniform Guidance (UG) pass-through entity requirements. More specifically, DMHAS did not communicate to subrecipients at the time of subaward the date on which DMHAS received its Notice of Award from the U.S. Department of Health and Human Services, Substance Abuse and Mental Health Services Administration, Center for Substance Abuse Treatment (SMAHSA). This single piece of information was omitted in each of the ten (10) samples tested. It is important to note, however, that DMHAS could certify that it did not communicate to any pool of applicants or subrecipients that funding was available until such time as DMHAS received its federal award. The failure to include the federal date of award was the result of clerical/ministerial error, and DMHAS’s inability to evidence the federal award date in its software system, known as the Contract Information Management System (CIMS). CIMS is accessible to subrecipients and DMHAS relies on it to document and track subawards. DMHAS satisfied every remaining subaward information element of the UG pass-through entity requirements with the exception of subsection (ii) – the subrecipient’s Unique Entity Identifier (UEI), for two (2) of the ten (10) samples tested. More specifically, DMHAS did not reference two (2) subrecipients UEI numbers at the time of each subrecipient’s subaward. It is important to note that DMHAS has the UEIs available to it, but it could not establish that it referenced two (2) of the UEIs at the time of award. The failure to include the UEI for each of the two (2) subrecipients was the result of clerical/ministerial error, and DMHAS’s inability to enter the data for the particular subrecipients into CIMS. Each of the two (2) samples related to a “specialty contract” that cannot be captured in CIMS. DMHAS has already undertaken efforts to update its software system and replace CIMS with SAGE AGATE. Although federal regulation does not require that every data element referenced in 2 CFR 200.332(a)(1) be available in a single document, as part of its ongoing systems improvement plans, the DMHAS is completing the procurement of a new contract information management system, SAGE AGATE, so that all federal award and contract information is available in a single report through a single software application. DMHAS has prepared a purchase order for SAGE AGATE, the State funds have been appropriated and the DMHAS is in the process of scheduling a kick off meeting, along with Section III – Federal Award Findings and Questioned Costs (Continued) 3-day training sessions. The DMHAS SAGE AGATE Scope of Work includes IntelliGrants software, as well as limited customization of the IntelliGrants software to satisfy any needs particular to DMHAS. DMHAS will ensure that the final software package provides DMHAS with the means to document and communicate to subrecipients at the time of subaward each of the requisite elements of 2 CFR 200.332(a)(1), including the Federal Date of Award and the UEI. In the interim, DMHAS has drafted an updated Notice of Subrecipient Award Template, which Template includes every component required by 2 CFR 200.332(a)(1). Upon DMHAS executive review and approval of the Template, Contract staff in the DMHAS Fiscal Unit will utilize the Template for each Notice of Subrecipient Award. DMHAS anticipates that the Template will be superseded by a Notice maintained within, and/or generated by, SAGE AGATE. Prior to the date of this CAP, DMHAS Program/Initiative Managers throughout the various DMHAS treatment service and support units were responsible for preparing and executing Notices of Subrecipient Award. As a result of the Significant Deficiency identified in this 2023 Audit, and in order to correct and mitigate against clerical/ministerial errors, DMHAS is transferring responsibility for the preparation and execution of Notices of Subrecipient Award from Program/Initiative Managers, to the DMHAS Fiscal Unit, Contract Manager (and the Contract Manager’s Contract Administration staff). Such staff will have total SAGE AGATE system access, and be best suited to ensure that Notices of Subrecipient Award comply with 2 CFR 200.332. Finally, as a preventive action, the DMHAS Compliance Unit will audit the issuance of post-contract negotiation Notices of Award in three (3) months, and again in six (6) months. The internal audit will sample no less than ten (10) newly awarded/renewed deficit-funded contracts for substance use disorder services, and will measure compliance with every element identified in 2 CFR 200.332.

Reference Number: 2023-025 Prior Year Finding: No Federal Agency: U.S. Department of Health and Human Services State Agency: Department of Human Services Federal Program: Opioid STR Assistance Listing Number: 93.788 Award Number and Year: H79T1083317 (9/3/2020 – 9/29/2023), H79T1085743 (9/30/2022 – 9/29/2024) Compliance Requirement: Subrecipient Monitoring Type of Finding Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance – Per 2 CFR section 200.332(a), all pass-through entities must ensure that every subaward is clearly identified to the subrecipient as a subaward and includes information 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. Control – Per 2 CFR section 200.303(a), a 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: The Department of Human Services (Department) did not include all required information in subaward agreements. Context: Ten subawards were selected for testing and the following exceptions were noted: • For 10 of 10 subawards selected for testing, the Federal Award Date of award to the recipient by the Federal agency was omitted from the subaward agreement. • For 2 of 10 subawards selected for testing, the subrecipient’s unique entity identifier was not obtained and was omitted from the subaward agreement. Questioned costs: None noted. Cause: The Department’s procedures were not effective to ensure that subawards were issued in compliance with Federal requirements. Internal controls did not prevent or detect the errors. Section III – Federal Award Findings and Questioned Costs (Continued) Effect: Excluding the required federal grant award information at the time of the subaward may cause subrecipients and their auditors to be uninformed about specific program and other regulations that apply to the funds they receive. There is also the potential for subrecipients to have incomplete Schedules of Expenditures of Federal Awards (SEFA) in their Single Audit reports, and federal funds may not be properly audited at the subrecipient level in accordance with the Uniform Guidance. Recommendation: The Department should review and enhance internal controls and procedures to ensure that all required information is included in subaward agreements. Views of responsible officials: The Department of Human Services, Division of Mental Health and Addiction Services (DMHAS) agrees that for fiscal year 2023 it did not provide at the time of subaward one (1) of the fourteen (14) elements required by the federal Uniform Guidance (UG) pass-through entity requirements. More specifically, DMHAS did not communicate to subrecipients at the time of subaward the date on which DMHAS received its Notice of Award from the U.S. Department of Health and Human Services, Substance Abuse and Mental Health Services Administration, Center for Substance Abuse Treatment (SMAHSA). This single piece of information was omitted in each of the ten (10) samples tested. It is important to note, however, that DMHAS could certify that it did not communicate to any pool of applicants or subrecipients that funding was available until such time as DMHAS received its federal award. The failure to include the federal date of award was the result of clerical/ministerial error, and DMHAS’s inability to evidence the federal award date in its software system, known as the Contract Information Management System (CIMS). CIMS is accessible to subrecipients and DMHAS relies on it to document and track subawards. DMHAS satisfied every remaining subaward information element of the UG pass-through entity requirements with the exception of subsection (ii) – the subrecipient’s Unique Entity Identifier (UEI), for two (2) of the ten (10) samples tested. More specifically, DMHAS did not reference two (2) subrecipients UEI numbers at the time of each subrecipient’s subaward. It is important to note that DMHAS has the UEIs available to it, but it could not establish that it referenced two (2) of the UEIs at the time of award. The failure to include the UEI for each of the two (2) subrecipients was the result of clerical/ministerial error, and DMHAS’s inability to enter the data for the particular subrecipients into CIMS. Each of the two (2) samples related to a “specialty contract” that cannot be captured in CIMS. DMHAS has already undertaken efforts to update its software system and replace CIMS with SAGE AGATE. Although federal regulation does not require that every data element referenced in 2 CFR 200.332(a)(1) be available in a single document, as part of its ongoing systems improvement plans, the DMHAS is completing the procurement of a new contract information management system, SAGE AGATE, so that all federal award and contract information is available in a single report through a single software application. DMHAS has prepared a purchase order for SAGE AGATE, the State funds have been appropriated and the DMHAS is in the process of scheduling a kick off meeting, along with Section III – Federal Award Findings and Questioned Costs (Continued) 3-day training sessions. The DMHAS SAGE AGATE Scope of Work includes IntelliGrants software, as well as limited customization of the IntelliGrants software to satisfy any needs particular to DMHAS. DMHAS will ensure that the final software package provides DMHAS with the means to document and communicate to subrecipients at the time of subaward each of the requisite elements of 2 CFR 200.332(a)(1), including the Federal Date of Award and the UEI. In the interim, DMHAS has drafted an updated Notice of Subrecipient Award Template, which Template includes every component required by 2 CFR 200.332(a)(1). Upon DMHAS executive review and approval of the Template, Contract staff in the DMHAS Fiscal Unit will utilize the Template for each Notice of Subrecipient Award. DMHAS anticipates that the Template will be superseded by a Notice maintained within, and/or generated by, SAGE AGATE. Prior to the date of this CAP, DMHAS Program/Initiative Managers throughout the various DMHAS treatment service and support units were responsible for preparing and executing Notices of Subrecipient Award. As a result of the Significant Deficiency identified in this 2023 Audit, and in order to correct and mitigate against clerical/ministerial errors, DMHAS is transferring responsibility for the preparation and execution of Notices of Subrecipient Award from Program/Initiative Managers, to the DMHAS Fiscal Unit, Contract Manager (and the Contract Manager’s Contract Administration staff). Such staff will have total SAGE AGATE system access, and be best suited to ensure that Notices of Subrecipient Award comply with 2 CFR 200.332. Finally, as a preventive action, the DMHAS Compliance Unit will audit the issuance of post-contract negotiation Notices of Award in three (3) months, and again in six (6) months. The internal audit will sample no less than ten (10) newly awarded/renewed deficit-funded contracts for substance use disorder services, and will measure compliance with every element identified in 2 CFR 200.332.

Reference Number: 2023-026 Prior Year Finding: No Federal Agency: U.S. Department of Health and Human Services State Agency: Department of Human Services Federal Program: Block Grants for Prevention and Treatment of Substance Abuse, COVID-19 – Block Grants for Prevention and Treatment of Substance Abuse Assistance Listing Number: 93.959 Award Number and Year: B08TI083538 (3/15/2021 – 3/14/2023), B08TI084660 (10/1/2020 – 9/30/2023), B08TI083465 (10/1/2020 – 9/30/2022), B08TI085822 (10/1/2022 – 9/30/2024) Compliance Requirement: Reporting – Federal Funding Accountability and Transparency Act (FFATA) Type of Finding Material Weakness in Internal Control Over Compliance, Material Noncompliance Criteria or specific requirement: Compliance: Per the Federal Funding Accountability and Transparency Act (FFATA), prime (direct) recipients of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Reports must be filed in FSRS by the end of the month following the month in which the prime recipient awards any sub-grant greater than or equal to $30,000. If the initial award is below $30,000 but subsequent grant modifications result in a total award equal to or over $30,000, the award will be subject to the reporting requirements as of the date the award exceeds $30,000. If the initial award equals or exceeds $30,000 but funding is subsequently de-obligated such that the total award amount falls below $30,000, the award continues to be subject to FFATA reporting requirements. The following key data elements must be reported: Subawardee Name and Unique Entity ID (UEI) number; Amount of Subaward (inclusive of modifications); Subaward Obligation/Action Date; Date of Report Submission; Subaward Number; Project Description; and Names and Compensation of Highly Compensated Officers. (Names and Compensation of Highly Compensated Officers must only be reported when the entity in the preceding fiscal year received 80 percent or more of its annual gross revenues in Federal awards; and $25,000,000 or more in annual gross revenues from Federal awards; and the public does not have access to this information about the compensation of the senior executives of the entity through periodic reports filed under section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. §§ 78m(a), 78o(d)) or section 6104 of the Internal Revenue Code of 1986.) Control: Per 2 CFR section 200.303(a), a 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 comply 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). Section III – Federal Award Findings and Questioned Costs (Continued) Condition: Subaward information was not reported to FSRS by the Department of Human Services (Department). Context: Eight of eight subawards selected for testing were not reported to FSRS. SEE SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR CHART/TABLE Cause: The Department did not establish effective procedures and internal controls over FFATA requirements to ensure that subawards were reported to FSRS. Effect: Subawards were not reported to FSRS in accordance with FFATA requirements. Questioned costs: Undetermined. Recommendation: We recommend that the Department develop procedures and internal controls to ensure that all required subawards are reported to FSRS no later than the end of the month following the month of issuance in accordance with FFATA reporting requirements. Views of responsible officials: The Department of Human Services, Division of Mental Health and Addiction Services (DMHAS) agrees that for fiscal year 2023 there were no Federal Funding Accountability & Transparency Act (FFATA) reporting procedures in place. It is important to note however, that DMHAS provided adequate support for subrecipient payments to each of the selected samples and corresponding dollar amounts. DMHAS was unable to comply with the FFATA reporting requirements due to insufficient staffing levels, the significant volume of data and effort required, and the significant demands and operational challenges precipitated by the Covid-19 Public Health Emergency. DMHAS will develop a formal policy with procedures to comply with FFATA reporting requirements. More specifically, the policy will identify all FFATA reporting requirements consistent with the law, and dictate standard operating procedures, including ongoing monitoring and progress reporting. DMHAS’s policy and practices will rely upon, and comport with, the applicable materials and Awardee User resources available at: https://www.fsrs.gov/ and https://www.fsrs.gov/documents/FSRS_Awardee_User_Guide.pdf. Section III – Federal Award Findings and Questioned Costs (Continued) DMHAS procedures will ensure the reporting of all first-tier subawards of $30,000 or more to the FSRS with all required FFATA data elements included. DMHAS will hire at least one (1) additional staff for the requisite data entry. The new staff member will be situated in the DMHAS Fiscal Unit, and will report directly to, and be under the supervision of the Fiscal Unit Budget Manager. One hundred percent of the new hire’s effort will be dedicated to FFATA reporting and data entry. DMHAS began the new hire process on or about March 22, 2024, and anticipates that the new hire will be on boarded in approximately ninety (90) days. In addition, the DMHAS Fiscal Unit Contract Manager (or the Contract Manager’s designated staff) will work with the Budget Manager and the FFATA new hire to assist with the collection and verification of the requisite Subrecipient data that must be entered into the FSRS portal. DMHAS will require all staff with FFATA reporting duties to complete the available online trainings. Furthermore, designated staff will be required to complete a FFATA Access Request Form that will be reviewed and approved by the DMHAS Chief Financial Officer. Designated staff shall also be subject to fixed Eligibility Criteria (e.g. completion of all IT Security Trainings, FFATA training(s), current DHS Confidentiality and Non-Disclosure Agreement, etc.). Access will be revoked if a Disqualifying Event such as separation of employment or failure to complete training occurs. DMHAS conferred recently with DHS, the designated grant recipient, and secured from DHS the requisite FSRS login credentials. DMHAS Fiscal logged into the reporting system and began work on a process description. DMHAS is committed to FFATA compliance, is prioritizing FFATA policy, procedures and reporting, and is making a good faith effort to comply. DMHAS will ensure that the requisite sub-award data is entered timely (no later than the end of the month following the month of issuance) into the FSRS portal, beginning January 1, 2025. In the event DMHAS cannot complete timely data entry into FSRS because of system issues outside of its control (e.g. the underlying federal award does not appear in FSRS), DMHAS will keep a record of the requisite data and document its efforts.

Reference Number: 2023-026 Prior Year Finding: No Federal Agency: U.S. Department of Health and Human Services State Agency: Department of Human Services Federal Program: Block Grants for Prevention and Treatment of Substance Abuse, COVID-19 – Block Grants for Prevention and Treatment of Substance Abuse Assistance Listing Number: 93.959 Award Number and Year: B08TI083538 (3/15/2021 – 3/14/2023), B08TI084660 (10/1/2020 – 9/30/2023), B08TI083465 (10/1/2020 – 9/30/2022), B08TI085822 (10/1/2022 – 9/30/2024) Compliance Requirement: Reporting – Federal Funding Accountability and Transparency Act (FFATA) Type of Finding Material Weakness in Internal Control Over Compliance, Material Noncompliance Criteria or specific requirement: Compliance: Per the Federal Funding Accountability and Transparency Act (FFATA), prime (direct) recipients of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Reports must be filed in FSRS by the end of the month following the month in which the prime recipient awards any sub-grant greater than or equal to $30,000. If the initial award is below $30,000 but subsequent grant modifications result in a total award equal to or over $30,000, the award will be subject to the reporting requirements as of the date the award exceeds $30,000. If the initial award equals or exceeds $30,000 but funding is subsequently de-obligated such that the total award amount falls below $30,000, the award continues to be subject to FFATA reporting requirements. The following key data elements must be reported: Subawardee Name and Unique Entity ID (UEI) number; Amount of Subaward (inclusive of modifications); Subaward Obligation/Action Date; Date of Report Submission; Subaward Number; Project Description; and Names and Compensation of Highly Compensated Officers. (Names and Compensation of Highly Compensated Officers must only be reported when the entity in the preceding fiscal year received 80 percent or more of its annual gross revenues in Federal awards; and $25,000,000 or more in annual gross revenues from Federal awards; and the public does not have access to this information about the compensation of the senior executives of the entity through periodic reports filed under section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. §§ 78m(a), 78o(d)) or section 6104 of the Internal Revenue Code of 1986.) Control: Per 2 CFR section 200.303(a), a 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 comply 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). Section III – Federal Award Findings and Questioned Costs (Continued) Condition: Subaward information was not reported to FSRS by the Department of Human Services (Department). Context: Eight of eight subawards selected for testing were not reported to FSRS. SEE SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR CHART/TABLE Cause: The Department did not establish effective procedures and internal controls over FFATA requirements to ensure that subawards were reported to FSRS. Effect: Subawards were not reported to FSRS in accordance with FFATA requirements. Questioned costs: Undetermined. Recommendation: We recommend that the Department develop procedures and internal controls to ensure that all required subawards are reported to FSRS no later than the end of the month following the month of issuance in accordance with FFATA reporting requirements. Views of responsible officials: The Department of Human Services, Division of Mental Health and Addiction Services (DMHAS) agrees that for fiscal year 2023 there were no Federal Funding Accountability & Transparency Act (FFATA) reporting procedures in place. It is important to note however, that DMHAS provided adequate support for subrecipient payments to each of the selected samples and corresponding dollar amounts. DMHAS was unable to comply with the FFATA reporting requirements due to insufficient staffing levels, the significant volume of data and effort required, and the significant demands and operational challenges precipitated by the Covid-19 Public Health Emergency. DMHAS will develop a formal policy with procedures to comply with FFATA reporting requirements. More specifically, the policy will identify all FFATA reporting requirements consistent with the law, and dictate standard operating procedures, including ongoing monitoring and progress reporting. DMHAS’s policy and practices will rely upon, and comport with, the applicable materials and Awardee User resources available at: https://www.fsrs.gov/ and https://www.fsrs.gov/documents/FSRS_Awardee_User_Guide.pdf. Section III – Federal Award Findings and Questioned Costs (Continued) DMHAS procedures will ensure the reporting of all first-tier subawards of $30,000 or more to the FSRS with all required FFATA data elements included. DMHAS will hire at least one (1) additional staff for the requisite data entry. The new staff member will be situated in the DMHAS Fiscal Unit, and will report directly to, and be under the supervision of the Fiscal Unit Budget Manager. One hundred percent of the new hire’s effort will be dedicated to FFATA reporting and data entry. DMHAS began the new hire process on or about March 22, 2024, and anticipates that the new hire will be on boarded in approximately ninety (90) days. In addition, the DMHAS Fiscal Unit Contract Manager (or the Contract Manager’s designated staff) will work with the Budget Manager and the FFATA new hire to assist with the collection and verification of the requisite Subrecipient data that must be entered into the FSRS portal. DMHAS will require all staff with FFATA reporting duties to complete the available online trainings. Furthermore, designated staff will be required to complete a FFATA Access Request Form that will be reviewed and approved by the DMHAS Chief Financial Officer. Designated staff shall also be subject to fixed Eligibility Criteria (e.g. completion of all IT Security Trainings, FFATA training(s), current DHS Confidentiality and Non-Disclosure Agreement, etc.). Access will be revoked if a Disqualifying Event such as separation of employment or failure to complete training occurs. DMHAS conferred recently with DHS, the designated grant recipient, and secured from DHS the requisite FSRS login credentials. DMHAS Fiscal logged into the reporting system and began work on a process description. DMHAS is committed to FFATA compliance, is prioritizing FFATA policy, procedures and reporting, and is making a good faith effort to comply. DMHAS will ensure that the requisite sub-award data is entered timely (no later than the end of the month following the month of issuance) into the FSRS portal, beginning January 1, 2025. In the event DMHAS cannot complete timely data entry into FSRS because of system issues outside of its control (e.g. the underlying federal award does not appear in FSRS), DMHAS will keep a record of the requisite data and document its efforts.

Reference Number: 2023-027 Prior Year Finding: No Federal Agency: Social Security Administration State Agency: Department of Labor and Workforce Development Federal Program: Disability Insurance/SSI Cluster Assistance Listing Number: 96.001 Award Number and Year: 04-2304NJD100 (10/1/2022 – 9/30/2023), 04-2204NJD100 (10/1/2021 – 9/30/2022) Compliance Requirement: Special Tests and Provisions – Qualified Providers Type of Finding Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance – Each state agency is responsible for comprehensive oversight management of its process and for ensuring accuracy, integrity, and economy of its process (20 CFR sections 404.1519g and 416.919g, and POMS DI 39569.300). As part of these duties, Disability Determination Services (DDS) must have, and follow, procedures for performing medical license verifications to ensure that only qualified providers perform DDSs task. By “qualified,” Social Security Administration (SSA) means that the medical source must: Be currently licensed in the state and have the training and experience to perform the type of examination or test the DDS requests; and a. Not be barred from participation in Medicare or Medicaid programs or other federal or federally assisted programs (20 CFR sections 404.1519g and 416.919g). Prior to using the services of any medical provider, the DDS must check the System of Award Management (SAM) website (https://sam.gov/SAM/) to verify medical licenses, credentials, and certifications with state medical boards (POMS DI 39569.300). and ensure medical staff and CE providers are qualified to perform the assigned tasks. Assigned tasks may include, but are not limited to, providing consultative examinations (CE) or final review of disability determinations. Control – Per 2 CFR section 200.303(a), a 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: The Department of Labor and Workforce Development (Department) did not perform timely periodic reviews of providers performing Consultative Examination (CE) services. Context: For one of forty CE providers selected for testing, the periodic review was not completed timely during FY2023. Section III – Federal Award Findings and Questioned Costs (Continued) Questioned costs: Undetermined. Cause: The Department’s procedures were not effective to ensure that CE provider reviews were completed timely. Internal controls did not prevent or detect the errors. Effect: Untimely provider periodic reviews could result in ineligible CE providers performing services under the program. Recommendation: The Department should review and enhance internal controls and procedures to ensure that all periodic CE provider reviews are completely timely. Views of responsible officials: The audit finding noted one Consultative Examination (CE) provider where the qualified provider review was not completed timely and this was an oversight on the part of the Department of Labor and Workforce Development’s Division of Disability Services (DDS) due to attrition of staff. Going forward, each DDS Professional Relations Officer will be responsible for reviewing eight to 10 CE provider’s qualifications each month until the yearly review is completed for each vendor. The Chief of Professional Relations will submit a monthly report to the DDS Assistant Director detailing how many sites were visited that month and any findings that may have occurred. Each month, the report will detail how many reports remain outstanding in order to complete the yearly reviews.

Reference Number: 2023-027 Prior Year Finding: No Federal Agency: Social Security Administration State Agency: Department of Labor and Workforce Development Federal Program: Disability Insurance/SSI Cluster Assistance Listing Number: 96.001 Award Number and Year: 04-2304NJD100 (10/1/2022 – 9/30/2023), 04-2204NJD100 (10/1/2021 – 9/30/2022) Compliance Requirement: Special Tests and Provisions – Qualified Providers Type of Finding Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance – Each state agency is responsible for comprehensive oversight management of its process and for ensuring accuracy, integrity, and economy of its process (20 CFR sections 404.1519g and 416.919g, and POMS DI 39569.300). As part of these duties, Disability Determination Services (DDS) must have, and follow, procedures for performing medical license verifications to ensure that only qualified providers perform DDSs task. By “qualified,” Social Security Administration (SSA) means that the medical source must: Be currently licensed in the state and have the training and experience to perform the type of examination or test the DDS requests; and a. Not be barred from participation in Medicare or Medicaid programs or other federal or federally assisted programs (20 CFR sections 404.1519g and 416.919g). Prior to using the services of any medical provider, the DDS must check the System of Award Management (SAM) website (https://sam.gov/SAM/) to verify medical licenses, credentials, and certifications with state medical boards (POMS DI 39569.300). and ensure medical staff and CE providers are qualified to perform the assigned tasks. Assigned tasks may include, but are not limited to, providing consultative examinations (CE) or final review of disability determinations. Control – Per 2 CFR section 200.303(a), a 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: The Department of Labor and Workforce Development (Department) did not perform timely periodic reviews of providers performing Consultative Examination (CE) services. Context: For one of forty CE providers selected for testing, the periodic review was not completed timely during FY2023. Section III – Federal Award Findings and Questioned Costs (Continued) Questioned costs: Undetermined. Cause: The Department’s procedures were not effective to ensure that CE provider reviews were completed timely. Internal controls did not prevent or detect the errors. Effect: Untimely provider periodic reviews could result in ineligible CE providers performing services under the program. Recommendation: The Department should review and enhance internal controls and procedures to ensure that all periodic CE provider reviews are completely timely. Views of responsible officials: The audit finding noted one Consultative Examination (CE) provider where the qualified provider review was not completed timely and this was an oversight on the part of the Department of Labor and Workforce Development’s Division of Disability Services (DDS) due to attrition of staff. Going forward, each DDS Professional Relations Officer will be responsible for reviewing eight to 10 CE provider’s qualifications each month until the yearly review is completed for each vendor. The Chief of Professional Relations will submit a monthly report to the DDS Assistant Director detailing how many sites were visited that month and any findings that may have occurred. Each month, the report will detail how many reports remain outstanding in order to complete the yearly reviews.

Reference Number: 2023-028 Prior Year Finding: No Federal Agency: U.S. Department of Homeland Security State Agency: Department of Law and Public Safety Federal Program: COVID-19 - Disaster Grants - Public Assistance (Presidentially Declared Disasters) Assistance Listing Number: 97.036 Award Number and Year: 066124021PA: 8/31/11; 066224614PA: 9/5/21; 066164264PA: 3/14/16; 066214597PA: 4/28/21; 066184368PA: 6/6/18; 066214574PA: 12/11/20; 066204488PA: 3/13/20; 066134086PA: 10/30/12 Compliance Requirement: Reporting – Federal Funding Accountability and Transparency Act (FFATA) Type of Finding Material Weakness in Internal Control Over Compliance, Material Non-compliance Criteria or specific requirement: Compliance: Per the Federal Funding Accountability and Transparency Act (FFATA), prime (direct) recipients of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Reports must be filed in FSRS by the end of the month following the month in which the prime recipient awards any sub-grant greater than or equal to $30,000. If the initial award is below $30,000 but subsequent grant modifications result in a total award equal to or over $30,000, the award will be subject to the reporting requirements as of the date the award exceeds $30,000. If the initial award equals or exceeds $30,000 but funding is subsequently de-obligated such that the total award amount falls below $30,000, the award continues to be subject to FFATA reporting requirements. The following key data elements must be reported: Subawardee Name and Unique Entity ID (UEI) number; Amount of Subaward (inclusive of modifications); Subaward Obligation/Action Date; Date of Report Submission; Subaward Number; Project Description; and Names and Compensation of Highly Compensated Officers. (Names and Compensation of Highly Compensated Officers must only be reported when the entity in the preceding fiscal year received 80 percent or more of its annual gross revenues in Federal awards; and $25,000,000 or more in annual gross revenues from Federal awards; and the public does not have access to this information about the compensation of the senior executives of the entity through periodic reports filed under section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. §§ 78m(a), 78o(d)) or section 6104 of the Internal Revenue Code of 1986.) Control: Per 2 CFR section 200.303(a), a 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 comply 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). Section III – Federal Award Findings and Questioned Costs (Continued) Condition: The Department of Law and Public Safety (Department) did not report subaward information to FSRS during FY 2023. Context: Forty of forty subawards selected for testing were not reported to FSRS. The subawards were issued from 2/18/2022 through 11/22/2023 and were not reported to FSRS until after they were selected for testing by auditors during January and February 2024. SEE SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR CHART/TABLE Cause: The Department has insufficient procedures and internal controls to ensure that subawards are reported to FSRS. Effect: Subawards were not reported to FSRS in accordance with FFATA requirements. Questioned costs: None noted. Recommendation: We recommend that the Department develop internal controls and procedures to ensure that all required subawards are reported timely to FSRS no later than the end of the month following the month of issuance in accordance with FFATA reporting requirements. Views of responsible officials: Unlike other subgrants managed by the Department of Law and Public Safety (DLPS), the subgrants in the Public Assistance program are not issued by the Department but instead are issued by the Federal Emergency Management Agency (FEMA). These FEMA-issued subgrants take the form of Project Worksheets (PWs) and are directly related to a specific disaster. FEMA informs the DLPS of the approved PWs after they are issued. Given the unique nature of the PW issuance, the DLPS is not in a position to report on the FFATA Subaward Reporting System (FSRS) at the time PWs are issued. This contrasts with other grant programs overseen by the DLPS, which do allow for timely subaward reporting in FSRS. The Department will continue to work with our FEMA partners, incorporating any guidance they provide, to develop procedures that ensure subawards are reported in FSRS within the FFATA reporting requirements.

Reference Number: 2023-028 Prior Year Finding: No Federal Agency: U.S. Department of Homeland Security State Agency: Department of Law and Public Safety Federal Program: COVID-19 - Disaster Grants - Public Assistance (Presidentially Declared Disasters) Assistance Listing Number: 97.036 Award Number and Year: 066124021PA: 8/31/11; 066224614PA: 9/5/21; 066164264PA: 3/14/16; 066214597PA: 4/28/21; 066184368PA: 6/6/18; 066214574PA: 12/11/20; 066204488PA: 3/13/20; 066134086PA: 10/30/12 Compliance Requirement: Reporting – Federal Funding Accountability and Transparency Act (FFATA) Type of Finding Material Weakness in Internal Control Over Compliance, Material Non-compliance Criteria or specific requirement: Compliance: Per the Federal Funding Accountability and Transparency Act (FFATA), prime (direct) recipients of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Reports must be filed in FSRS by the end of the month following the month in which the prime recipient awards any sub-grant greater than or equal to $30,000. If the initial award is below $30,000 but subsequent grant modifications result in a total award equal to or over $30,000, the award will be subject to the reporting requirements as of the date the award exceeds $30,000. If the initial award equals or exceeds $30,000 but funding is subsequently de-obligated such that the total award amount falls below $30,000, the award continues to be subject to FFATA reporting requirements. The following key data elements must be reported: Subawardee Name and Unique Entity ID (UEI) number; Amount of Subaward (inclusive of modifications); Subaward Obligation/Action Date; Date of Report Submission; Subaward Number; Project Description; and Names and Compensation of Highly Compensated Officers. (Names and Compensation of Highly Compensated Officers must only be reported when the entity in the preceding fiscal year received 80 percent or more of its annual gross revenues in Federal awards; and $25,000,000 or more in annual gross revenues from Federal awards; and the public does not have access to this information about the compensation of the senior executives of the entity through periodic reports filed under section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. §§ 78m(a), 78o(d)) or section 6104 of the Internal Revenue Code of 1986.) Control: Per 2 CFR section 200.303(a), a 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 comply 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). Section III – Federal Award Findings and Questioned Costs (Continued) Condition: The Department of Law and Public Safety (Department) did not report subaward information to FSRS during FY 2023. Context: Forty of forty subawards selected for testing were not reported to FSRS. The subawards were issued from 2/18/2022 through 11/22/2023 and were not reported to FSRS until after they were selected for testing by auditors during January and February 2024. SEE SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR CHART/TABLE Cause: The Department has insufficient procedures and internal controls to ensure that subawards are reported to FSRS. Effect: Subawards were not reported to FSRS in accordance with FFATA requirements. Questioned costs: None noted. Recommendation: We recommend that the Department develop internal controls and procedures to ensure that all required subawards are reported timely to FSRS no later than the end of the month following the month of issuance in accordance with FFATA reporting requirements. Views of responsible officials: Unlike other subgrants managed by the Department of Law and Public Safety (DLPS), the subgrants in the Public Assistance program are not issued by the Department but instead are issued by the Federal Emergency Management Agency (FEMA). These FEMA-issued subgrants take the form of Project Worksheets (PWs) and are directly related to a specific disaster. FEMA informs the DLPS of the approved PWs after they are issued. Given the unique nature of the PW issuance, the DLPS is not in a position to report on the FFATA Subaward Reporting System (FSRS) at the time PWs are issued. This contrasts with other grant programs overseen by the DLPS, which do allow for timely subaward reporting in FSRS. The Department will continue to work with our FEMA partners, incorporating any guidance they provide, to develop procedures that ensure subawards are reported in FSRS within the FFATA reporting requirements.

Reference Number:2022-002Prior Year Finding:NoFederal Agency:U.S. Department of AgricultureState Agency:Department of AgricultureFederal Program:Child Nutrition ClusterAssistance Listing Number:10.553, 10.555, 10.556, 10.559, 10.582Award Number and Year:INJ300304 (10/1/2020-9/30/2022)Compliance Requirement:Reporting ? Federal Funding Accountability and Transparency Act (FFATA)Type of FindingMaterial Weakness in Internal Control Over Compliance, Material Non-complianceCriteria or specific requirement:Compliance: Per the Federal Funding Accountability and Transparency Act (FFATA), prime (direct) recipients of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Reports must be filed in FSRS by the end of the month following the month in which the prime recipient awards any sub-grant greater than or equal to $30,000. If the initial award is below $30,000 but subsequent grant modifications result in a total award equal to or over $30,000, the award will be subject to the reporting requirements as of the date the award exceeds $30,000. If the initial award equals or exceeds $30,000 but funding is subsequently de-obligated such that the total award amount falls below $30,000, the award continues to be subject to FFATA reporting requirements.The following key data elements must be reported: Subawardee Name and Data Universal Numbering System (DUNS) number; Amount of Subaward (inclusive of modifications); Subaward Obligation/Action Date; Date of Report Submission; Subaward Number; Project Description; and Names and Compensation of Highly Compensated Officers. (Names and Compensation of Highly Compensated Officers must only be reported when the entity in the preceding fiscal year received 80 percent or more of its annual gross revenues in Federal awards; and $30,000,000 or more in annual gross revenues from Federal awards; and the public does not have access to this information about the compensation of the senior executives of the entity through periodic reports filed under section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. ?? 78m(a), 78o(d)) or section 6104 of the Internal Revenue Code of 1986.)Control: Per 2 CFR section 200.303(a), a 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 comply 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:The Department of Agriculture (Department) did not report subaward information timely to FSRS during FY 2022.Context:Eight of eight subawards selected for testing were issued on 10/1/2021 and were not reported to FSRS until 9/30/2022, or 304 days late.SEE SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR CHART/TABLECause:The Department?s internal controls were not sufficient to ensure that subawards were reported timely to FSRS during FY 2022.Effect:Subawards were not reported to FSRS in accordance with FFATA requirements.Questioned costs:None noted.Recommendation:We recommend that the Department develop internal controls and procedures to ensure that all required subawards are reported timely to FSRS no later than the end of the month following the month of issuance in accordance with FFATA reporting requirements.Views of responsible officials:The Department of Agriculture, Division of Food and Nutrition (DOA) was delinquent in submitting required reporting in the FFFATA Subaward Reporting System (FSRS) due to the inability to make system updates for the UEI change during the pandemic. This prevented the DOA from pulling data to submit the reports to the FSRS. The DOA has two technical staff members assigned to query the data fields required to upload the report. Once the query is complete the data is converted to a CSV file and uploaded to FSRS. As of December 2022, monthly reporting has resumed. Successful monthly upload documentation will now be provided and monitored by the Assistant Division Director and Fiscal Coordinator.

Reference Number:2022-003Prior Year Finding:2021-007Federal Agency:U.S. Department of LaborState Agency:Department of Labor and Workforce DevelopmentFederal Program:Unemployment Insurance, COVID-19 - Unemployment InsuranceAssistance Listing Number:17.225Award Number and Year:UI-35663-21-55-A-34 (10/1/2020 ? 12/31/2023), UI-34510-20-60-A-34 (1/1/2020 ? 9/30/2021), UI-35959-21-60-A-34 (1/1/2021 ? 9/30/2022), UI-34073-20-55-A-34 (10/1/19 ? 12/31/22), UI-32614-19-55-A-34 (10/1/18 ? 12/31/21), UI-37238-22-55-A-34 (10/1/21 ? 12/31/24)Compliance Requirement:EligibilityType of Finding:Material Weakness in Internal Control Over Compliance, Material NoncomplianceCriteria or specific requirement:Compliance: Regular Unemployment Compensation (UC) Program ? Under state UC laws, a worker?s benefit rights depend on the amount of the worker?s wages and/or weeks of work in covered employment in a ?base period.? While most states define the base period as the first four of the last five completed calendar quarters prior to the filing of the claim, other base periods may be used. To qualify for benefits, a claimant must have earned a certain amount of wages or have worked a certain number of weeks or calendar quarters within the base period or meet some combination of wage and employment requirements. Some states require a waiting period of one week of total or partial unemployment before UC is payable. A ?waiting period? is a non-compensable period of unemployment in which the worker is otherwise eligible for benefits. To be eligible to receive UC, all states provide that a claimant must have been separated from suitable work for non-disqualifying reasons under state law (i.e., not because of such acts as leaving voluntarily without good cause or discharge for misconduct connected with work). After separation, he or she must be able and available for work, actively seeking work, legally authorized to work in the United States and must not have refused an offer of suitable work.Pandemic Unemployment Assistance (PUA) ? PUA provides benefits to covered individuals, who are those individuals not eligible for regular unemployment compensation (UC or extended benefits under state or federal law or Pandemic Emergency Unemployment Compensation (PEUC), including those who have exhausted all rights to such benefits. Covered individuals also include self-employed, those seeking part-time employment, individuals lacking sufficient work history, and those who otherwise do not qualify for regular unemployment compensation or extended benefits under state or federal law or PEUC.PUA is payable to individuals who are ineligible for regular UC, and are unemployed, partially unemployed, or unable or unavailable to work due to one of the COVID-19 related reasons identified Attachment I to UIPL No. 16-20, Change 5. Section 2102(a)(3)(A)(ii)(I) of the CARES Act included 10 specific COVID-19 related reasons. The Department, under the authority provided by Section 2102(a)(3)(A)(ii)(I)(kk) of the CARES Act, has added additional COVID-19 related reasons; these are discussed in more detail in Section 4.a. of UIPL No. 16-20, Change 5. While three of these new COVID-19 related reasons were introduced to states with the publication of UIPL No. 16-20, Change 5 on February 25, 2021, all COVID-19 related reasons apply retroactively to the beginning of the PUA program.Additionally, as described in Section 4.b.i. of UIPL No. 16-20, Change 5, paraphrasing of the COVID-19 related reasons is not permissible; individuals must be permitted to select more than one COVID-19 related reason; individuals must be permitted to select different COVID-19 related reasons each week; and individuals must be permitted to file and select no COVID-19 related reasons.Federal Pandemic Unemployment Compensation (FPUC) ? To be eligible for FPUC during the program dates described in Section 8 above, individuals must be eligible to receive at least $1 of underlying benefits for the week in question (including regular UC, UCFE, UCX, PEUC, PUA, EB, STC, TRA, DUA, and SEA). FPUC does not require the individual to submit a separate initial application or continued claim.Control: Per 2 CFR section 200.303(a), a 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 comply 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:CLA noted that ineligible claimants were being paid unemployment insurance. The Department of Labor and Workforce Development (DLWD) did not maintain an effective control environment over eligibility requirements of the New Jersey Local Office Online Payment System (NJLOOPS) for both FPUC and PUA.Context:Sixty claimants were selected for testing which included 24 claimants for Regular UC and Extended Benefits, 25 claimants for FPUC and 11 claimants for PUA. We noted the following exceptions:? FPUC: 2 of 25 claimants receiving benefits did not receive at least $1 of other benefits for the payment period.? PUA: 4 of 11 claimants receiving PUA did not identify a COVID-19 reason for their unemployment and were ineligible for the program.Questioned costs:$2,320 - The total amount of benefits received by ineligible recipients:? FPUC: $600? PUA: $1,720Cause:The Department began providing benefits to claimants before NJLOOPS had completed the eligibility determination process.Effect:Ineligible claimants received unemployment compensation benefits.Recommendation:We recommend the Department review and enhance procedures and controls to ensure that only eligible claimants receive unemployment compensation benefits.Views of responsible officials:The Department of Labor and Workforce Development (DLWD) has controls in place to only allow an FPUC payment to be made when an underlying Unemployment Insurance (UI) payment has also been processed. FPUC payments should not be issued to any claim without the underlying UI payment being made for the same week. The two FPUC payments issued and noted as exceptions during eligibility testing will be reviewed independently by DLWD to determine if the payments issued were to eligible recipients or not.For the PUA exceptions noted during Eligibility testing, overall the DLWD issued PUA payments to over 680,000 claimants during the COVID-19 pandemic. DLWD had controls in place to require a COVID related reason to make the claim PUA eligible and the weekly PUA certification required claimants to choose a COVID related reason for why they were out of work before they could get paid. The PUA payments in question will be reviewed independently by the DLWD to determine if the payments issued under PUA were appropriate or if they should have been paid instead under the regular UI program.

Reference Number:2022-004Prior Year Finding:2021-010Federal Agency:U.S. Department of LaborState Agency:Department of Labor and Workforce DevelopmentFederal Program:Unemployment Insurance, COVID-19 ? Unemployment InsuranceAssistance Listing Number:17.225Award Number and Year:UI-35663-21-55-A-34 (10/1/2020 ? 12/31/2023), UI-34510-20-60-A-34 (1/1/2020 ? 9/30/2021), UI-35959-21-60-A-34 (1/1/2021 ? 9/30/2022), UI-34073-20-55-A-34 (10/1/19 ? 12/31/22), UI-32614-19-55-A-34 (10/1/18 ? 12/31/21), UI-37238-22-55-A-34 (10/1/21 ? 12/31/24)Compliance Requirement:Reporting ? ETA 9050 and ETA 9052Type of Finding:Significant Deficiency in Internal Control Over Compliance, Other MattersCriteria or specific requirement:Compliance: The ETA 9050 ? Time Lapse of All First Payments except Workshare report contains monthly information on first payment time lapse. This report concerns the time it takes states to pay benefits to claimants for the first compensable week of unemployment. First Payments are considered timely at 14/21 days, Interstate and Intrastate UI, UCFE, and UCX, full and partial weeks. The report is due in the ETA National Office on the 20th of the month following the month to which the data relates.The ETA 9052 ? Nonmonetary Determination Time Lapse Detection report contains monthly information on the time it take states to issue nonmonetary determinations from the date the issues are first detected by the agency. Single-claimant and multi-claimant nonmonetary determinations are included in the report. Nonmonetary determinations made by organizational units such as Benefits Accuracy Measurement (BAM) and Benefit Payment Control (BPC) are also included in the report. Nonmonetary determinations are considered timely if completed within 21 days. The report is due in the ETA National Office on the 20th of the month following the month to which the data relates.Control: Per 2 CFR section 200.303(a), a 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 comply 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:Reports submitted by the Department of Labor and Workforce Development (Department) indicate that First Payment Time Lapse and Nonmonetary Determinations were untimely during FY 2022.Context:Four ETA 9050 and four ETA 9052 reports were selected for testing for the months of September 2021, November 2021, February 2022, and May 2022. We noted the following exceptions:? ETA 9050: 4 of 4 reports indicate that First Payments were made in more than 14/21 days.? ETA 9052: 4 of 4 reports indicate that nonmonetary determinations were completed in more than 21 days.Questioned costs:None noted.Cause:The Department?s procedures and controls were not operating effectively to ensure that first payments and nonmonetary determinations were completed timely.Effect:First Payments and Nonmonetary Determinations were not completed timely as required by the program.Recommendation:We recommend that the Department review its policies and procedures to ensure that it makes first payments within 14/21 days and that nonmonetary determinations are completed within 21 days per program requirements.Views of responsible officials:New Jersey continues to make progress towards meeting the first payment and non-monetary time lapse standards as recovery from the historic claims filing related to the COVID-19 pandemic continues. As indicated in the prior year update, time lapse standards for both first payment and non-monetary continue to increase from the lows seen during the pandemic. Most recent figures for February 2023 show first payment time lapse at 65.1% and year-to-date at 54.5%, both up from what was reported last November 2022 at 40% and 36.4%, respectively. Non-monetary time lapse figures have also improved, with the most recent February 2023 figures reported as 62.6% for the month and 44.1% year-to-date, which is up from 24.0% for March 2022 and year-to-date at that time of 33.0%).It is important to note that before the pandemic hit in March 2020, New Jersey current figures at that time met all first payment and non-monetary time lapse standards for the reporting year that ended March 2020. The decrease to the timeliness figures is a direct result of the significant increase to workload volumes resulting from the pandemic and not due to a lack of proper internal controls.In addition to the high workloads, New Jersey has also implemented strict anti-fraud measures that include all new claims filed going through an identity proofing process before any payments can be issued. Delays on the claimant end to complete the verification process ? either by the claimant not going through the process or having difficulty with completing it ? also will have a direct impact on first payment time lapse. Increased education to claimants on the requirement to verify their ID, as well as increasing the tools and greater availability of support for ID verification will provide claimants with more options to meet this requirement. New Jersey has worked with our identity verification partner to allow for three different methods of verification; 1) self-service online, 2) connect to a `Trusted Referee? with our identity verification partner who will provide the verification online through a video call, or 3) an in-person appointment at a walk-in center to complete the process. In addition to what is offered by the vendor, One Stop centers throughout the State have been equipped with upgraded monitors with cameras that will allow claimants that are unable to complete the process with our vendor to report to one of these centers and complete the process there.As New Jersey continues to work through the backlog of claims, it is anticipated that overall time lapse figures will continue to improve and for the reporting year ending March 2024 progress will be made towards meeting the established standards.

Reference Number:2022-005Prior Year Finding:NoFederal Agency:U.S. Department of LaborState Agency:Department of Labor and Workforce DevelopmentFederal Program:Unemployment Insurance, COVID-19 ? Unemployment InsuranceAssistance Listing Number:17.225Award Number and Year:UI-35663-21-55-A-34 (10/1/2020 ? 12/31/2023), UI-34510-20-60-A-34 (1/1/2020 ? 9/30/2021), UI-35959-21-60-A-34 (1/1/2021 ? 9/30/2022), UI-34073-20-55-A-34 (10/1/19 ? 12/31/22), UI-32614-19-55-A-34 (10/1/18 ? 12/31/21), UI-37238-22-55-A-34 (10/1/21 ? 12/31/24)Compliance Requirement:Special Tests and Provisions: UI Reemployment Programs: RESEAType of Finding:Significant Deficiency in Internal Control over Compliance, Other MattersCriteria or specific requirement:Compliance: Per 42 U.S. Code ? 506 (a) The Secretary of Labor (in this section referred to as the ?Secretary?) shall award grants under this section for a fiscal year to eligible States to conduct a program of reemployment services and eligibility assessments for individuals referred to reemployment services as described in section 503(j) of this title for weeks in such fiscal year for which such individuals receive unemployment compensation. Further, per 42 U.S. Code ? 506 (c) (1), In carrying out a State program of reemployment services and eligibility assessments using grant funds awarded to the State under this section, a State shall use such funds only for interventions demonstrated to reduce the number of weeks for which program participants receive unemployment compensation by improving employment outcomes for program participants.The UI program serves as one of the principal ?gateways? to the workforce system. It is often the first workforce program accessed by individuals who need workforce services. The WPRS and RESEA programs serve as UI?s primary programs that facilitate the reemployment needs of UI claimants.WPRS, which is mandated by Section 303(j) of the Social Security Act, is designed to identify UI claimants who are most likely to exhaust their benefits and need reemployment assistance to return to work, and refer them to appropriate reemployment services, such as: job search and job placement assistance; counseling; testing; provision of occupational and labor market information; and assessments. WPRS provides reemployment services to selected claimants through an early intervention process. The number of individuals served under WPRS is determined by the state (and/or local areas) based on its capacity to serve these individuals. UIPL No. 41-94 provides guidance on WPRS requirements.RESEA is authorized by Section 306 of the Social Security Act and builds on the success of RESEA?s predecessor, the former UI Reemployment and Eligibility Assessment (REA) program. RESEA uses an evidence-based integrated approach that combines an eligibility assessment for continuing UI eligibility and the provision of reemployment services. State administration of the RESEA is voluntary and under certain circumstances may be designed to also satisfy WPRS requirements. Operating guidance for the RESEA program is updated annually. UIPL 13-21 provides RESEA operating Guidance for FY 2021.Control: Per 2 CFR section 200.303(a), a 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:The Department of Labor (Department) did not retain documentation required by the RESEA program to verify compliance with federal program regulations. Controls were not working sufficiently to document that a staff member at the Department with knowledge of the program reviewed eligibility requirements prior to admission of participants to the RESEA program.Context:The Department?s policy is that RESEA eligibility interviews must be conducted and eligibility review forms completed. Both steps are to be reviewed and signed by the participant and an Unemployment Insurance (UI) staff member who is knowledgeable of the program requirements. For three of sixty cases selected for testing, the Department was unable to provide a signed RESEA worksheet indicating the interview had been completed and the claimant was reviewed and approved by a UI supervisor.Questioned costs:Undetermined.Cause:The Department?s procedures and internal controls are not sufficient to ensure compliance with RESEA requirements.Effect:Without clear documentation supporting a participant?s eligibility and supervisory review, ineligible participants could go undetected and federal funds could be paid to recipients who do not qualify to participate in the RESEA program.Recommendation:We recommend that policies and procedures be implemented to ensure that internal controls over RESEA include retention of documentation of each participant?s eligibility and review and approval by a UI supervisor.Views of responsible officials:The RESEA policy and controls presently in place at the Department of Labor and Workforce Development (DLWD) require eligibility interviews to be conducted and eligibility review forms to be completed and signed by the participant and UI program representative. DLWD will work to strengthen and reinforce these controls with responsible staff in an effort to ensure that all interviews are properly documented and eligibility review forms are signed and maintained on file for future reference and compliance support.

Reference Number: 2022-006Prior Year Finding: 2021-012Federal Agency: U.S. Department of LaborState Agency: Department of Labor and Workforce DevelopmentFederal Program: Unemployment InsuranceAssistance Listing Number: 17.225Award Number and Year: UI-35663-21-55-A-34 (10/1/2020 ? 12/31/2023), UI-34510-20-60-A-34 (1/1/2020 ? 9/30/2021), UI-35959-21-60-A-34 (1/1/2021 ? 9/30/2022)Compliance Requirement: Information Technology General ControlsType of Finding Significant Deficiency in Internal Control Over Compliance, Other MattersCriteria or specific requirement:Control: Per 2 CFR section 200.303(a), a 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 comply 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). As part of an entity?s internal controls to reasonably ensure compliance over Federal laws and regulations, an entity must maintain an effective control environment over their information technology systems used to generate and process information to administer Federal programs in accordance with the respective rules and regulations that govern the program.Condition:The Department of Labor and Workforce Development (Department) did not maintain an effective control environment over change management of the New Jersey Local Office Online Payment System (NJLOOPS).Context:The NJLOOPS application is an essential system hosted within the Office of Information Technology?s (OIT) infrastructure used by the Department for unemployment insurance eligibility, claims, benefit calculations, and payments. NJLOOPS application management is provided by Department staff. We noted that the prior year finding for internal controls over change management was not corrected. Specifically, we noted that while tickets have been documented for the sample of changes tested for the NJLOOPS change management procedures, they do not maintain key information described in the change management policy. Further, we noted that two individuals have the ability to develop and promote their own changes to production which poses a segregation of duties issue.Questioned costs:Undetermined.Cause:Due to limitations on staffing and increased demand on IT resources due to the additional requirements of the pandemic's unemployment program, the agency was unable to comply with its internal change management procedures requirements.Effect:Noncompliance with the requirements of internal change management procedures and a lack of segregation of duties could increase the risk of potential unauthorized or unapproved changes occurring to the application.Recommendation:We recommend the Department follow the statewide change management policy and formally document the request, testing, and approval of all changes related to the NJLOOPS application. We further recommend that the Department implement segregation of duties controls to prevent the same user from developing, approving, and promoting a system change to the production environment.Views of responsible officials:The Department of Labor and Workforce Development (DLWD) Office of Information Management, Services & Solutions (OIMSS) will continue its efforts to strengthen and improve staff compliance with existing controls over program change controls for the New Jersey Local Office Online Payment System (NJLOOPs). OIMSS management will conduct a meeting with all staff involved in program changes to reiterate that existing control requirements must be adhered to at all times. DLWD expects to achieve full compliance with exiting controls by June 30, 2023.

Reference Number:2022-007Prior Year Finding:NoFederal Agency:U.S. Department of LaborState Agency:Department of Labor and Workforce DevelopmentFederal Program:WIOA ClusterAssistance Listing Number:17.258, 17.259, 17.278Award Number and Year:AA-32176-18-55-A-34 (7/1/18 ? 9/30/21), AA-33245-19-55-A-34 (7/1/19 ? 9/30/22), AA-34783-20-55-A-34 (7/1/20 ? 9/30/23), AA-36334-21-55-A-34 (7/1/21 ? 9/30/24)Compliance Requirement:Reporting ? Federal Funding Accountability and Transparency Act (FFATA)Type of Finding:Material Weakness in Internal Control Over Compliance, Material Non-complianceCriteria or specific requirement:Compliance: Per the Federal Funding Accountability and Transparency Act (FFATA), prime (direct) recipients of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Reports must be filed in FSRS by the end of the month following the month in which the prime recipient awards any sub-grant greater than or equal to $30,000. If the initial award is below $30,000 but subsequent grant modifications result in a total award equal to or over $30,000, the award will be subject to the reporting requirements as of the date the award exceeds $30,000. If the initial award equals or exceeds $30,000 but funding is subsequently de-obligated such that the total award amount falls below $30,000, the award continues to be subject to FFATA reporting requirements.The following key data elements must be reported: Subawardee Name and Unique Entity ID (UEI) number; Amount of Subaward (inclusive of modifications); Subaward Obligation/Action Date; Date of Report Submission; Subaward Number; Project Description; and Names and Compensation of Highly Compensated Officers. (Names and Compensation of Highly Compensated Officers must only be reported when the entity in the preceding fiscal year received 80 percent or more of its annual gross revenues in Federal awards; and $30,000,000 or more in annual gross revenues from Federal awards; and the public does not have access to this information about the compensation of the senior executives of the entity through periodic reports filed under section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. ?? 78m(a), 78o(d)) or section 6104 of the Internal Revenue Code of 1986.)Control: Per 2 CFR section 200.303(a), a 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 comply 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:Subaward information was not reported timely to FSRS during FY 2022.Context:Eight of eight subawards selected for testing were not reported timely to FSRS. Specifically, we noted the following exceptions:? 3 of 3 subawards issued on 7/1/2019 were reported to FSRS on 9/1/2021, or 733 days late.? 5 of 5 subawards issued between 7/1/2020 and 2/1/2022 were reported to FSRS on 2/6/2023, or between 343 and 951 days late.SEE SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR CHART/TABLECause:The Department?s internal controls were not sufficient to ensure that subawards were reported timely to FSRS during FY 2022.Effect:Subawards were not reported to FSRS in accordance with FFATA requirements.Questioned costs:None noted.Recommendation:We recommend that the Department develop internal controls and procedures to ensure that all required subawards are reported timely to FSRS no later than the end of the month following the month of issuance in accordance with FFATA reporting requirements.Views of responsible officials:In recent years, the Department of Labor and Workforce Development (DLWD) has transitioned from a manual contract process to a web-based system (i.e., SAGE and IGX systems) and has also experienced changes in personnel responsible for the contracting process. Although progress has been made with getting the FFATA Reporting Unit access to these automated systems, the DLWD will continue to enhance the communication between the offices that prepare and approve the contracts/agreements and the FFATA Reporting Unit. DLWD will also develop procedures to ensure that timely and accurate information is provided to the FFATA Reporting Unit and that group will also be included in the grant approval process so the unit is notified timely.

Reference Number:2022-008Prior Year Finding:NoFederal Agency:U.S. Department of the TreasuryState Agency:Department of Community AffairsFederal Program:COVID-19 - Emergency Rental Assistance ProgramAssistance Listing Number:21.023Award Number and Year:ERA0222 (3/13/2020 ? 9/30/2025), ERAE0490 (3/13/2020 - 9/30/2025)Compliance Requirement:ReportingType of FindingMaterial Weakness in Internal Control Over Compliance, Material NoncomplianceCriteria or specific requirement:Compliance: Emergency Rental Assistance (ERA) 1 and ERA 2 state, local, and territorial recipients were required to submit monthly and quarterly reports to the United States Department of the Treasury (U.S. Treasury). The monthly reports are brief two-question updates through which ERA recipients provide U.S. Treasury with very high-level counts of the numbers of households receiving assistance and the amounts of ERA funds distributed. The quarterly reports are in-depth reports with data on an array of programmatic and financial information to provide transparency in the use and progress of ERA funds. Monthly reports were required for each month of Fiscal Year 2022 and were due 15 days after the end of the month. Quarterly reports were required for each quarter of Fiscal Year 2022 and were due October 29, 2021, February 1, 2022, April 15, 2022, and July 15, 2022.The Emergency Rental Assistance Program Reporting Guidance published by the U.S. Treasury identifies several steps in the reporting process:? Recipients gather and maintain required information such as counts of applicants and participants; amounts paid directly or indirectly to tenants, landlords, and utility/home energy providers; amounts paid to subrecipients and contractors; and administrative expenses.? Recipients will need to communicate with and gather required information from their subrecipients and contractors, if applicable.? After manually entering or uploading the report information, Recipients must review the information entered or submitted to the online reporting forms for any errors and completeness. Following completion of the report in Treasury?s portal, the Recipient?s designated Authorized Representative for Reporting must certify to the authenticity and accuracy of the information provided and formally submit the report to Treasury.SF-425, Federal Financial Report: As stated in the award terms and conditions of the award agreement, a final SF-425, Federal Financial Report, is due 90 days after the expiration of the award and should be submitted electronically. The awardee shall report program outlays and program income on the same accounting basis (i.e., cash or accrual) that it uses in its normal accounting system. When submitting a final SF-425, Federal Financial Report, the total matching contribution, if required, should be shown in the report. The final SF-425 must not show any unliquidated obligations. If the awardee still has valid obligations that remain unpaid when the report is due, it shall request an extension of time for submitting the report pursuant to paragraph (c) of this section; submit a provisional report (showing the unliquidated obligations) by the due date; and submit a final report when all obligations have been liquidated, but no later than the approved extension date. SF-425, Federal Financial Reports, must be submitted by all awardees, including Federal agencies and national laboratories.Control: Per 2 CFR section 200.303(a), a 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 comply 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:As the direct recipient of ERA funds, the Department of Community Affairs (DCA) is responsible for ensuring the timeliness and accuracy of report submissions. We noted that monthly and quarterly special reports and quarterly financial reports submitted during FY 2022 did not agree with supporting documentation.Context:We selected eight monthly special reports, four quarterly special reports, and two quarterly financial reports for testing and we noted that for 13 of 14 reports selected, amounts reported did not agree to supporting documentation. Specifically, we noted the following exceptions:? Four of four quarterly special reports submitted did not agree to supporting documentation.? Five of eight monthly special reports submitted were missing expenditures that were included in supporting documentation.? For two of eight monthly reports submitted, DCA was unable to provide supporting documentation for reported expenditures.? Two of two quarterly financial reports submitted did not agree to supporting documentation.We noted that the reports contained all required data elements, however, DCA was unable to provide supporting documentation that agreed with the information reported. We also noted that DCA used the same data used for the quarterly reports with their submission of the financial SF-425 reports.Cause:DCA?s procedures were not sufficient to ensure the accuracy of the reports submitted to the U.S. Treasury nor that it maintained documentation supporting the information reported. Internal controls did not prevent or detect the errors.Effect:Information reported to the U.S. Treasury may have been inaccurate since it did not agree to supporting documentation.Questioned costs:Undetermined.Recommendation:We recommend that DCA implement formal policies and procedures to verify the information reported and that reports are reviewed for accuracy before they are submitted to U.S. Treasury to ensure that reports filed are complete and accurate. We further recommend that DCA retains supporting documentation used when preparing reports, and that this documentation is available for audit.Views of responsible officials:U.S. Treasury?s COVID-19 Emergency Rental Assistance Program (ERA) was established in 2021 to support housing stability throughout the pandemic by providing assistance payments for renters facing eviction. The Department of Community Affairs (DCA) is a direct recipient of ERA funding for use in preventing evictions for over 70,000 families throughout the State of New Jersey.Since the rollout of the new ERA program back in 2021, the reporting requirements and guidance provided by U.S. Treasury to ERA recipients evolved with numerous changes and updates posted that also required DCA to change and update systems over time. As the programs continued to evolve so did DCA?s reporting process. U.S. Treasury initially required monthly reporting starting in April 2021, through which ERA recipients provided U.S. Treasury with very high-level counts of the numbers of households receiving assistance and the amounts of ERA funds distributed. The monthly reporting requirement was then discontinued after the June 30, 2022 submission and thereafter, U.S. Treasury shifted the ERA Reporting guidance to be focused primarily on the quarterly reporting requirements and also amended those reporting requirements going forward.When preparing monthly and quarterly reports, DCA?s data source used has always been the most reliable one at the time the report was due in order to ensure accuracy of information reported to U.S. Treasury. As previously stated, DCA?s systems evolved as needed in order to keep up with the constant changes in reporting requirements for the ERA program.? At the inception of the program, reporting was done from the primary Podio system that obligated and requested payments.? DCA then worked to build the necessary reports from the MRI system that generated ERA payments in order to trace payments back to checks issued ? representing distributions incurred.? Most recently DCA has been working to reconcile MRI with the State?s NJCFS accounting system to further validate the MRI data. Over time variances have been identified that affect reporting such as void and uncashed check actions.DCA recognizes the need to ensure supporting documentation used to prepare quarterly and other required reports for Treasury is captured and retained for audit purposes. DCA continues to build?a three-way reconciliation between the three primary systems to document explainable variances among the systems, such as timing differences, voids, returned items, etc. DCA has implemented a corrective action plan to enhance the availability of supporting documentation for ERA Treasury reporting as detailed in the State?s official corrective action plan.

Reference Number:2022-009Prior Year Finding:NoFederal Agency:U.S. Department of the TreasuryState Agency:Department of Community AffairsFederal Program:COVID-19 - Homeowner Assistance FundAssistance Listing Number:21.026Award Number and Year:HAF0019 (2021)Compliance Requirement:Reporting ? Federal Funding Accountability and Transparency Act (FFATA)Type of FindingMaterial Weakness in Internal Control Over Compliance, Material Non-complianceCriteria or specific requirement:Compliance: Per the Federal Funding Accountability and Transparency Act (FFATA), prime (direct) recipients of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Reports must be filed in FSRS by the end of the month following the month in which the prime recipient awards any sub-grant greater than or equal to $30,000. If the initial award is below $30,000 but subsequent grant modifications result in a total award equal to or over $30,000, the award will be subject to the reporting requirements as of the date the award exceeds $30,000. If the initial award equals or exceeds $30,000 but funding is subsequently de-obligated such that the total award amount falls below $30,000, the award continues to be subject to FFATA reporting requirements.The following key data elements must be reported: Subawardee Name and Unique Entity ID (UEI) number; Amount of Subaward (inclusive of modifications); Subaward Obligation/Action Date; Date of Report Submission; Subaward Number; Project Description; and Names and Compensation of Highly Compensated Officers. (Names and Compensation of Highly Compensated Officers must only be reported when the entity in the preceding fiscal year received 80 percent or more of its annual gross revenues in Federal awards; and $30,000,000 or more in annual gross revenues from Federal awards; and the public does not have access to this information about the compensation of the senior executives of the entity through periodic reports filed under section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. ?? 78m(a), 78o(d)) or section 6104 of the Internal Revenue Code of 1986.)Control: Per 2 CFR section 200.303(a), a 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 comply 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:Subaward information was not reported timely to FSRS during FY 2022.Context:One subaward was issued by the Department of Community Affairs (Department) during FY 2022 which was selected for testing. The subaward was issued on 8/23/2021 and it was not reported to FSRS until 2/7/2022, or 130 days late.SEE SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR CHART/TABLECause:The Department?s internal controls were not sufficient to ensure that subawards were reported timely to FSRS during FY 2022.Effect:Subawards were not reported to FSRS in accordance with FFATA requirements.Questioned costs:None noted.Recommendation:We recommend that the Department develop internal controls and procedures to ensure that all required subawards are reported timely to FSRS no later than the end of the month following the month of issuance in accordance with FFATA reporting requirements.Views of responsible officials:The Department of Community Affairs (DCA) has internal controls and procedures in place to ensure that required subawards are reported timely to FSRS in accordance with FFATA reporting requirements. The Homeowner Assistance Fund award received by DCA was unique in that it was planned and fully reallocated via Memorandum of Understanding (MOU) agreement to a DCA affiliate organization to administer on the State?s behalf. As a result, the DCA did not initially believe this single reallocation transaction was subject to FFATA reporting requirements. The Accountability Officer at the affiliate organization will be involved should another program and contractual arrangement of this type occur and will ensure that the FSRS reporting is done timely. No further subaward transactions are expected to be processed by DCA as the full allocation was disbursed to our affiliate organization upon receipt of the award and execution of the MOU.

Reference Number:2022-010Prior Year Finding:NoFederal Agency:U.S. Department of the TreasuryState Agency:Department of Community AffairsFederal Program:COVID-19 - Homeowner Assistance FundAssistance Listing Number:21.026Award Number and Year:HAF0019 (2021)Compliance Requirement:Subrecipient MonitoringType of FindingSignificant Deficiency in Internal Control over Compliance, Other MattersCriteria or specific requirement:Compliance ? Per 2 CFR section 200.332(a), all pass-through entities must ensure that every subaward is clearly identified to the subrecipient as a subaward and includes the following information 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.Required information includes:i. Subrecipient name (which must match the name associated with its unique entity identifier);ii. Subrecipient's unique entity identifier;iii. Federal Award Identification Number (FAIN);iv. Federal Award Date (see the definition of Federal award date in ? 200.1 of this part) of award to the recipient by the Federal agency;v. Subaward Period of Performance Start and End Date;vi. Subaward Budget Period Start and End Date;vii. Amount of Federal Funds Obligated by this action by the pass-through entity to the subrecipient;viii. Total Amount of Federal Funds Obligated to the subrecipient by the pass-through entity including the current financial obligation;ix. Total Amount of the Federal Award committed to the subrecipient by the pass-through entity;x. Federal award project description, as required to be responsive to the Federal Funding Accountability and Transparency Act (FFATA);xi. Name of Federal awarding agency, pass-through entity, and contact information for awarding official of the Pass-through entity;xii. Assistance Listings number and Title; the pass-through entity must identify the dollar amount made available under each Federal award and the Assistance Listings Number at time of disbursement;xiii. Identification of whether the award is R&D; andxiv. Indirect cost rate for the Federal award (including if the de minimis rate is charged) per section 200.414.2 CFR section 200.332 also states that pass-through entities must:(d) Evaluate each subrecipient's risk of noncompliance with Federal statutes, 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, which may include consideration of such factors as:1) The subrecipient's prior experience with the same or similar subawards;2) The results of previous audits including whether or not the subrecipient receives a Single Audit in accordance with Subpart F - Audit Requirements of this part, and the extent to which the same or similar subaward has been audited as a major program;3) Whether the subrecipient has new personnel or new or substantially changed systems;4) The extent and results of Federal awarding agency monitoring (e.g., if the subrecipient also receives Federal awards directly from a Federal awarding agency).(e) 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:(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.(3) Issuing a management decision for audit findings pertaining to the Federal award provided to the subrecipient from the pass-through entity as required by ? 200.521 Management decision.(f) Verify that every subrecipient is audited as required by Subpart F - Audit Requirements of this part when it is expected that the subrecipient's Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in ? 200.501 Audit requirements.Control ? Per 2 CFR section 200.303(a), a 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:The Department of Community Affairs (Department) did not comply with subrecipient monitoring requirements for the program.Context:The Department issued one subaward under the program and it was noted that the subaward did not include all required Federal Award information, nor did the Department perform a risk assessment of the subrecipient or perform monitoring activities for the award.Questioned costs:None noted.Cause:The Department?s procedures and controls were not effective to ensure the subaward was issued in compliance with Federal requirements, nor that it performed a risk assessment or timely monitoring of subrecipient.Effect:Excluding the required federal grant award information at the time of the subaward may cause subrecipients and their auditors to be uninformed about specific program and other regulations that apply to the funds they receive. There is also the potential for subrecipients to have incomplete Schedules of Expenditures of Federal Awards (SEFA) in their Single Audit reports, and federal funds may not be properly audited at the subrecipient level in accordance with the Uniform Guidance.Not conducting during the award monitoring may result in a failure of the Division to detect that its subrecipients used subawards for unauthorized purposes, managed them in violation of the terms and conditions of the subawards, or that subaward performance goals were not achieved.Without ensuring subrecipients have obtained audits as required by Subpart F, there is an increased risk that subrecipients could be inappropriately spending and/or inaccurately tracking and reporting federal funds over multiple year periods, and these discrepancies may not be properly monitored, detected, and corrected by Division personnel on a timely basis.Recommendation:The Department should review and enhance internal controls and procedures to ensure that all required information is included in all subawards, that proper subrecipient monitoring is conducted, and that evaluation of independent audits is performed.Views of responsible officials:As recommended, the Department of Community Affairs (DCA) will review current procedures to ensure that all subaward information required by the federal Uniform Guidance is included in all subaward contracts and grant agreements. The DCA has also reviewed its current subrecipient monitoring procedures for standard subawards made by the agency and has determined that no internal control enhancements are required. The HAF award was a unique grant relationship for DCA in that the entire award was passed through to another New Jersey State government agency that is a direct affiliate of the Department. Monitoring procedures were determined based on the close working relationship with our affiliate organization and the fact that less than 1 percent of the grant award was expended through June 30, 2022. Current procedures included a risk assessment of the subrecipient and performance of the single audit desk review of the independent audit report. In addition, the Director of Audit, and the Executive Director of the subgrantee affiliate participate in weekly meetings where updates on the program status can be determined. DCA?s subrecipient monitoring plan also includes the hiring of an Integrity Monitor to oversee and monitor the use of the HAF funds as well as compliance with all HAF program reporting requirements. As program disbursement activity is continuing to increase with the HAF program(s) created more fully up and running, DCA is currently targeting the Integrity Monitor hire to take place sometime within the next three to six months.

Reference Number:2022-011Prior Year Finding:NoFederal Agency:U.S. Department of EducationState Agency:Department of CorrectionsFederal Program:Special Education Cluster IDEAAssistance Listing Number:84.027 and 84.173Award Number and Year:H027A200100 (7/1/2020 ? 9/30/2021), H027A200100-20A (7/1/2020 ? 9/30/2021), H027A210100 (7/1/2021 ? 9/30/2022), H027A2100100-21A (7/1/2021 ? 9/30/2022), H027X210100 (7/1/2021 ? 9/30/2022), H173A200114 (7/1/2020 ? 9/30/2021), H173A210114 (7/1/2021 ? 9/30/2022), H173X210114 (7/1/2021 ? 9/30/2021)Compliance Requirement:Allowable Costs/Cost Principles ? Time and Effort ReportingType of Finding:Significant Deficiency in Internal Control Over Compliance, Other MattersCriteria or specific requirement:Compliance ? Per 2 CFR ? 200.430 (a), costs of compensation are allowable to the extent that they satisfy the specific requirements of this part, and that the total compensation for individual employees: (1) Is reasonable for the services rendered and conforms to the established written policy of the non-Federal entity consistently applied to both Federal and non-Federal activities; (2) Follows an appointment made in accordance with a non-Federal entity's laws or rules or written policies and meets the requirements of Federal statute, where applicable; and (3) Is determined and supported as provided in paragraph (i) of this section, Standards for Documentation of Personnel Expenses, when applicable.Per 2 CFR ? 200.430 (i), charges to federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must:? Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated,? Be incorporated into the official records of the non-Federal entity,? Reasonably reflect the total activity for which the employee is compensated by the non-Federal entity, not exceeding 100% of compensated activities,? Encompass both federally assisted, and all other activities compensated by the non-Federal entity on an integrated basis, but may include the use of subsidiary records as defined in the non-Federal entity's written policy,? Comply with the established accounting policies and practices of the non-Federal entity,? Support the distribution of the employee's salary or wages among specific activities or costobjectives if the employee works on more than one Federal award; a Federal award and non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity.Control ? Per 2 CFR section 200.303(a), a 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 comply with the 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:The Department of Corrections (Department) did not maintain adequate support to validate actual payroll expenses charged to the program. An employee?s timesheet was not approved by the supervisor on a timely basis.Context:The Department was unable to provide documentation that one of forty employee timesheets selected for testing had been approved by the supervisor on a timely basis.Questioned costs:None noted.Cause:Controls were not operating effectively to ensure that time and effort reporting was performed in accordance with federal requirements.Effect:There is an increased risk of charging unallowed payroll costs to the program.Recommendation:The Department should reevaluate its current process, implement proper controls, and perform additional training over time and effort reporting. The Department should not seek federal reimbursement unless it can substantiate that the time and effort was dedicated to the federal program.Views of responsible officials:The Department of Corrections (DOC) held a meeting on March 22, 2023 with the Supervisors of Education where the importance of reviewing and approving all timesheets was reinforced. Staff were also informed and reminded of progressive discipline for future instances of timesheet approval omissions. DOC also plans to distribute a memorandum to all Supervisors and Assistant Supervisors of Education in an effort to ensure that proper controls are implemented for timely supervisory review and approvals of timesheets as required. Supervisors were also instructed to substantiate via email that timesheet approval, in their absence, will be approved by DOC Administration at their facility.

Reference Number:2022-012Prior Year Finding:2021-015Federal Agency:U.S. Department of Health and Human ServicesState Agency:Department of Human ServicesFederal Program:Aging Cluster and COVID-19 Aging ClusterAssistance Listing Number:93.044, 93.045, 93.053Award Number and Year:2001NJCMC2-00 (3/20/2020 ? 9/30/2022)2101NJVAC5-00 (4/1/2022 ? 9/30/2022)2001NJHDC2-00 (3/20/2020 ? 9/30/2022)2101NJOASS-00 (10/1/2020 ? 9/30/2022)2101NJOASS-01 (10/1/2020 ? 9/30/2022)2101NJOANS-00 (10/1/2020 ? 9/30/2022)2101NJHDC5-00 (12/27/2020 ? 9/30/2022)2101NJSSC6-00 (4/1/2022 ? 9/30/2024)2001NJOASS-03 (10/1/2019 ? 9/30/2022)2001NJOANS-04 (10/1/2019 ? 9/30/2022)2201NJOASS-02 (10/1/2021 ? 9/30/2023)2201NJOACM-02 (10/1/2021 ? 9/30/2023)2201NJOAHD-02 (10/1/2021-9/30/2023)2201NJOAPH-02 (10/1/2021-9/30/2023)2201NJOAFC-02 (10/1/2021-9/30/2023)Compliance Requirement:Reporting ? Federal Funding Accountability and Transparency Act (FFATA)Type of FindingMaterial Weakness in Internal Control Over Compliance, Material Non-complianceCriteria or specific requirement:Compliance: Per the Federal Funding Accountability and Transparency Act (FFATA), prime (direct) recipients of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Reports must be filed in FSRS by the end of the month following the month in which the prime recipient awards any sub-grant greater than or equal to $30,000. If the initial award is below $30,000 but subsequent grant modifications result in a total award equal to or over $30,000, the award will be subject to the reporting requirements as of the date the award exceeds $30,000. If the initial award equals or exceeds $30,000 but funding is subsequently de-obligated such that the total award amount falls below $30,000, the award continues to be subject to FFATA reporting requirements.The following key data elements must be reported: Subawardee Name and Data Universal Numbering System (DUNS) number; Amount of Subaward (inclusive of modifications); Subaward Obligation/Action Date; Date of Report Submission; Subaward Number; Project Description; and Names and Compensation of Highly Compensated Officers. (Names and Compensation of Highly Compensated Officers must only be reported when the entity in the preceding fiscal year received 80 percent or more of its annual gross revenues in Federal awards; and $30,000,000 or more in annual gross revenues from Federal awards; and the public does not have access to this information about the compensation of the senior executives of the entity through periodic reports filed under section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. ?? 78m(a), 78o(d)) or section 6104 of the Internal Revenue Code of 1986.)Control: Per 2 CFR section 200.303(a), a 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 comply 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:Subaward information was not reported to FSRS during FY 2022.Context:Zero of six subrecipients selected for testing were reported to FSRS during FY 2022. Total subawards tested were $35,266,155, and $0 was reported as required by FFATA requirements.SEE SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR CHART/TABLECause:The Department was unaware of FFATA reporting requirements and did not report subaward information to FSRS during FY 2022.Effect:Subawards were not reported to FSRS in accordance with FFATA requirements.Questioned costs:None noted.Recommendation:We recommend that the Department develop internal controls and procedures to ensure that FFATA reporting requirements are met. We further recommend the Department develop controls and procedures to ensure that all required subawards are reported accurately and timely to FSRS no later than the end of the month following the month of issuance.Views of responsible officials:The Department of Human Services, Division of Aging Services (DoAS) continues to work towards attaining full compliance with Federal Funding Accountability and Transparency Act (FFATA) requirements. The DoAS continues to consult with the Department and/or other DHS Division fiscal leadership to finalize the FFATA procedures. These procedures shall include creating a list of all active first-tier subawards of federal funds DoAS has issued at $30,000 or more. The list will include all the data fields required for FFATA reporting. DoAS grants management members will ensure each of the identified subawards is entered on the Federal Subaward Reporting System (FSRS) website. DoASwill also revise internal procedures to ensure all future subawards of $30,000 or more are entered on FSRS within 30 days of award.

Reference Number:2022-013Prior Year Finding:NoFederal Agency:U.S. Department of Health and Human ServicesState Agency:Department of HealthFederal Program:Immunization Cooperative Agreements, COVID-19 - Immunization Cooperative AgreementsAssistance Listing Number:93.268Award Number and Year:NH23IP922594 (7/1/19 ? 6/30/24), 5NH23IP922594-02-00 (7/1/19 ? 6/30/24), NH23IP922594-03-00 (7/1/19 ? 6/30/24)Compliance Requirement:Reporting ? Federal Funding Accountability and Transparency Act (FFATA)Type of FindingMaterial Weakness in Internal Control Over Compliance, Material NoncomplianceCriteria or specific requirement:Compliance: Per the Federal Funding Accountability and Transparency Act (FFATA), prime (direct) recipients of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Reports must be filed in FSRS by the end of the month following the month in which the prime recipient awards any sub-grant greater than or equal to $30,000. If the initial award is below $30,000 but subsequent grant modifications result in a total award equal to or over $30,000, the award will be subject to the reporting requirements as of the date the award exceeds $30,000. If the initial award equals or exceeds $30,000 but funding is subsequently de-obligated such that the total award amount falls below $30,000, the award continues to be subject to FFATA reporting requirements.The following key data elements must be reported: Subawardee Name and Unique Entity ID (UEI) number; Amount of Subaward (inclusive of modifications); Subaward Obligation/Action Date; Date of Report Submission; Subaward Number; Project Description; and Names and Compensation of Highly Compensated Officers. (Names and Compensation of Highly Compensated Officers must only be reported when the entity in the preceding fiscal year received 80 percent or more of its annual gross revenues in Federal awards; and $30,000,000 or more in annual gross revenues from Federal awards; and the public does not have access to this information about the compensation of the senior executives of the entity through periodic reports filed under section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. ?? 78m(a), 78o(d)) or section 6104 of the Internal Revenue Code of 1986.)Control: Per 2 CFR section 200.303(a), a 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 comply 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:Subaward information was not reported timely to FSRS during FY 2022.Context:Eight of eight subawards selected for testing were not reported timely to FSRS.Specifically, we noted the following:? 7 of 8 subawards were issued on 7/1/2021 and they were not reported to FSRS until 1/24/2023, or 511 days late.? 1 of 8 subawards was issued on 7/1/2022 and was not reported to FSRS until 1/24/2023, or 146 days late.SEE SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR CHART/TABLECause:The Department?s internal controls were not sufficient to ensure that subawards were reported timely to FSRS.Effect:Subawards were not reported to FSRS in accordance with FFATA requirements.Questioned costs:None noted.Recommendation:We recommend that the Department develop internal controls and procedures to ensure that all required subawards are reported timely to FSRS no later than the end of the month following the month of issuance in accordance with FFATA reporting requirements.Views of responsible officials:The Department of Health, Division of Epidemiology, Environmental and Occupational Health?s (DEEOH), Vaccine Preventable Disease Program (VPDP) will attain full compliance with Federal Funding Accountability and Transparency Act (FFATA) requirements. The VPDP on boarded a full-time lead fiscal/grants officer in August 2022 to oversee the Immunization Cooperative Agreements, including COVID-19 supplemental funding. VPDP fiscal/grants leadership will implement FFATA procedures for the Immunization Cooperative Agreement. These procedures shall include creating a list of all active first-tier subawards of federal funds DEEOH has issued at $30,000 or more under this Cooperative Agreement. The list will include all the data fields required for FFATA reporting. DEEOH fiscal/grants leadership will ensure each of the identified sub-awards is entered on the FFATA Subaward Reporting System (FSRS) website within 30 days of award issuance or award amendment.

Reference Number:2022-014Prior Year Finding:2021-016Federal Agency:U.S. Department of Health and Human ServicesState Agency:Department of HealthFederal Program:Epidemiology and Laboratory Capacity for Infectious Diseases (ELC), COVID-19 - Epidemiology and Laboratory Capacity for Infectious Diseases (ELC)Assistance Listing Number:93.323Award Number and Year:6NU50CK000525 (8/1/2019 ? 7/31/2024), 6 NU50CK000525-02-03 (8/1/2020 - 7/31/2024), 5NU50CK000525-03-00 (8/1/2019 ? 7/31/2024)Compliance Requirement:Suspension and DebarmentType of FindingMaterial Weakness in Internal Control Over ComplianceCriteria or specific requirement:Compliance: 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.When a non-federal entity enters into a covered transaction with an entity at a lower tier, the non-federal entity must verify that the entity, as defined in 2 CFR section 180.995 and agency adopting regulations, is not suspended or debarred or otherwise excluded from participating in the transaction. This verification may be accomplished by (1) checking the System for Award Management (SAM) Exclusions maintained by the General Services Administration (GSA), (2) collecting a certification from the entity, or (3) adding a clause or condition to the covered transaction with that entity (2 CFR section 180.300).Control: Per 2 CFR section 200.303(a), a 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 comply 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:The Department could not provide support that it ensured its vendors were not suspended or debarred before issuing contracts to the entity.Context:The suspension and debarment status for eight of eight vendors was not documented. DRAFT4/18/2023Questioned costs:There are no questioned costs related to this finding as the vendors were not federally suspended or debarred.Cause:The Department did not establish effective internal controls for maintaining sufficient evidence that a suspension and debarment check was completed before issuing contracts to its vendors.Effect:If the suspension and debarment status of vendors is not verified when entering into covered transactions, it is possible that a contract could be issued to an ineligible vendor.Recommendation:We recommend the Department implement controls and procedures to ensure suspension and debarments checks are adequately documented and maintained in the vendor procurement files.Views of responsible officials:The New Jersey Department of Health?s (DOH) Central Procurement recently implemented revised Department policy FMC-23-02 and is working with the DOH divisional procurement staff within the agency to achieve full compliance. The revised policy circular includes the debarment language identified as missing in the previous FMC 21-02 policy.

Reference Number:2022-015Prior Year Finding:2021-017Federal Agency:U.S. Department of Health and Human ServicesState Agency:Department of HealthFederal Program:Epidemiology and Laboratory Capacity for Infectious Diseases (ELC), COVID-19 - Epidemiology and Laboratory Capacity for Infectious Diseases (ELC)Assistance Listing Number:93.323Award Number and Year:6NU50CK000525 (8/1/2019 ? 7/31/2024), 6NU50CK000525 (8/1/2019 ? 7/31/2024), 6NU50CK000525-02-03 (8/1/2020 - 7/31/2024), 5NU50CK000525-03-00 (8/1/2019 ? 7/31/2024)Compliance Requirement:Reporting ? Federal Funding Accountability and Transparency Act (FFATA)Type of Finding:Material Weakness in Internal Control Over Compliance, Material Non-complianceCriteria or specific requirement:Compliance: Per the Federal Funding Accountability and Transparency Act (FFATA), prime (direct) recipients of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Reports must be filed in FSRS by the end of the month following the month in which the prime recipient awards any sub-grant greater than or equal to $30,000. If the initial award is below $30,000 but subsequent grant modifications result in a total award equal to or over $30,000, the award will be subject to the reporting requirements as of the date the award exceeds $30,000. If the initial award equals or exceeds $30,000 but funding is subsequently de-obligated such that the total award amount falls below $30,000, the award continues to be subject to FFATA reporting requirements.The following key data elements must be reported: Subawardee Name and Unique Entity ID (UEI) number; Amount of Subaward (inclusive of modifications); Subaward Obligation/Action Date; Date of Report Submission; Subaward Number; Project Description; and Names and Compensation of Highly Compensated Officers. (Names and Compensation of Highly Compensated Officers must only be reported when the entity in the preceding fiscal year received 80 percent or more of its annual gross revenues in Federal awards; and $30,000,000 or more in annual gross revenues from Federal awards; and the public does not have access to this information about the compensation of the senior executives of the entity through periodic reports filed under section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. ?? 78m(a), 78o(d)) or section 6104 of the Internal Revenue Code of 1986.)Control: Per 2 CFR section 200.303(a), a 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 comply 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:Subaward information was not reported timely to FSRS by the Department of Health (Department) during FY 2022.Context:Twenty-one of twenty-one subawards selected for testing were not reported timely to FSRS. Specifically, we noted the following:? 13 of 13 subawards issued between July and December 2020 were reported to FSRS between 273 and 725 days late.? 8 of 8 subawards issued in July and October 2021 were reported to FSRS between 244 and 512 days late.? Of the exceptions noted, 12 subawards totaling $10.6 million were not reported to FSRS until January 2023.SEE SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR CHART/TABLECause:The Department?s internal controls were not sufficient to ensure that subawards were reported timely to FSRS.Effect:Subawards were not reported to FSRS in accordance with FFATA requirements.Questioned costs:None noted.Recommendation:We recommend that the Department develop internal controls and procedures to ensure that all required subawards are reported timely to FSRS no later than the end of the month following the month of issuance in accordance with FFATA reporting requirements.Views of responsible officials:With the Corrective Action Plan (CAP) previously developed as a result of the prior year 2021 audit finding, the Department?s Grants Unit with coordination from ELC program fiscal staff added a new function to the SAGE system that pulls all subaward data for all of ELC using its assigned ALN number 93.323. This system change was implemented in September 2022 that allows SAGE to pull data by CFDA number and enables the ELC fiscal staff to access all ELC subawards. ELC fiscal staff also has a reminder set to report at the end of each month, to enter FFATA information into FSRS, and to upload each report to SharePoint ELC Document Library at the end of each month.As per the prior year CAP created in September 2022, FFATA information for ELC subawards began being entered into FSRS on September 1, 2022.

Reference Number:2022-016Prior Year Finding:NoFederal Agency:U.S. Department of Health and Human ServicesState Agency:Department of HealthFederal Program:Epidemiology and Laboratory Capacity for Infectious Diseases (ELC), COVID-19 - Epidemiology and Laboratory Capacity for Infectious Diseases (ELC)Assistance Listing Number:93.323Award Number and Year:6 NU62PS924524-01-04 (2018), 18NU62PS924524 (2019), 5 NU62PS924524-03-00 (2020), 6 NU62PS924524-03-02 (2020)Compliance Requirement:Allowable Costs/Cost PrinciplesType of Finding:Material Weakness in Internal Control Over Compliance, Material NoncomplianceCriteria or specific requirement:Compliance: Per 2 CFR 200.403, except where otherwise authorized by statute, costs must meet the following general criteria to be allowable under Federal awards:(a) Be necessary and reasonable for the performance of the Federal award and be allocable under these principles.(b) Conform to any limitations or exclusions outlined in these principles or the Federal award regarding types or amount of cost items.(c) Be consistent with policies and procedures that apply uniformly to Federally financed and other activities of the non-Federal entity.(d) Be accorded consistent treatment. A cost may not be assigned to a Federal award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to the Federal award as an indirect cost.(e) Be determined following generally accepted accounting principles (GAAP), except for state and local governments and Indian tribes only, as otherwise provided for in this part.(f) Not be included as a cost or used to meet cost sharing or matching requirements of any other Federally financed program in either the current or a prior period. See also ?200.306 Cost sharing or matching paragraph (b).(g) Be adequately documented.Control: Per 2 CFR section 200.303(a), a 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 comply with the 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:The Department of Health (Department) was unable to provide supporting documentation for disbursement transactions charged to the program.Context:The Department was unable to provide supporting documentation for 17 of 60 disbursement transactions selected for testing. Auditors were not able to verify whether the expenditures were allowable per program requirements nor that they had been properly reviewed and approved.Questioned costs:Questioned costs of $59,466 represent the total of unsupported disbursements charged to the program.Cause:The Department?s procedures and controls were not sufficient to ensure that expenditures charged to the program were allowable and properly documented in accordance with federal requirements.Effect:Unallowable and unapproved costs may have been charged to the program.Recommendation:We recommend that the Department review its current procedures and controls to ensure that all expenditures charged to the program are supported by documentation, are properly reviewed and approved, and that documentation is readily available for audit. The Department should not seek federal reimbursement unless it can substantiate that disbursements are allowable and properly approved.Views of responsible officials:Due to the COVID-19 pandemic and the resulting remote teleworking period that was in place at the Department of Health (DOH) during the FY 2022 audit period, some payment documents were approved remotely without physical documents in hand, and the payment documentation for the 17 of 60 ELC general disbursement transactions examined were either not delivered to the office to be filed yet or have been delivered but misfiled. DOH Central Accounts Payable will review and improve its current procedures and controls to ensure all physical payment documents are reviewed, approved, and filed correctly under the current hybrid remote working conditions in place now since the pandemic ceased.

Reference Number:2022-017Prior Year Finding:NoFederal Agency:U.S. Department of Health and Human ServicesState Agency:Department of Community AffairsFederal Program:Low-Income Home Energy Assistance, COVID-19 - Low-Income Home Energy AssistanceAssistance Listing Number:93.568Award Number and Year:2102NJE5C6 (3/11/21 ? 9/30/22), 2001NJE5C3 (3/27/20 ? 9/30/21), G-1701NJLIEA (10/1/16 ? 9/30/18), G-1801NJLIEA (10/1/17 ? 9/30/19), 2202NJLIEA (10/1/21 ? 9/30/22), 2001NJLIEA (10/1/19 ? 9/30/22), 2102NJLIEA (10/1/20 ? 9/30/21)Compliance Requirement:Reporting ? Federal Funding Accountability and Transparency Act (FFATA)Type of Finding:Material Weakness in Internal Control Over Compliance, Material Non-complianceCriteria or specific requirement:Compliance: Per the Federal Funding Accountability and Transparency Act (FFATA), prime (direct) recipients of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Reports must be filed in FSRS by the end of the month following the month in which the prime recipient awards any sub-grant greater than or equal to $30,000. If the initial award is below $30,000 but subsequent grant modifications result in a total award equal to or over $30,000, the award will be subject to the reporting requirements as of the date the award exceeds $30,000. If the initial award equals or exceeds $30,000 but funding is subsequently de-obligated such that the total award amount falls below $30,000, the award continues to be subject to FFATA reporting requirements.The following key data elements must be reported: Subawardee Name and Data Universal Numbering System (DUNS) number; Amount of Subaward (inclusive of modifications); Subaward Obligation/Action Date; Date of Report Submission; Subaward Number; Project Description; and Names and Compensation of Highly Compensated Officers. (Names and Compensation of Highly Compensated Officers must only be reported when the entity in the preceding fiscal year received 80 percent or more of its annual gross revenues in Federal awards; and $30,000,000 or more in annual gross revenues from Federal awards; and the public does not have access to this information about the compensation of the senior executives of the entity through periodic reports filed under section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. ?? 78m(a), 78o(d)) or section 6104 of the Internal Revenue Code of 1986.)Control: Per 2 CFR section 200.303(a), a 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 comply 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:Subaward information was not reported to FSRS during FY 2022.Context:Zero of eight subrecipients selected for testing were reported to FSRS during FY 2022. Total subawards tested were $3,241,668, and $0 was reported as required by FFATA requirements.SEE SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR CHART/TABLECause:During FY 2022, there was a vacancy in the Department?s staffing assigned to FFATA reporting, a breakdown in the transition responsibilities for the position, and a delay in hiring a replacement.Effect:Subawards were not reported to FSRS in accordance with FFATA requirements.Questioned costs:None noted.Recommendation:We recommend that the Department cross-train staff to ensure it maintains capacity to meet FFATA requirements in the event that a staffing vacancy occurs in the future.Views of responsible officials:The Department of Community Affairs (DCA) now has a staff member in place with assigned responsibility for the FFATA reporting in the Federal Subaward Reporting System (FSRS) and other required federal reporting. To ensure that all required reporting in FSRS is completed timely, the process and procedures will be fully documented and the LIHEAP program manager will verify completion each month. DCA will also hire additional staff or cross-train current staff to further support the federal reporting function.

Reference Number:2022-018Prior Year Finding:NoFederal Agency:U.S. Department of Health and Human ServicesState Agency:Department of Community AffairsFederal Program:Low-Income Home Energy Assistance, COVID-19 - Low-Income Home Energy AssistanceAssistance Listing Number:93.568Award Number and Year:2102NJE5C6 (3/11/21 ? 9/30/22), 2001NJE5C3 (3/27/20 ? 9/30/21), G-1701NJLIEA (10/1/16 ? 9/30/18), G-1801NJLIEA (10/1/17 ? 9/30/19), 2202NJLIEA (10/1/21 ? 9/30/22), 2001NJLIEA (10/1/19 ? 9/30/22), 2102NJLIEA (10/1/20 ? 9/30/21)Compliance Requirement:Cash ManagementType of Finding:Significant Deficiency in Internal Control Over Compliance, Other MattersCriteria or specific requirement:Compliance: Per 2 CFR 200.302, 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 own funds. In addition, the state's and the other non-Federal entity's financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions; and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the Federal statutes, regulations, and the terms and conditions of the Federal award.Control: Per 2 CFR section 200.303(a), a 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 comply 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:The Department of Community Affairs (Department) was not able to provide documentation that drawdown requests had been properly approved.Context:Two of eight drawdown requests selected did not have evidence of supervisory approval prior to submission of the requests to the federal agency. The amounts drawn down for the two samples were $282,956 and $74,916 respectively.Questioned costs:None noted.Cause:The Department?s procedures were not sufficient to ensure that drawdown requests were reviewed and approved prior to submission. Internal controls did not prevent or detect the errors.Effect:Without proper review and approval of drawdown requests, the amounts requested could be inaccurate which could result in the Department receiving program funds to which it is not entitled.Recommendation:We recommend that the Department review and enhance its procedures and controls to ensure that cash drawdowns are reviewed and approved prior to submission to the federal agency.Views of responsible officials:The Department of Community Affairs (DCA) staff responsible for the LIHEAP cash management function retired prior to this audit period without a proper transition of these tasks and there was also a delay in refilling the position. As recommended, the DCA has reviewed current procedures and controls regarding cash drawdown approvals and has developed a Policy Memo that details the Payment Management System (PMS) drawdown procedures going forward. For each request made, a Contract Administrator will produce a Business Object report for all transactions to be included in the drawdown and will send the report to the Program staff for review and approval that the amounts contained in the report are correct. Once the Program staff review is complete, the approved Business Object report will be forwarded with a cover email to the Division Fiscal Unit staff responsible for drawing down the funds in PMS for final processing.Views of responsible officials:

Reference Number:2022-019Prior Year Finding:NoFederal Agency:U.S. Department of Health and Human ServicesState Agency:Department of Community AffairsFederal Program:Low-Income Home Energy Assistance, COVID-19 - Low-Income Home Energy AssistanceAssistance Listing Number:93.568Award Number and Year:2102NJE5C6 (3/11/21 ? 9/30/22), 2001NJE5C3 (3/27/20 ? 9/30/21), G-1701NJLIEA (10/1/16 ? 9/30/18), G-1801NJLIEA (10/1/17 ? 9/30/19), 2202NJLIEA (10/1/21 ? 9/30/22), 2001NJLIEA (10/1/19 ? 9/30/22), 2102NJLIEA (10/1/20 ? 9/30/21)Compliance Requirement:Reporting ? Performance and Special ReportingType of FindingSignificant Deficiency in Internal Control Over Compliance, Other MattersCriteria or specific requirement:Compliance: LIHEAP Performance Data Form (OMB No 0970-0449) ? State grantees must submit this report by January 31st regarding the prior federal fiscal year. The first section of the report is the Grantee Survey that covers sources and allocation of funding. The rest of the report is regarding performance metrics, mostly related to home energy burden targeting and reduction, as well as the continuity of home energy service.Carryover and Reallotment Report (OMB No. 0970-0106) ? Grantees must submit this report no later than August 1 indicating the amount expected to be carried forward for obligation in the following fiscal year and the planned use of those funds. Funds in excess of the maximum carryover limit are subject to reallotment to other LIHEAP grantees in the following fiscal year and must also be reported.Annual Report on Households Assisted by LIHEAP (OMB No. 0970-0060) ? As part of the application for block grant funds each year, a report is required for the preceding fiscal year of (1) the number and income levels of the households assisted for each component and any type of LHEAP assistance (heating, cooling, crisis, and weatherization); and (2) the number of households served that contained young children, elderly, or persons with disabilities, or any vulnerable household for each component. Territories with annual allotments of less than $200,000 and all Indian tribes are required to report only on the number of households served for each program component.Control: Per 2 CFR section 200.303(a), a 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 comply 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:The Department of Community Affairs (Department) did not submit performance and special reports timely. The LIHEAP Performance Data Form and the LIHEAP Carryover and Reallotment Report were submitted after their respective due dates.Context:We selected for testing the LIHEAP Performance Data Form, the LIHEAP Carryover and Reallotment Report, and the Annual Report on Households Assisted by LIHEAP which were due during FY2022. The following exceptions were noted:? One of one LIHEAP Performance Data Forms was not submitted timely. The report for the period ending 9/30/2021 was due by 1/31/2022 but was not submitted until 4/22/2022, or 81 days late.? One of one LIHEAP Carryover and Reallotment Reports was not submitted timely. The report was due by 8/1/2021, but was not submitted until 11/16/2021, or 107 days late.Questioned costs:None noted.Cause:The Department?s procedures were not sufficient to ensure that the LIHEAP Performance Data Form and the LIHEAP Carryover and Reallotment Report were submitted timely. Internal controls did not prevent or detect the errors.Effect:Delays in submission of annual performance and special reports could impact the Federal agency?s ability to manage the program, could result in delays in annual awards, and possible penalties or sanctions could be imposed by the grantor.Recommendation:We recommend that the Department review and enhance its procedures and internal controls to ensure that performance and special reports are submitted timely.Views of responsible officials:All performance and special reports noted in the audit finding must be approved by the Applied Public Policy Research Institute for Study and Evaluation (APPRISE - U.S. Department of Health and Human Services (USDHHS) Consultants) before they are submitted to USDHHS. The final reports noted as exceptions were not submitted on time due to pandemic related complications, staff retirements and communication issues with APPRISE. As recommended, the Department of Community Affairs (DCA) has reviewed current reporting procedures and Program staff will be assigned the responsibility to prepare all reports, work with APPRISE to obtain required approvals, and submit the all required reports on a timely basis. Reporting due dates and deadlines will be documented to ensure that initial reports are produced timely. The timeframe needed to coordinate with the APPRISE consultants for reviews and updates to the reports will also be built into the process so that final reports are submitted to USDHHS by the due date. All reporting procedures will be documented and distributed to LIHEAP program staff.

Reference Number:2022-020Prior Year Finding:NoFederal Agency:U.S. Department of Health and Human ServicesState Agency:Department of Human ServicesFederal Program:CCDF Cluster, COVID-19 ? CCDF ClusterAssistance Listing Number:93.575, 93.596Award Number and Year:2201NJCCDF (10/1/2021 ? 9/30/2024)2201NJCCDD (10/1/2021 ? 9/30/2024)2101NJCCDF (10/1/2020 ? 9/30/2023)2101NJCCDF (10/1/2020 ? 9/30/2023)2101NJCCDF (10/1/2019 ? 9/30/2022)2001NJCCDF (10/1/2019- 9/30/2022)2101NJCSC6 (10/1/2020 ? 9/30/2023)Compliance Requirement:Reporting ? Federal Funding Accountability and Transparency Act (FFATA)Type of FindingMaterial Weakness in Internal Control Over Compliance, Material Non-complianceCriteria or specific requirement:Compliance: Per the Federal Funding Accountability and Transparency Act (FFATA), prime (direct) recipients of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Reports must be filed in FSRS by the end of the month following the month in which the prime recipient awards any sub-grant greater than or equal to $30,000. If the initial award is below $30,000 but subsequent grant modifications result in a total award equal to or over $30,000, the award will be subject to the reporting requirements as of the date the award exceeds $30,000. If the initial award equals or exceeds $30,000 but funding is subsequently de-obligated such that the total award amount falls below $30,000, the award continues to be subject to FFATA reporting requirements.The following key data elements must be reported: Subawardee Name and Data Universal Numbering System (DUNS) number; Amount of Subaward (inclusive of modifications); Subaward Obligation/Action Date; Date of Report Submission; Subaward Number; Project Description; and Names and Compensation of Highly Compensated Officers. (Names and Compensation of Highly Compensated Officers must only be reported when the entity in the preceding fiscal year received 80 percent or more of its annual gross revenues in Federal awards; and $30,000,000 or more in annual gross revenues from Federal awards; and the public does not have access to this information about the compensation of the senior executives of the entity through periodic reports filed under section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. ?? 78m(a), 78o(d)) or section 6104 of the Internal Revenue Code of 1986.)Control: Per 2 CFR section 200.303(a), a 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 comply 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:Subaward information was not reported to FSRS during FY 2022.Context:Zero of eight subrecipients selected for testing were reported to FSRS during FY 2022. Total subawards tested were $27,226,331, and $0 was reported as required by FFATA requirements.SEE SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR CHART/TABLECause:The Department was unaware of FFATA reporting requirements and did not report subaward information to FSRS during FY 2022.Effect:Subawards were not reported to FSRS in accordance with FFATA requirements.Questioned costs:None noted.Recommendation:We recommend that the Department develop internal controls and procedures to ensure that FFATA reporting requirements are met. We further recommend the Department develop controls and procedures to ensure that all required subawards are reported accurately and timely to FSRS no later than the end of the month following the month of issuance.Views of responsible officials:The DHS Division of Family Development (DFD) agrees with the audit finding regarding the submission of subawards to the FFFATA Subaward Reporting System (FSRS).In accordance with the finding recommendation, the DFD will develop internal controls and procedures to ensure the timely reporting of all required subawards to FSRS. An initial review of the FSRS by DFD fiscal staff appeared to indicate that some federal grant data that should be prepopulated on the website was missing (e.g. Child Care M&M available; discretionary not found). DFD will work with the necessary federal agencies to ensure that the Division can input the required information for all awards.Assessment and development of policy and procedures related to this task will take approximately three months. Staff assignment, training, and submission of federal grant information to the federal website will occur over the next State fiscal year 2024.Projected policy and procedures development completion: July 1, 2023.Assignment and submission of federal reports: June 30, 2024.

Reference Number:2022-021Prior Year Finding:NoFederal Agency:Department of Health and Human ServicesState Agency:Department of Children and FamiliesFederal Program:Social Services Block GrantAssistance Listing Number:93.667Award Number and Year:G-2200NJSOSR (10/1/2021 ? 3/30/2023)Compliance Requirement:Period of PerformanceType of FindingSignificant Deficiency in Internal Control Over Compliance, Other MattersCriteria or specific requirement:Compliance ? A non-federal entity may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance and any costs incurred before the federal awarding agency or pass-through entity made the federal award that were authorized by the federal awarding agency or pass-through entity (2 CFR sections 200.308 200.309 and 200.403(h)). A period of performance may contain one or more budget periods. Social Services Block Grant funds must be expended by the state in the fiscal year allotted or in the succeeding fiscal year.Control ? Per 2 CFR Section 200.303(a), a 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 comply 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:The Department of Children and Families (Department) charged costs to the program that were incurred outside of the grant award?s period of performance.Context:Four of forty expenditure transactions selected for testing, totaling $842, were incurred prior to the award start date of October 1, 2021.Questioned costs:$842, the total of expenditures charged to the program that were incurred outside of the grant award?s period of performance.Cause:Accounting staff identified and charged program costs to the incorrect grant. The Department?s review process did not detect the errors nor take timely corrective action.Effect:The Department was not compliant with the grant?s period of performance which could result in the grantor?s disallowance of the costs.Recommendation:We recommend that the Department review and enhance its procedures and controls to ensure that expenditures charged to the program are incurred within the grant?s period of performance.Views of responsible officials:The Department of Children and Families (DCF) will review and enhance its procedures and controls to ensure that expenditures charged to the program are incurred within each grant award?s specified period of performance.Further, as the federal SSBG grant award cited has a period of performance that remains open through September 2023, DCF has adjusted the four transactions that were posted incorrectly to another available funding source and ensured that all transactions presently recorded are now in compliance and within the specified period of performance.

Reference Number:2022-022Prior Year Finding:2021-019Federal Agency:U.S. Department of Health and Human ServicesState Agency:Department of Human ServicesFederal Program:Medicaid Cluster, COVID-19 - Medicaid ClusterAssistance Listing Number:93.775, 93.777, 93.778Award Number and Year:2205NJ5MAP (10/1/2021 ? 9/30/2022)2205NJ5ADM (10/1/2021 ? 9/30/2022)Compliance Requirement:Special Tests and Provisions: Managed Care Financial AuditType of FindingSignificant Deficiency in Internal Control Over Compliance, Other MattersCriteria or specific requirement:Compliance: Two types of audits are required for managed care:1. Audited Financial Reports ? The contract with each Managed Care Organization (MCO), Prepaid Inpatient Health Plan (PIHP), and Prepaid Ambulatory Health Plan (PAHP) must require them to submit to the state an audited financial report specific to the Medicaid contract on an annual basis. These audits must be conducted in accordance with generally accepted accounting principles and generally accepted auditing standards (42 CFR section 438.3(m)).2. Periodic Audits ? Effective no later than for rating periods for contracts starting on or after July 1, 2017, the state must periodically, but no less frequently than once every three years, conduct, or contract for an independent audit of the accuracy, truthfulness, and completeness of the encounter and financial data submitted by, or on behalf of each MCO, PIHP, and PAHP and post the results of these audits on its website (42 CFR section 438.602(e) and (g); May 6, 2016, Federal Register (81 FR 27497); OMB No. 0938-0920).Control: Per 2 CFR section 200.303(a), a 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 comply 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:The Department of Human Services (Department) received audit reports from its MCOs, but these reports were Agreed Upon Procedures (AUP) reports which were not conducted in accordance with generally accepted accounting principles and generally accepted auditing standards.Context:Five of five MCO audit reports received by DMAHS were AUP reports. An AUP engagement is one in which a practitioner is engaged by a client to issue a report of findings based on specific procedures performed on subject matter. The client engages the practitioner to assist specified parties in evaluating subject matter or an assertion as a result of a need or needs of the specified parties.In an engagement performed under this section, the practitioner does not perform an examination or a review, and does not provide an opinion or negative assurance. Therefore, AUP reports do not fulfill the requirement that the audit is conducted in accordance with generally accepted accounting principles and generally accepted auditing standards.Questioned costs:Undetermined.Cause:The Department held the opinion that AUP reports were sufficient to meet the requirement of obtaining a financial statement audit report per the flexibility given to States in Medicaid and CHIP Managed Care Final Rule (CMS-2390-F) Frequently Asked Question number Q10, dated November 10, 2016.Effect:The Department is unable to ensure that its MCOs were audited in accordance with generally accepted accounting principles and generally accepted auditing standards. Failure to obtain qualified audit reports from its MCOs would result in DMAHS being unaware of deficiencies, corrective action plans or unmet requirements which would be identified as a result of qualified audits.Recommendation:We recommend that The Department update its contracts with its MCOs to remove the language specifying the requirement for an audit conducted specifically in accordance with generally accepted accounting principles and generally accepted auditing standards and instead to specify that an AUP report is acceptable per guidance provided under Medicaid and CHIP Managed Care Final Rule (CMS-2390-F) Frequently Asked Question number Q10.Views of responsible officials:Based on this audit finding recommendation, Section 7.25.1(B) of the MCO Contract has been updated effective January 2023. The update removes language requiring audits in accordance with generally accepted accounting principles and generally accepted auditing standards and specifies that an AUP report is acceptable per guidance provided under Medicaid and CHIP Managed Care Final Rule (CMS-2390-F) Frequently Asked Question number Q10.

Reference Number:2022-023Prior Year Finding:2021-014Federal Agency:U.S. Department of Health and Human ServicesState Agency:Department of Human ServicesFederal Program:Medicaid Cluster, COVID-19 - Medicaid ClusterAssistance Listing Number:93.775, 93.777, 93.778Award Number and Year:2205NJ5MAP (10/1/2021 ? 9/30/2022)2205NJ5ADM (10/1/2021 ? 9/30/2022)Compliance Requirement:Special Tests and Provisions: Provider EligibilityType of FindingSignificant Deficiency in Internal Control Over Compliance, Other MattersCriteria or specific requirement:Compliance: In order to receive Medicaid payments, providers must: (1) be licensed in accordance with federal, state, and local laws and regulations to participate in the Medicaid program (42 CFR sections 431.107 and 447.10; and Section 1902(a)(9) of the Social Security Act (42 USC 1396a(a)(9)); (2) screened and enrolled in accordance with 42 CFR Part 455, Subpart E (sections 455.400 through 455.470); and make certain disclosures to the state (42 CFR Part 455, Subpart B, sections 455.100 through 455.106). Medicaid managed care network providers are subject to the same disclosure, screening, enrollment, and termination requirements that apply to Medicaid fee-for-service providers in accordance with 42 CFR Part 438, Subpart H. Providers who have been barred from participation by the Office of the Inspector General (OIG) exclusion list are not eligible to be enrolled in the Medicaid program. (See 42 CFR 455.436).Control: Per 2 CFR section 200.303(a), a 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 comply 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:The Department of Health and Human Services (the Department) did not maintain documentation to support provider eligibility to participate in the Medicaid program. The provider eligibility requirement is administered by a 3rd-party that is required to determine and document the provider?s eligibility with the Department?s requirements. Provider files were incomplete, containing expired licenses or missing key documentation supporting eligibility.Context:The Department contracts with a 3rd party provider to manage medical provider eligibility. The 3rd party provider is responsible for verifying providers? license statuses and that providers meet health and safety standards. We noted that medical provider files maintained by the 3rd party contractor did not consistently support providers? eligibility and compliance with the State?s health and safety standards in accordance with federal and state requirements. A sample of 60 provider files was selected for testing and the following exceptions were noted:? Six of sixty provider files did not have an active license on file. The provider licenses expired and an active license was not obtained and updated in the provider files.? One of sixty provider files did not contain the provider agreement checklist.Questioned costs:Undetermined.Cause:Internal controls of the 3rd party provider were ineffective in ensuring that all required documentation was obtained and maintained in provider files. The Department?s controls over the 3rd party contractor were ineffective in detecting the errors.Effect:Medicaid claims may be paid to ineligible providers which may result in unallowed program costs. The Department is not compliant with the State?s plan for Medicaid.Recommendation:We recommend that the Department continue to review the 3rd party provider?s procedures for determining and documenting provider eligibility and compliance with related State and Federal requirements. The Department should periodically review provider files to determine if all required documentation is maintained in the files.Views of responsible officials:The Department of Human Services? Division of Medical Assistance and Health Services (DMAHS) has unsuccessfully attempted to gain access to data files that would provide current licensure data to our contracted vendor from the State?s licensing agencies. Continuing efforts to outreach providers by sending a license expiration letter to providers 45 days prior to the license expiration date have also been less than successful. Access concerns have discouraged the State?s efforts to deny claims because of expired licenses. It is important to note that the State?s expectations are that providers are properly licensed, but have failed to communicate this information to our contracted vendor. Licensure information for all enrolling providers and those subject to revalidation are also screened in accordance with ACA requirements.DMAHS efforts to achieve compliance with regard to provider licensing in coordination with the State?s contracted vendor remains ongoing and the importance of having license information on file for the providers being enrolled will again be reiterated and reinforced through communications with the contracted vendor and their staff. The vendor has also been approved to continue taking screenshots of providers? licensing information from licensing websites in lieu of the provider sending in paper copies. These ongoing efforts and actions will help to ensure that licensing information is captured and maintained for each provider and the State?s compliance with documenting provider licensing continues to improve and move towards full compliance in future periods.

Reference Number:2022-024Prior Year Finding:NoFederal Agency:Social Security AdministrationState Agency:Department of Labor and Workforce DevelopmentFederal Program:Disability Insurance/SSI ClusterAssistance Listing Number:96.001Award Number and Year:04-2204NJD100 (10/1/2021 ? 3/30/2023), 04-2104NJD100 (10/1/2020 ? 3/30/2022), 04-2004NJD100 (10/1/2019 ? 3/30/2021)Compliance Requirement:Period of PerformanceType of FindingSignificant Deficiency in Internal Control Over Compliance, Other MattersCriteria or specific requirement:Compliance ? A non-federal entity may charge only allowable costs incurred during the approved budget period of a federal award?s period of performance and any costs incurred before the federal awarding agency or pass-through entity made the federal award that were authorized by the federal awarding agency or pass-through entity (2 CFR sections 200.308 200.309 and 200.403(h)). A period of performance may contain one or more budget periods.Control ? Per 2 CFR Section 200.303(a), a 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 comply 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:The Department of Labor and Workforce Development (Department) charged costs to the program that were incurred outside of the grant award?s period of performance.Context:Two of six expenditure transactions selected for testing, totaling $435, were incurred prior to the award start date of October 1, 2021.Questioned costs:$435, the total of expenditures charged to the program that were incurred outside of the grant?s period of performance.Cause:Accounting staff identified and charged program costs to the incorrect grant. The Program?s review process did not detect the errors nor take timely corrective action.Effect:The Department was not compliant with the grant?s period of performance which could result in the grantor?s disallowance of the costs.Recommendation:We recommend that the Department review its procedures to ensure that expenditures charged to the program are incurred within the grant?s period of performance.Views of responsible officials:The New Jersey Department of Labor and Workforce Development (DLWD) has a policy in place for processing tuition reimbursements that are performed by the Department?s Accounts Payable unit. The policy was reviewed by the Office of Finance & Accounting (F&A) and internal control procedures were enhanced to ensure that fiscal cutoff measures were appropriately addressed. Tuition reimbursement procedures include having the requests forwarded to the responsible Supervising Analyst in the Appropriations/Accounting unit for final review and approval to ensure the proper fiscal period is charged. The correcting transactions were completed during the Single Audit timeframe to remediate the findings by charging and reimbursing the proper fiscal year accounts. The DLWD will continue its efforts to ensure compliance and that all charges applied to Federal awards are within the specified period of performance going forward.

Reference Number: 2021-002 Prior Year Finding: N/A Federal Agency: U.S. Department of Agriculture State Agency: Department of Treasury, Office of Management and Budget (OMB) Federal Program: COVID-19 ? Pandemic EBT Food Benefits Assistance Listing Number: 10.542 Award Number and Year: 2020 - 2021 Compliance Requirement: Reporting: Schedule of Expenditures of Federal Awards Type of Finding Material Weakness in Internal Control Over Compliance Criteria or specific requirement: Compliance: Per 2 CFR 200 Section 510(b), the auditee must prepare a schedule of expenditures of Federal awards for the period covered by the auditee?s financial statements which must include the total Federal awards expended as determined in accordance with Section 200.502. The schedule must list individual Federal programs by Federal agency and provide total Federal awards expended for each individual Federal program and the Assistance Listings Number or other identifying number when the Assistance Listings information is not available. It must also include the total amount provided to subrecipients from each Federal program. Per Section 502(g), Federal non-cash assistance, such as free rent, food commodities, donated property, or donated surplus property, must be valued at fair market value at the time of receipt or the assessed value provided by the Federal agency. Control: Per 2 CFR section 200.303(a), a 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 comply 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: The Schedule of Expenditures of Federal Awards (SEFA) submitted to auditors for test work was missing a non-cash assistance program which was later determined to be a new Type A program. Context: When reconciling support to the SEFA submitted to auditors during test work, it was discovered that approximately $1 billion in non-cash assistance was omitted from the SEFA for program 10.542 - Pandemic EBT Food Benefits. After the error was detected, this program was determined to be a new major program. Questioned costs: Undetermined. Cause: Procedures and internal controls were not sufficient to ensure that non-cash assistance reported on the SEFA were complete and accurate. The State?s SEFA is initially prepared by OMB using reports from the State?s NJCFS accounting system. After compilation by OMB, preliminary SEFA expenditures are reviewed and confirmed by program administering State agencies and, when necessary, adjustment detail is submitted to OMB to be included in the final SEFA, including adjustments for non-cash assistance programs. Although the program administering agency reviewed and confirmed their programs? expenditures to OMB, assistance listing 10.542 had been omitted. Effect: Federal non-cash assistance was incorrectly compiled and reported on the SEFA which was used to determine Type A and Type B programs for the FY 2021 Single Audit. After the error was detected and corrected, Assistance Listing 10.542 was required to be audited as a new major program. Recommendation: We recommend that OMB improve its SEFA compilation process to ensure that program expenditures reported on the State?s SEFA are complete and accurate. Procedures and controls should include a process to identify non-cash assistance programs that are new to the State and ensure they are included on the SEFA. We further recommend that OMB work with the State?s agencies and departments to review and update their SEFA review and confirmation procedures to ensure that all necessary adjustments, including adjustments for non-cash assistance, are submitted to OMB for inclusion in the final SEFA report. Views of responsible officials: The Office of Management and Budget (OMB) has revised its annual GN12/SEFA Confirmation Letter and instructions sent out to all State agencies for the FY 2022 audit engagement in response to this finding. The Pandemic EBT Food Benefits program (PEBT) was a new, non-monetary benefits program established by the USDA during the FY 2021 audit period in response to COVID-19 and it is administered by the Department of Human Services (DHS). DHS was responsible for calculating benefits to be paid to eligible recipients and communicating that information/data to a national vendor who is contracted to make all disbursements nationwide under the program for all States. Non-monetary assistance like the PEBT program does not flow through the NJCFS accounting system and are not set-up in the system?s Grant Module like traditional monetary assistance and awards received from the federal government. OMB was not able to independently identify this new program through regular NJCFS channels, nor did DHS report the required non-monetary adjustment info for the PEBT benefits amount calculated during OMB?s annual SEFA and federal expenditures confirmation process. As a result, the PEBT program benefits calculated amount was omitted from the original SEFA provided to the auditors. The non-monetary instructions included in the FY 2022 SEFA confirmation letter were revised in August 2022 to emphasize the importance of reporting all such assistance to OMB during the annual SEFA confirmation process. In addition, OMB will make enhancements to the analytical and prior year comparison procedures it performs each year on the SEFA and will continue its efforts to stay abreast and up to date on all new federal programs that may originate each year, especially non-monetary assistance programs required to be included on the SEFA.

Reference Number: 2021-003 Prior Year Finding: N/A Federal Agency: U.S. Department of Health and Human Services State Agency: Department of Human Services Federal Program: SNAP Cluster Assistance Listing Number: 10.551, 10.561 Award Number and Year: 1NJ400404 (10/1/2019 ? 9/30/2021) Compliance Requirement: Suspension and Debarment Type of Finding: Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance: 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. When a non-federal entity enters into a covered transaction with an entity at a lower tier, the non-federal entity must verify that the entity, as defined in 2 CFR section 180.995 and agency adopting regulations, is not suspended or debarred or otherwise excluded from participating in the transaction. This verification may be accomplished by (1) checking the System for Award Management (SAM) Exclusions maintained by the General Services Administration (GSA), (2) collecting a certification from the entity, or (3) adding a clause or condition to the covered transaction with that entity (2 CFR section 180.300). Control: Per 2 CFR section 200.303(a), a 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 comply 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: The Department of Human Services (Department) did not verify that one of its subrecipients had not been suspended or debarred or otherwise excluded from participating in the transaction before issuing subawards to the entity. Context: Seven subrecipients were selected for testing, to which thirteen grant awards were issued. The Department did not verify that one of seven subrecipients had not been suspended or debarred or otherwise excluded. Three subawards had been issued to the entity to which payments of $100,601 had been issued during the fiscal year. Cause: The Department?s procedures and controls were not operating sufficiently to ensure that the suspension and debarment status of its subrecipients were verified when it issued subawards. Effect: If the suspension and debarment status of subrecipients is not verified when entering into covered transactions, it is possible that an award could be issued to an ineligible subrecipient. Questioned costs: None noted. Recommendation: We recommend that the Department develop internal controls and procedures to ensure that subrecipients are not suspended or debarred or otherwise excluded from participating in subawards. This verification may be accomplished by (1) checking the System for Award Management (SAM) Exclusions maintained by the General Services Administration (GSA), (2) collecting a certification from the entity, or (3) adding a clause or condition to the covered transaction with that entity. Views of responsible officials: The Division of Family Development (DFD) is in agreement with the audit finding in reference to the suspension and debarment testing exception noted for one subrecipient that received three subawards totaling $100,601. The Division was unable to provide detailed documentation as support that the subrecipient had not been suspended or debarred before issuing the subawards. DFD will enhance current internal control procedures to ensure that a suspension/debarment check on the federal System for Award Management (SAM) Exclusions website is performed annually on each subrecipient utilized by the Division and that the subrecipient?s status is documented at the proper time.

Reference Number: 2021-004 Prior Year Finding: N/A Federal Agency: U.S. Department of Housing and Urban Development State Agency: Department of Community Affairs Federal Program: Housing Voucher Cluster Assistance Listing Number: 14.871, 14.879 Award Number and Year: NJ912 (2021) Compliance Requirement: Special Tests and Provisions ? Housing Assistance Payment Type of Finding: Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance: The Public Housing Authority (PHA) must pay a monthly Housing Assistance Payment (HAP) that corresponds with the amount on line 12u of the HUD-50058. This HAP amount must be reflected on the HAP contract and HAP register (24 CFR section 982.158 and 24 CFR Part 982, Subpart K). Control: Per 2 CFR section 200.303(a), a 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 comply 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: Documentation was incomplete supporting housing assistance payments. Context: For 1 of 40 tenants selected for testing, the contract or contract amendment (portions letter) was missing from the file. Support that the HAP amount was reflected on the HAP contract could not be verified. Questioned costs: Undetermined. Cause: The Department?s procedures were not sufficient to ensure that tenant files contained all required information. Internal controls did not prevent or detect the errors. Effect: Missing information from tenant files could result in an inaccurate HAP for the tenant. Recommendation: We recommend that the Department review its policies and procedures to ensure that all tenant files contain all required supporting documentation. Views of responsible officials: As recommended, the Department of Community Affairs (DCA) will review its policies and procedures to ensure that all tenant files contain all required supporting documentation and will adopt appropriate actions as indicated by the review. The DCA will also provide additional ongoing training to staff regarding these policies and procedures.

Reference Number: 2021-005 Prior Year Finding: N/A Federal Agency: U.S. Department of Housing and Urban Development State Agency: Department of Community Affairs Federal Program: Housing Voucher Cluster Assistance Listing Number: 14.871, 14.879 Award Number and Year: NJ912 (2021) Compliance Requirement: Special Tests and Provisions ? Reasonable Rent Type of Finding: Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance: The Public Housing Authority?s (PHA?s) administrative plan must state the method used by the PHA to determine that the rent to owner is reasonable in comparison to rent for other comparable unassisted units. The PHA determination must consider unit attributes such as the location, quality, size, unit type, and age of the unit, and any amenities, housing services, maintenance, and utilities provided by the owner. The PHA must determine that the rent to owner is reasonable at the time of initial leasing. Also, the PHA must determine reasonable rent during the term of the contract (a) before any increase in the rent to owner, and (b) at the housing assistance payment (HAP) contract anniversary if there is a 5 percent decrease in the published Fair Market Rent in effect 60 days before the HAP contract anniversary. The PHA must maintain records to document the basis for the determination that rent to owner is a reasonable rent (initially and during the term of the HAP contract) (24 CFR sections 982.4, 982.54(d)(15), 982.158(f)(7), and 982.507). Control: Per 2 CFR section 200.303(a), a 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 comply 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: Documentation was incomplete relating to reasonable rent determinations. Further, the Department completed rent determinations after the effective date. Context: Reasonable rent determinations are required at the time of initial leasing. Forty newly admitted tenants were selected for testing and we noted the following exceptions: ? For 4 of 40 tenants, the reasonable rent determination date was after the effective date ? For 2 of 40 tenants, the tenants were incorrectly entered into the system as being admitted to the program in 2021, when they were actually admitted back in 2019. Reasonable rent determinations are also required during the term of the contract. Forty rent increase and/or HAP contract anniversary tenants were selected for testing and we noted the following exceptions: ? For 2 of 40 tenants, the reasonable rent determination date was after the effective date. ? For 1 of 40 tenants, the tenant file was missing support for the letter to the landlord and tenant notifying them of the adjusted rent amounts. Questioned costs: Undetermined. Cause: The Department?s procedures were not sufficient to ensure that tenant files contained all required information. In addition, procedures and controls were not sufficient to ensure that rent determinations were completed prior to the effective date. Effect: Errors in tenant benefits could result when rent determinations are completed after the effective date. Recommendation: We recommend that the Department review its policies and procedures to ensure that tenant tiles contain all required supporting documentation and that all rent determinations are completed prior to the effective date. Views of responsible officials: As recommended, the Department of Community Affairs (DCA) will review its policies and procedures to ensure that tenant tiles contain all required supporting documentation and that all rent determinations are completed prior to the effective date. The DCA will also provide additional ongoing training to staff regarding these policies and procedures.

Reference Number: 2021-006 Prior Year Finding: N/A Federal Agency: U.S. Department of Housing and Urban Development State Agency: Department of Community Affairs Federal Program: Housing Voucher Cluster Assistance Listing Number: 14.871, 14.879 Award Number and Year: NJ912 (2021) Compliance Requirement: Special Tests and Provisions ? Selection from the Waiting List Type of Finding: Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance: The Public Housing Authority (PHA) must have written policies in its Housing Choice Voucher Program (HCVP) administrative plan for selecting applicants from the waiting list and PHA documentation must show that the PHA follows these policies when selecting applicants for admission from the waiting list. Except as provided in 24 CFR section 982.203 Special admission (non-waiting list), all families admitted to the program must be selected from the waiting list. ?Selection? from the waiting list generally occurs when the PHA notifies a family whose name reaches the top of the waiting list to come in to verify eligibility for admission (24 CFR sections 5.410, 982.54(d), and 982.201 through 982.207). Control: Per 2 CFR section 200.303(a), a 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 comply 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: The Department of Community Affairs (Department) incorrectly identified tenants as being selected from the waitlist and admitted into the program during FY2021. The tenants were documented as being admitted in the program in FY2021; upon review of the tenant?s files, it was noted that the tenants were admitted into the program in FY2020. Context: For two of forty tenants selected for testing, the tenant admission date was incorrectly entered in the system. This tenants were newly admitted to the program in FY2020, not FY2021. Questioned costs: Undetermined. Cause: Internal controls and supervisory review did not detect the errors in a timely manner. Effect: The Department had an inaccurate list of tenants on the FY2021 waitlist. Recommendation: We recommend that the Department review its policies and procedures to ensure that proper documentation is maintained to support the correct date of tenant?s admittance into the program. Views of responsible officials: As recommended, the Department of Community Affairs (DCA) will review its policies and procedures to ensure that the proper documentation is maintained to support the correct date of the tenant?s admittance to the program. The DCA will also provide additional ongoing training to staff regarding these policies and procedures.

Reference Number: 2021-007 Prior Year Finding: 2020-005 Federal Agency: U.S. Department of Labor State Agency: Department of Labor and Workforce Development Federal Program: Unemployment Insurance, COVID-19 ? Unemployment Insurance Assistance Listing Number: 17.225 Award Number and Year: UI-35663-21-55-A-34 (10/1/2020 ? 12/31/2023), UI-34510-20-60-A-34 (1/1/2020 ? 9/30/2021), UI-35959-21-60-A-34 (1/1/2021 ? 9/30/2022) Compliance Requirement: Eligibility Type of Finding Material Weakness in Internal Control Over Compliance, Material Noncompliance Criteria or specific requirement: Compliance: Regular Unemployment Compensation (UC) Program ? Under state UC laws, a worker?s benefit rights depend on the amount of the worker?s wages and/or weeks of work in covered employment in a ?base period.? While most states define the base period as the first four of the last five completed calendar quarters prior to the filing of the claim, other base periods may be used. To qualify for benefits, a claimant must have earned a certain amount of wages or have worked a certain number of weeks or calendar quarters within the base period or meet some combination of wage and employment requirements. Some states require a waiting period of one week of total or partial unemployment before UC is payable. A ?waiting period? is a non-compensable period of unemployment in which the worker is otherwise eligible for benefits. To be eligible to receive UC, all states provide that a claimant must have been separated from suitable work for non-disqualifying reasons under state law (i.e., not because of such acts as leaving voluntarily without good cause or discharge for misconduct connected with work). After separation, he or she must be able and available for work, actively seeking work, legally authorized to work in the United States and must not have refused an offer of suitable work. Pandemic Unemployment Assistance (PUA) ? PUA provides benefits to covered individuals, who are those individuals not eligible for regular unemployment compensation (UC or extended benefits under state or federal law or Pandemic Emergency Unemployment Compensation (PEUC), including those who have exhausted all rights to such benefits. Covered individuals also include self-employed, those seeking part-time employment, individuals lacking sufficient work history, and those who otherwise do not qualify for regular unemployment compensation or extended benefits under state or federal law or PEUC. PUA is payable to individuals who are ineligible for regular UC, and are unemployed, partially unemployed, or unable or unavailable to work due to one of the COVID-19 related reasons identified Attachment I to UIPL No. 16-20, Change 5. Section 2102(a)(3)(A)(ii)(I) of the CARES Act included 10 specific COVID-19 related reasons. The Department, under the authority provided by Section 2102(a)(3)(A)(ii)(I)(kk) of the CARES Act, has added additional COVID-19 related reasons; these are discussed in more detail in Section 4.a. of UIPL No. 16-20, Change 5. While three of these new COVID-19 related reasons were introduced to states with the publication of UIPL No. 16-20, Change 5 on February 25, 2021, all COVID-19 related reasons apply retroactively to the beginning of the PUA program. Additionally, as described in Section 4.b.i. of UIPL No. 16-20, Change 5, paraphrasing of the COVID-19 related reasons is not permissible; individuals must be permitted to select more than one COVID-19 related reason; individuals must be permitted to select different COVID-19 related reasons each week; and individuals must be permitted to file and select no COVID-19 related reasons. Control: Per 2 CFR section 200.303(a), a 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 comply 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: CLA noted that ineligible claimants were being paid unemployment insurance. The Department of Labor and Workforce Development (DLWD) did not maintain an effective control environment over eligibility requirements of the New Jersey Local Office Online Payment System (NJLOOPS) for both regular Unemployment Compensation and Pandemic Unemployment Assistance. Context: Sixty claimants were selected for testing which included 32 claimants for regular UC (including extended benefits and PEUC) and 28 claimants for PUA. We noted the following exceptions: ? Regular UC: 2 of 32 claimants receiving benefits had voluntarily left work and were ineligible for the program. ? PUA: 8 of 28 claimants receiving PUA did not identify a COVID-19 reason for their unemployment and were ineligible for the program. Questioned costs: $18,957 - The total amount of benefits received by ineligible recipients: ? Regular UC: $16,614 ? PUA: $2,343 Cause: The Department began providing benefits to claimants before NJLOOPS had completed the eligibility determination process. Effect: Ineligible claimants received unemployment compensation benefits. Recommendation: We recommend the Department review and enhance procedures and controls to ensure that only eligible claimants receive unemployment compensation benefits. Views of responsible officials: The Division of Unemployment Insurance (DUI) will emphasize in its ongoing training plan for all Unemployment Insurance (UI) employees the requirement to confirm that the claimant, in order to be eligible to receive UI benefits, was not at fault for their separation from employment. Since the Pandemic Unemployment Assistance (PUA) program ended over a year ago on September 4, 2021 and PUA claims are no longer being filed, no action will be taken by the DUI at this time to alert staff of the requirement to ensure that one of the COVID-19 related reasons was not identified. Steps will also be taken by the DUI to attempt to recoup any UI or PUA benefits that were improperly paid.

Reference Number: 2021-008 Prior Year Finding: N/A Federal Agency: U.S. Department of Labor State Agency: Department of Labor and Workforce Development Federal Program: Unemployment Insurance, COVID-19 ? Unemployment Insurance Assistance Listing Number: 17.225 Award Number and Year: UI-35663-21-55-A-34 (10/1/2020 ? 12/31/2023), UI-34510-20-60-A-34 (1/1/2020 ? 9/30/2021), UI-35959-21-60-A-34 (1/1/2021 ? 9/30/2022) Compliance Requirement: Special Tests and Provisions - Employer Experience Rating Type of Finding Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance: Certain benefits accrue to states and employers as a result of the state having a federally approved experience-rated UI tax system. All states currently have an approved system. For the purpose of proper administration of the system, the State Workforce Agency (SWA) maintains accounts, or subsidiary ledgers, on state UI taxes received or due from individual employers, and the UI benefits charged to the employer. The employer?s ?experience? with the unemployment of former employees is the dominant factor in the SWA computation of the employer?s annual state UI tax rate. The computation of the employer?s annual tax rate is based on state UI law (26 USC 3303). States were provided with temporary emergency flexibility regarding experience rating as needed in response to the spread of COVID-19. As such, a state should have supporting documentation (e.g., statutory changes, emergency rules, or executive orders) if this temporary flexibility was exercised for the time period in question. Control: Per 2 CFR section 200.303(a), a 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 comply 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: The Department of Labor and Workforce Development (DLWD) did not maintain an effective control environment over Employer Experience Rating requirements. Context: One of sixty employers selected for testing had an incorrectly calculated Employee Experience Rate applied. The rate did not match the employer?s IRS 940C Form. Questioned costs: Undetermined. Cause: The Department?s controls were not operating sufficiently to ensure that employer rates were calculated and applied properly. For this particular employer, its date of first hire was inadvertently changed in NJLOOPS from 1969 to 2019 which resulted in the incorrect calculation of the employee experience rate. Effect: An incorrect Employee Experience Rate was applied to an employer. Recommendation: We recommend the Department review and enhance procedures and controls to ensure that employer experience rates are properly calculated and applied. Views of responsible officials: The Department of Labor and Workforce Development (DLWD) would like to note that only one out of 60 cases that were reviewed by the auditors was cited as an exception. Based on those results that error statistic falls within the tolerance limit for the USDOL Tax Performance System and does not require further action by DLWD. This issue was caused by an Employer Identification Number (EIN) that was renumbered by the Department of the Treasury, Division of Revenue and Enterprise Services (DORES) that did not transfer over to the Tax System. The solution is for the DLWD Employer Accounts Division to request a Renumber Report that can be manually reviewed by tax examiners in Status/Experience Rating for possible corrective action. DLWD will implement the request for a Renumber Report and this manual review beginning October 31, 2022.

Reference Number: 2021-009 Prior Year Finding: 2020-003 Federal Agency: U.S. Department of Labor State Agency: Department of Labor and Workforce Development Federal Program: Unemployment Insurance, COVID-19 ? Unemployment Insurance Assistance Listing Number: 17.225 Award Number and Year: UI-35663-21-55-A-34 (10/1/2020 ? 12/31/2023), UI-34510-20-60-A-34 (1/1/2020 ? 9/30/2021), UI-35959-21-60-A-34 (1/1/2021 ? 9/30/2022) Compliance Requirement: Reporting ? ETA 2208A ? Quarterly UI Above-Base Report Type of Finding Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance: The ETA 2208A - Quarterly UI Above-Base Report must be submitted no later than 30 days after the end of each quarter. Control: Per 2 CFR section 200.303(a), a 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 comply 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: The Department of Labor and Workforce Development (Department) did not submit the quarterly ETA 2208A ? Quarterly UI Above-Base Reports timely in accordance with the program?s reporting requirements. Context: One of two ETA 2208A reports selected for testing was not submitted by the due date. The December 31, 2020 quarterly report was originally due by January 30, 2021 and the Department was given an extension until 1/31/2021 but the report was not submitted until February 9, 2021. Questioned costs: None noted. Cause: The Department?s supervisory review and controls were not operating effectively to ensure the ETA 2208A reports were submitted timely. Effect: The Department was not in compliance with the quarterly reporting requirements for the ETA 2208A report. Recommendation: We recommend that the Department review its policies and procedures to ensure that the ETA 2208A ? Quarterly UI Above-Base Reports are submitted timely each quarter. Views of responsible officials: The ETA 2208A report for the period ending December 31, 2020 was due for submission by January 31, 2021. During this time period the DLWD was experiencing similar working conditions as the prior fiscal year 2020 time period, which included limited access to the office building/facilities and staff outages due to the ongoing COVID-19 pandemic situation. The late filing of the December 2020 quarterly report on February 9, 2021 also occurred prior to the implementation of DLWD?s prior year 2020 corrective action plan on June 30, 2021.

Reference Number: 2021-010 Prior Year Finding: N/A Federal Agency: U.S. Department of Labor State Agency: Department of Labor and Workforce Development Federal Program: Unemployment Insurance, COVID-19 ? Unemployment Insurance Assistance Listing Number: 17.225 Award Number and Year: UI-35663-21-55-A-34 (10/1/2020 ? 12/31/2023), UI-34510-20-60-A-34 (1/1/2020 ? 9/30/2021), UI-35959-21-60-A-34 (1/1/2021 ? 9/30/2022) Compliance Requirement: Reporting ? ETA 9050 and ETA 9052 Type of Finding Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance: The ETA 9050 ? Time Lapse of All First Payments except Workshare report contains monthly information on first payment time lapse. This report concerns the time it takes states to pay benefits to claimants for the first compensable week of unemployment. First Payments are considered timely at 14/21 days, Interstate and Intrastate UI, UCFE, and UCX, full and partial weeks. The report is due in the ETA National Office on the 20th of the month following the month to which the data relates. The ETA 9052 ? Nonmonetary Determination Time Lapse Detection report contains monthly information on the time it take states to issue nonmonetary determinations from the date the issues are first detected by the agency. Single-claimant and multi-claimant nonmonetary determinations are included in the report. Nonmonetary determinations made by organizational units such as Benefits Accuracy Measurement (BAM) and Benefit Payment Control (BPC) are also included in the report. Nonmonetary determinations are considered timely if completed within 21 days. The report is due in the ETA National Office on the 20th of the month following the month to which the data relates. Control: Per 2 CFR section 200.303(a), a 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 comply 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: Reports submitted by the Department of Labor and Workforce Development (Department) indicate that First Payment Time Lapse and Nonmonetary Determinations were untimely during FY 2021. Context: Four ETA 9050 and four ETA 9055 reports were selected for testing for the months of August 2020, December 2020, February 2021 and March 2021. We noted the following exceptions: ? ETA 9050: 4 of 4 reports indicate that First Payments were made in more than 14/21 days. ? ETA 9052: 4 of 4 reports indicate that nonmonetary determinations were completed in more than 21 days. Questioned costs: None noted. Cause: The Department?s procedures and controls were not operating effectively to ensure that first payments and nonmonetary determinations were completed timely. Effect: First Payments and Nonmonetary Determinations were not completed timely as required by the program. Recommendation: We recommend that the Department review its policies and procedures to ensure that it makes first payments within 14/21 days and that nonmonetary determinations are completed within 21 days per program requirements. Views of responsible officials: This new ETA reporting audit finding noted for the UI program is directly attributable to the massive volume of claims that were filed when businesses were shut down throughout the duration of the COVID-19 pandemic, and the fact that most of the claimants were brand new to the filing process. As a result, the DLWD was unable to meet the timeliness requirements during the FY 2021 audit period that directly coincided with the COVID-19 pandemic. This was a condition affecting all States and the USDOL has recognized this extremely rare situation and the difficulty it presented with complying with the timeliness requirements without penalty. DLWD expects this finding to be an isolated citation that will be corrected and come back into compliance under regular operating procedures now that the extraordinary volume created during the pandemic period has decreased significantly.

Reference Number: 2021-011 Prior Year Finding: 2020-004 Federal Agency: U.S. Department of Labor State Agency: Department of Labor and Workforce Development Federal Program: Unemployment Insurance, COVID-19 ? Unemployment Insurance Assistance Listing Number: 17.225 Award Number and Year: UI-35663-21-55-A-34 (10/1/2020 ? 12/31/2023), UI-34510-20-60-A-34 (1/1/2020 ? 9/30/2021), UI-35959-21-60-A-34 (1/1/2021 ? 9/30/2022) Compliance Requirement: Special Tests and Provisions - UI Benefit Payments Type of Finding Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance: The State Workforce Agency (SWA) is required by 20 CFR section 602.11(d) to operate and maintain a quality control system. The Benefits Accuracy Measurement (BAM) program is DOL?s quality control system designed to assess the accuracy of UI benefit payments and denied claims, unless the SWA is excepted from such requirement (20 CFR section 602.22). The program estimates error rates, that is, numbers of claims improperly paid or denied and dollar amounts of benefits improperly paid or denied, by projecting the results from investigations of statistically sound random samples to the universe of all claims paid and denied in a state. Specifically, the SWA?s BAM unit is required to draw a weekly sample of payments and denied claims, complete prompt, and in-depth investigations to determine if the administration of the UC program is consistent with state and federal law (20 CFR section 602.21(d)). As presented in the ET Handbook No. 395, the investigation involves a review of state agency records, as well as contacting the claimant, employers, and third parties (either in-person, by telephone, or by fax) to conduct new and original fact-finding related to all of the information pertinent to the paid or denied claim that was sampled. BAM investigators review cases for adherence to federal and state law as well as official policy. The following time limits are established for completion of all cases for the year. (The "year" includes all batches of weeks ending in the calendar year.): ? a minimum of 70 percent of cases must be completed within 60 days of the week ending date of the batch; ? 95 percent of cases must be completed within 90 days of the week ending date of the batch; ? a minimum of 98 percent of cases for the year must be completed within 120 days of the ending date of the calendar year. Control: Per 2 CFR section 200.303(a), a 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 comply 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: The Department of Labor and Workforce Development (Department) did not complete BAM case investigations within the time limits established in ET Handbook No. 395. Context: Two of nine cases selected for testing were closed more than one year after they were selected for review. One case was initially assigned on 9/19/2020 and the other on 10/3/2020. Both cases were closed on 11/1/2021 which was 408 and 394 days, respectively, after date of initial assignment. Questioned costs: Undetermined. Cause: The investigators did not notify the supervisor timely that review of the cases had been completed and the BAM review should be closed. The BAM Unit supervisor noted that the unit has been overwhelmed due to the Pandemic and resulting staff shortages. Effect: Noncompliance with BAM case investigation time limits could delay the detection and correction of inaccurate benefit payments and denied claims. Recommendation: We recommend that the Department review and enhance procedures and controls to ensure that BAM case investigations are completed timely. Views of responsible officials: The Division of Unemployment Insurance (DUI) was able to hire six new BAM investigators effective July 2, 2022. Bringing on these new investigators will now staff the unit with 10 BAM investigators total. These new hires are currently being trained on the BAM process by more senior BAM staff. Some of the new hires are also new to the Unemployment Insurance (UI) program as a whole, so they will have to be trained on UI laws, policies and procedures in addition to learning how to score cases under BAM rules. It is anticipated that these six new hires will be able to start working towards closing cases by the end of the 2022 calendar year. Expected increases to timely completion of case reviews is anticipated once these new hires complete their training and are able to independently work the BAM caseload.

Reference Number: 2021-012 Prior Year Finding: 2020-001 Federal Agency: U.S. Department of Labor State Agency: Department of Labor and Workforce Development Federal Program: Unemployment Insurance, COVID-19 ? Unemployment Insurance Assistance Listing Number: 17.225 Award Number and Year: UI-35663-21-55-A-34 (10/1/2020 ? 12/31/2023), UI-34510-20-60-A-34 (1/1/2020 ? 9/30/2021), UI-35959-21-60-A-34 (1/1/2021 ? 9/30/2022) Compliance Requirement: Information Technology General Controls Type of Finding Significant Deficiency in Internal Control Over Compliance Criteria or specific requirement: Control: Per 2 CFR section 200.303(a), a 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 comply 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). As part of an entity?s internal controls to reasonably ensure compliance over Federal laws and regulations, an entity must maintain an effective control environment over their information technology systems used to generate and process information to administer Federal programs in accordance with the respective rules and regulations that govern the program. Condition: The Department of Labor and Workforce Development (DLWD) did not maintain an effective control environment over change management of the New Jersey Local Office Online Payment System (NJLOOPS). Context: The NJLOOPS application is an essential system hosted within the Office of Information Technology?s (OIT) infrastructure used by DLWD for unemployment insurance eligibility, claims, benefit calculations, and payments. NJLOOPS application management is provided by DLWD staff. We noted that the prior year finding for internal controls over change management were only partially corrected. Specifically, we noted that management did not maintain documentation around the testing and approval of system changes. Questioned costs: Undetermined. Cause: Due to limitations on staffing and increased demand on IT resources due to the additional requirements of the pandemic's unemployment program, the agency was unable to comply with its internal change management procedures requirements. Effect: Noncompliance with the requirements of internal change management procedures could increase the risk of potential unauthorized changes occurring to the application. Recommendation: We recommend the Department follow the statewide change management policy and formally document the request, testing, and approval of all changes related to the NJLOOPS application. Views of responsible officials: The Division of Information Technology (DIT) utilizes the Foot Prints system to document all change control requests made by program areas within the New Jersey Department of Labor. This system will be utilized to ensure that all system changes are documented including changes requested, programmatic work performed, testing, and approval of the effort for promotion to the Production environment. The Foot Prints system will document all actions taken, the signoffs by the application development staff, the testing efforts by quality assurance testing staff, and the sign off and approval to move the changes to the Production environment. In addition, the team will improve the documentation by using the attachment features within Foot Prints for the inclusion of relevant documents, notes emails, etc. associated with change control requests. This will ensure that all documentation is maintained around the testing and approval of system changes The DLWD Change Management Policy and Procedure underwent its annual review during the summer of 2022 to ensure it was in compliance with the requirement and recommendations of the Statewide Information Security Manual (SISM) Weekly Service Request review and Change Management meetings are also held by DIT.

Reference Number: 2021-013 Prior Year Finding: N/A Federal Agency: U.S. Department of Labor U.S Department of Health and Human Services U.S. Department of Homeland Security State Agency: Department of Treasury, Office of Management and Budget (OMB) Federal Program: Unemployment Insurance, COVID-19 ? Unemployment Insurance COVID-19 ? Coronavirus Relief Fund Adoption Assistance COVID-19 - Presidential Declared Disaster Assistance to Individuals and Households - Other Needs Assistance Listing Number: 17.225, 21.019, 93.659, 97.050 Award Number and Year: UI-35663-21-55-A-34 (10/1/2020 ? 12/31/2023), UI-34510-20-60-A-34 (1/1/2020 ? 9/30/2021), UI-35959-21-60-A-34 (1/1/2021 ? 9/30/2022) SLT0007 (2020), SLT0228 (2020) 2001NJADPT (10/1/2019 ? 9/30/2020), 2101NJADPT (10/1/2020 ? 9/30/2021) FEMA-DR-4488-NJ-SPLW (7/25/2020 ? 3/27/2021) Compliance Requirement: Reporting: Schedule of Expenditures of Federal Awards Type of Finding Significant Deficiency in Internal Control Over Compliance Criteria or specific requirement: Compliance: Per 2 CFR 200 Section 510(b), the auditee must prepare a schedule of expenditures of Federal awards for the period covered by the auditee?s financial statements which must include the total Federal awards expended as determined in accordance with Section 200.502. The schedule must list individual Federal programs by Federal agency and provide total Federal awards expended for each individual Federal program and the Assistance Listings Number or other identifying number when the Assistance Listings information is not available. It must also include the total amount provided to subrecipients from each Federal program. Per Section 502(g), Federal non-cash assistance, such as free rent, food commodities, donated property, or donated surplus property, must be valued at fair market value at the time of receipt or the assessed value provided by the Federal agency. Control: Per 2 CFR section 200.303(a), a 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 comply 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: Errors were detected in the Schedule of Expenditures of Federal Awards (SEFA) submitted to auditors. Errors included reporting of expenditures for assistance listing 97.050 ? Presidential Declared Disaster Assistance to Individuals and Households - Other Needs under 17.225 ? Unemployment Insurance, the amounts passed through to subrecipients were significantly overstated for assistance listings 21.019 - Coronavirus Relief Fund and 93.659 - Adoption Assistance, and total expenditures for assistance listing 93.659 ? Adoption Assistance was overstated. Context: When reconciling support to the SEFA submitted to auditors during test work, the following errors were detected: 1. Approximately $1.4 billion for the program 97.050 - Presidential Declared Disaster Assistance to Individuals and Households - Other Needs was reported under assistance listing 17.225 ? Unemployment Insurance. When properly reported under the correct assistance listing number, assistance listing 97.050 was determined to be a new Type A program. 2. The amount passed through to subrecipients was overstated for program 21.019 ? Coronavirus Relief Fund. The amount passed through to subrecipients was reported as $760.4 million but it was determined that $71 million in payments to beneficiaries had been misclassified as subrecipient payments, resulting in an overstatement of 10.3%. 3. Under program 93.659 ? Adoption Assistance, approximately $1.4 million in Adoption Savings was incorrectly reported as an expenditure incurred in total expenditures and the amount passed through to subrecipients. The amount passed through to subrecipients was overstated by 100% as it was determined that the amount passed through to subrecipients should have been $0. Questioned costs: Undetermined. Cause: Procedures and internal controls were not sufficient to ensure that expenditures reported on the SEFA and the amounts passed through to subrecipients, were complete and accurate. The State?s SEFA is initially prepared by OMB using reports from the State?s NJCFS accounting system. After compilation by OMB, preliminary SEFA expenditures are reviewed and confirmed by program administering State agencies and, when necessary, adjustment detail is submitted to OMB to be included in the final SEFA. Although program administering agencies reviewed and confirmed their respective programs to OMB, expenditures for assistance listings 17.225, and 97.050 were improperly reported. Further, the administering agency did not identify that it had incorrectly identified Adoption Savings as reportable expenditures under assistance listing 93.659. Effect: Federal expenditures were incorrectly reported on the SEFA submitted to auditors, effecting the initial determination of Type A and Type B programs. When the reporting errors were corrected, assistance listing 97.050 was determined to be a new Type A program. Subrecipient pass-through reporting errors for assistance listing 21.019 and 93.659 effected testing of subrecipient monitoring for the programs. Recommendation: We recommend that OMB improve its SEFA compilation process to ensure that program expenditures and the amounts passed through to subrecipients reported on the State?s SEFA are complete and accurate. Procedures and controls should include a process to identify programs that are new to the State and ensure they are properly reported on the SEFA. We further recommend that OMB work with the State?s agencies and departments to review and update their SEFA review and confirmation procedures to ensure that expenditure information they submit to OMB is accurate, that it includes all programs expended, and ties to detail expenditure transactions in the State?s accounting system. They should also review and enhance procedures and controls to ensure that subrecipient payments are accurately reported. Views of responsible officials: The Office of Management and Budget (OMB) has revised its annual GN12/SEFA Confirmation Letter and instructions sent out to all State agencies for the FY 2022 audit engagement in response to this finding. The majority of these SEFA errors and misclassifications of expenditures are noted under brand new COVID-specific federal programs that the State received awards under after the pandemic began in March 2020. The newness and urgency of these COVID programs contributed to the errors made during the first year these programs were required to be reported on the SEFA. The pass-through to subrecipient expenditure misclassifications are directly attributable to the miscoding of the disbursements in NJCFS at time of payment by the disbursing agency and subsequent failure of those agencies to identify and report any adjustments to OMB that are needed to pass-through totals during the annual SEFA confirmation process. The pass-through language and instructions in the revised GN12/SEFA Confirmation Letter sent out for FY 2022 was strengthened and was also emphasized in the email message sent with the annual confirmation request. All State agencies were also advised to seek guidance or technical assistance from OMB in situations where they are unsure if an entity is a true subrecipient or a contractor/vendor for pass-through classification purposes. This is sometimes a difficult determination to make and OMB has provided guidance every year to agencies on this topic since 2012 in an effort to accurately and completely report pass-through expenditures on the SEFA. OMB will continue to look for ways to strengthen controls in this area and provide additional guidance to agencies charged with making these determinations.

Reference Number: 2021-014 Prior Year Finding: N/A Federal Agency: U.S. Department of Transportation State Agency: Department of Transportation Federal Program: Highway Planning and Construction Cluster Assistance Listing Number: 20.205, 20.219 Award Number and Year: (2020-2021) Compliance Requirement: Special Tests and Provisions - Utilities Type of Finding Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance: State Departments of Transportation (DOTs) are required to develop policies and procedures pertaining to the use, accommodation and/or relocation of public and private utility facilities on highway rights-of way using federal highway funds. State DOTs are required to develop, maintain, and obtain Federal Highway Administration (FHWA) approval of their Utility Accommodation Policy (UAP) (23 CFR section 645.215). Control: Per 2 CFR section 200.303(a), a 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 comply 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: The Department of Transportation (the Department) did not receive FHWA approval of its UAP in effect for SFY 2021. Context: The Department followed its UAP during SFY 2021, but it had not been formally approved by FHWA. Questioned costs: Undetermined. Cause: The Department?s procedures and controls were not sufficient to ensure that it received FHWA approval of its UAP in a timely manner. Effect: The Department followed an unapproved UAP during the fiscal year. Recommendation: We recommend that the Department review its policies and procedures to ensure that it submits its UAP to FHWA so that it can be approved timely. Views of responsible officials: The New Jersey Department of Transportation (NJDOT) Utility Management unit will be working on updating its N.J.A.C Title 16 Chapter 25 Utility Accommodation Policy (UAP) that is currently in use under the program. The UAP policy?s current expiration date is February 1, 2023. The UAP will be sent to FHWA for review once it has been updated and commented on by the utility industry. NJDOT?s goal is to have the amended UAP completed and approved before the current policy?s expiration date of February 1, 2023.

Reference Number: 2021-015 Prior Year Finding: N/A Federal Agency: U.S. Department of Health and Human Services State Agency: Department of Human Services Federal Program: Aging Cluster, COVID-19 Aging Cluster Assistance Listing Number: 93.044, 93.045, 93.053 Award Number and Year: 2001NJCMC2-00 (3/20/2020 ? 9/30/2021) 2101NJVAC5-00 (4/1/2021 ? 9/30/2022) 2001NJHDC2-00 (3/20/2020 ? 9/30/2021) 2101NJOASS-00 (10/1/2020 ? 9/30/2022) 2101NJOASS-01 (10/1/2020 ? 9/30/2022) 2101NJOANS-00 (10/1/2020 ? 9/30/2022) 2101NJHDC5-00 (12/27/2020 ? 9/30/2022) 2101NJSSC6-00 (4/1/2021 ? 9/30/2024) 2001NJOASS-03 (10/1/2019 ? 9/30/2021) 2001NJOANS-04 (10/1/2019 ? 9/30/2021) Compliance Requirement: Reporting ? Federal Funding Accountability and Transparency Act (FFATA) Type of Finding: Material Weakness in Internal Control Over Compliance, Material Non-compliance Criteria or specific requirement: Compliance: Per the Federal Funding Accountability and Transparency Act (FFATA), prime (direct) recipients of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Reports must be filed in FSRS by the end of the month following the month in which the prime recipient awards any sub-grant greater than or equal to $30,000. If the initial award is below $30,000 but subsequent grant modifications result in a total award equal to or over $30,000, the award will be subject to the reporting requirements as of the date the award exceeds $30,000. If the initial award equals or exceeds $30,000 but funding is subsequently de-obligated such that the total award amount falls below $30,000, the award continues to be subject to FFATA reporting requirements. The following key data elements must be reported: Subawardee Name and Data Universal Numbering System (DUNS) number; Amount of Subaward (inclusive of modifications); Subaward Obligation/Action Date; Date of Report Submission; Subaward Number; Project Description; and Names and Compensation of Highly Compensated Officers. (Names and Compensation of Highly Compensated Officers must only be reported when the entity in the preceding fiscal year received 80 percent or more of its annual gross revenues in Federal awards; and $30,000,000 or more in annual gross revenues from Federal awards; and the public does not have access to this information about the compensation of the senior executives of the entity through periodic reports filed under section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. ?? 78m(a), 78o(d)) or section 6104 of the Internal Revenue Code of 1986.) Control: Per 2 CFR section 200.303(a), a 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 comply 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: Subaward information was not reported to FSRS during FY 2021. Context: Zero of six subrecipients selected for testing were reported to FSRS during FY 2021. Total subawards tested were $29,068,161, and $0 was reported as required by FFATA requirements. See Schedule of Findings and Questioned Costs for chart/table. Cause: The Department was unaware of FFATA reporting requirements and did not report subaward information to FSRS during FY 2021. Effect: Subawards were not reported to FSRS in accordance with FFATA requirements. Questioned costs: None noted. Recommendation: We recommend that the Department develop internal controls and procedures to ensure that FFATA reporting requirements are met. We further recommend the Department develop controls and procedures to ensure that all required subawards are reported accurately and timely to FSRS no later than the end of the month following the month of issuance. Views of responsible officials: The Department of Human Services, Division of Aging Services (DoAS) will attain full compliance with Federal Funding Accountability and Transparency Act (FFATA) requirements. The DoAS will consult with the Department and/or other DHS Division fiscal leadership to develop its FFATA procedures. These procedures shall include creating a list of all active first-tier subawards of federal funds DoAS has issued at $30,000 or more. The list will include all the data fields required for FFATA reporting. DoAS grants management members will ensure each of the identified subawards is entered on the Federal Subaward Reporting System (FSRS) website. DoAS will revise internal procedures to ensure all future subawards of $30,000 or more are entered on FSRS within 30 days of award.

Reference Number: 2021-016 Prior Year Finding: N/A Federal Agency: U.S. Department of Health and Human Services State Agency: Department of Health Federal Program: COVID-19 - Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) Assistance Listing Number: 93.323 Award Number and Year: 6NU50CK000525 (8/1/2019 ? 7/31/2024) Compliance Requirement: Suspension and Debarment Type of Finding: Material Weakness in Internal Control Over Compliance Criteria or specific requirement: Compliance: 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. When a non-federal entity enters into a covered transaction with an entity at a lower tier, the non-federal entity must verify that the entity, as defined in 2 CFR section 180.995 and agency adopting regulations, is not suspended or debarred or otherwise excluded from participating in the transaction. This verification may be accomplished by (1) checking the System for Award Management (SAM) Exclusions maintained by the General Services Administration (GSA), (2) collecting a certification from the entity, or (3) adding a clause or condition to the covered transaction with that entity (2 CFR section 180.300). Control: Per 2 CFR section 200.303(a), a 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 comply 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: The Department could not provide support that it ensured its vendors were not suspended or debarred before issuing contracts to the entity. Context: The suspension and debarment status for ten of eleven vendors was not documented. Questioned costs: There are no questioned costs related to this finding as the vendors were not federally suspended or debarred. Cause: The Department did not establish effective internal controls for maintaining sufficient evidence that a suspension and debarment check was completed before issuing contracts to its vendors. Effect: If the suspension and debarment status of vendors is not verified when entering into covered transactions, it is possible that a contract could be issued to an ineligible vendor. Recommendation: We recommend the Department implement controls and procedures to ensure suspension and debarments checks are adequately documented and maintained in the vendor procurement files. Views of responsible officials: The Department of Health will update policy FMC 21-02 to include the search for any vendor suspensions and debarments on the federal System for Award Management (SAM) Exclusions website and will maintain a ?screen print? of those results on file.

Reference Number: 2021-017 Prior Year Finding: N/A Federal Agency: U.S. Department of Health and Human Services State Agency: Department of Health Federal Program: COVID-19 - Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) Assistance Listing Number: 93.323 Award Number and Year: 6NU50CK000525 (8/1/2019 ? 7/31/2024) Compliance Requirement: Reporting ? Federal Funding Accountability and Transparency Act (FFATA) Type of Finding: Material Weakness in Internal Control Over Compliance, Material Non-compliance Criteria or specific requirement: Compliance: Per the Federal Funding Accountability and Transparency Act (FFATA), prime (direct) recipients of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Reports must be filed in FSRS by the end of the month following the month in which the prime recipient awards any sub-grant greater than or equal to $30,000. If the initial award is below $30,000 but subsequent grant modifications result in a total award equal to or over $30,000, the award will be subject to the reporting requirements as of the date the award exceeds $30,000. If the initial award equals or exceeds $30,000 but funding is subsequently de-obligated such that the total award amount falls below $30,000, the award continues to be subject to FFATA reporting requirements. The following key data elements must be reported: Subawardee Name and Data Universal Numbering System (DUNS) number; Amount of Subaward (inclusive of modifications); Subaward Obligation/Action Date; Date of Report Submission; Subaward Number; Project Description; and Names and Compensation of Highly Compensated Officers. (Names and Compensation of Highly Compensated Officers must only be reported when the entity in the preceding fiscal year received 80 percent or more of its annual gross revenues in Federal awards; and $30,000,000 or more in annual gross revenues from Federal awards; and the public does not have access to this information about the compensation of the senior executives of the entity through periodic reports filed under section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. ?? 78m(a), 78o(d)) or section 6104 of the Internal Revenue Code of 1986.) Control: Per 2 CFR section 200.303(a), a 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 comply 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: Subaward information was not reported timely to FSRS during FY 2021. Context: Eleven of thirteen subawards selected for testing were not reported timely to FSRS during FY 2021. Specifically, we noted the following: ? 4 subawards issued between 9/24/2020 and 12/30/2020 were reported on 7/1/2021 which was between 151 and 243 days late. ? 7 subawards issued between 12/29/2020 and 1/4/2021 were reported on 6/1/2022 which was between 460 and 486 days late. See Schedule of Findings and Questioned Costs for chart/table. Cause: The Department?s internal controls were not sufficient to ensure that subawards were reported timely to FSRS during FY 2021. Effect: Subawards were not reported to FSRS in accordance with FFATA requirements. Questioned costs: None noted. Recommendation: We recommend that the Department develop internal controls and procedures to ensure that all required subawards are reported timely to FSRS no later than the end of the month following the month of issuance in accordance with FFATA reporting requirements. Views of responsible officials: The Department of Health (DOH) acknowledges that the subaward reports were not submitted timely during the current FY 2021 audit period, and that under normal circumstances, this oversight would be deemed an audit finding. However, based on our unique and historic circumstances during the said period, the DOH would like to appeal to the Good Faith exception for this finding under the Federal Funding Accountability and Transparency (FFATA) Act. Under the Act, in the event that applicable subawards were not properly reported by a recipient, the auditor should evaluate compliance based on whether a recipient demonstrated a ?good faith? effort to comply, evidenced by proper documentation. Moreover, under the FFATA Act, auditors are not required to report audit findings when there is evidence a recipient demonstrated a good faith effort. Please see the following link from the Federal Service Desk site: Federal Service Desk: Q&A on Testing FFATA Reporting Compliance The DOH believes that we have taken numerous steps, in good faith, to comply with the requirements under the Act, as soon as we were made aware of this non-compliance. To start, the scope of the audit period was during the beginning and the height of the historic COVID-19 declared state of emergency. The ELC COVID Unit was newly created to handle a series of historic CDC funding awards (over $1.5 billion), with varying funding requirements. The unit was made aware that a separate FFATA reporting was required for each cooperative agreement approximately two months prior to the current audit. However, upon notice, DOH reached out to our partners and established the necessary accounts/access requirements and contacted all the stakeholders. As such, through a sense of urgency among all staff, DOH was able to gather and submit all outstanding reports. Moreover, DOH has copied the auditor in our internal e-mail communications in our compliance efforts. Moreover, our attempt to invoke the good faith exception under the Act has been unsuccessful during our subsequent meetings with the auditors. Specifically, the auditor claims that we have not provided sufficient documentation such as emails, as detailed in the Act; however, the Act references the emails only as one of two examples of good faith exceptions (indicated by ?such as?), and therefore, it does not provide an exhaustive list of all exceptions. Therefore, we maintain our position as set forth above. Moving forward, with awareness and newly created infrastructure, the DOH is committed to submitting timely FFATA reports. As such, the DOH respectfully requests that this oversight, which has since been cured, not be listed as an audit finding, as per the Good Faith exception under the Act. Thank you for your consideration. Rejoinder: General Service Administration (GSA) guidance states that demonstration of a ?good faith? effort by a recipient should be evidenced by proper documentation such as: ? Emails or phone logs of communication between a recipient and the awarding agency or the General Services Administration ? Computer screen shots that illustrate recipient attempts to upload information into the FFATA Subaward Reporting System (FSRS) The Department was unable to provide these types of documentation. We noted that seven of the eleven exceptions identified in the finding were not submitted to FSRS until after our request for testing support. We believe the modified audit guidance issued by the GSA was primarily applicable to FY2011 single audits due to the newness of the FFATA reporting requirements and implementation challenges recipients had with the FFATA reporting process at that time. This guidance also notes that recipients are still required to comply with FFATA requirements in FY2012 and going forward. The Department was not in compliance with FFATA reporting requirements during FY2021 and it did not provide evidence of a ?good faith effort? to comply.

Reference Number: 2021-018 Prior Year Finding: N/A Federal Agency: U.S. Department of Health and Human Services State Agency: Department of Human Services Federal Program: Medicaid Cluster, COVID-19 ? Medicaid Cluster Assistance Listing Number: 93.775, 93.777, 93.778 Award Number and Year: 2105NJ5MAP (10/1/2020 ? 9/30/2021), 2105NJ5ADM (10/1/2020 ? 9/30/2021) Compliance Requirement: Reporting ? CMS-64 Type of Finding Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance: The CMS-64 - Quarterly Statement of Expenditures for the Medical Assistance Program report must be submitted electronically to the Centers for Medicare and Medicaid Services (CMS) within 30 days after the end of each quarter. Control: Per 2 CFR section 200.303(a), a 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 comply 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: The Department of Health and Human Services (the Department) did not submit the 3/31/2021 quarterly report within 30 days as required by CMS. Context: One of two quarterly reports tested was filed after the 30 day due date. The 3/31/2021 quarterly report was due by 4/30/2021 but was not submitted by the Department until 5/7/2021. In addition, the original report included expenditures that exceeded the two-year timely filing limitation and CMS required the Department to revise and resubmit the report. The revised quarterly report was finalized on 5/27/2021. Questioned costs: None noted. Cause: The Department?s procedures and controls were not sufficient to ensure the CMS-64 report was submitted timely. Effect: Delays in quarterly financial reporting to CMS could result in delays in the reconciliation of quarterly awards and possible penalties or sanctions imposed by the grantor. Recommendation: We recommend that the Department review its policies and procedures to ensure that the CMS-64 report is submitted timely each quarter. Views of responsible officials: During the audit engagement, the State informed the auditor that one of the CMS-64 forms was not available. The unavailable form is commonly known as the QI allotment form. The quarter ending March 31, 2021 report could not be filed on time because this form was not available on the Medicaid Budget & Expenditure System (MBES) until the very end of April and the State had to wait for it to be updated before it could enter data on this form. In addition, the State did not receive its drug rebate reports in time to meet the 30-day deadline. The delay was caused by a recent file layout change mandated by CMS. The CMS Medicaid Drug Rebate unit (MDR) required that all States update their systems in order to accept the new format. The new CMS MDR file format required the State to make multiple system changes to its legacy mainframe system. When the live processing file was run, there were unexpected issues and errors that delayed the creation of the reports used for the CMS-64 drug rebate section. The State believes that the majority of the issues have now been identified and corrected in the mainframe. The State was instructed to remove two claims from its March 31, 2021 submission because they were beyond two years old. However, the claims in question did not have a material value. During a routine review, the State discovered that a claim from 2017 was improperly reported on line 2B. The claim should have been reported on line 24D. The State attempted to reclassify the claims from line 2B to line 24D. The claims were offsetting decreasing and increasing adjustments of equal value that totaled zero. The CMS officer did not approve and we removed both the increasing and decreasing adjustments per his request. In the future, if the State discovers that a claim was reported on the wrong line of the CMS-64 report it will not attempt to correct the claim if it is beyond the two-year time limit.

Reference Number: 2021-019 Prior Year Finding: N/A Federal Agency: U.S. Department of Health and Human Services State Agency: Department of Human Services Federal Program: Medicaid Cluster, COVID-19 ? Medicaid Cluster Assistance Listing Number: 93.775, 93.777, 93.778 Award Number and Year: 2105NJ5MAP (10/1/2020 ? 9/30/2021), 2105NJ5ADM (10/1/2020 ? 9/30/2021) Compliance Requirement: Special Tests and Provisions: Managed Care Financial Audit Type of Finding Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance: Two types of audits are required for managed care: 1. Audited Financial Reports ? The contract with each Managed Care Organization (MCO), Prepaid Inpatient Health Plan (PIHP), and Prepaid Ambulatory Health Plan (PAHP) must require them to submit to the state an audited financial report specific to the Medicaid contract on an annual basis. These audits must be conducted in accordance with generally accepted accounting principles and generally accepted auditing standards (42 CFR section 438.3(m)). 2. Periodic Audits ? Effective no later than for rating periods for contracts starting on or after July 1, 2017, the state must periodically, but no less frequently than once every three years, conduct, or contract for an independent audit of the accuracy, truthfulness, and completeness of the encounter and financial data submitted by, or on behalf of each MCO, PIHP, and PAHP and post the results of these audits on its website (42 CFR section 438.602(e) and (g); May 6, 2016, Federal Register (81 FR 27497); OMB No. 0938-0920). Control: Per 2 CFR section 200.303(a), a 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 comply 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: The Department of Health and Human Services (the Department) received audit reports from its MCOs, but these reports were Agreed Upon Procedures (AUP) reports which were not conducted in accordance with generally accepted accounting principles and generally accepted auditing standards. Context: Five of five MCO audit reports received by the Department were AUP reports. An AUP engagement is one in which a practitioner is engaged by a client to issue a report of findings based on specific procedures performed on subject matter. The client engages the practitioner to assist specified parties in evaluating subject matter or an assertion as a result of a need or needs of the specified parties. In an engagement performed under this section, the practitioner does not perform an examination or a review and does not provide an opinion or negative assurance. Therefore, AUP reports do not fulfill the requirement that the audit was conducted in accordance with generally accepted accounting principles and generally accepted auditing standards. Questioned costs: Undetermined. Cause: DMAHS held the opinion that AUP reports were sufficient to meet the requirement of obtaining a financial statement audit report per the flexibility given to States in Medicaid and CHIP Managed Care Final Rule (CMS-2390-F) Frequently Asked Question number Q10, dated November 10, 2016. Effect: The Department is unable to ensure that its MCOs were audited in accordance with generally accepted accounting principles and generally accepted auditing standards. Failure to obtain qualified audit reports from its MCOs would result in the Department being unaware of deficiencies, corrective action plans or unmet requirements which would be identified as a result of qualified audits. Recommendation: We recommend that DMAHS update its contracts with its MCOs to remove the language specifying the requirement for an audit conducted specifically in accordance with generally accepted accounting principles and generally accepted auditing standards and instead to specify that an AUP report is acceptable per guidance provided under Medicaid and CHIP Managed Care Final Rule (CMS-2390-F) Frequently Asked Question number Q10. Views of responsible officials: The Division of Medical Assistance and Health Services (DMAHS) will update the Managed Care contract removing the language specifying the requirement for an audit conducted under generally accepted accounting principles and revise it to reflect the current practice of accepting the AUP report, as acceptable within the flexibility outlined in the Managed Care Final Rule (CMS-2390-F) FAQ #10.

Reference Number: 2021-020 Prior Year Finding: 2020-007 Federal Agency: U.S. Department of Health and Human Services State Agency: Department of Human Services Federal Program: Medicaid Cluster, COVID-19 ? Medicaid Cluster Assistance Listing Number: 93.775, 93.777, 93.778 Award Number and Year: 2105NJ5MAP (10/1/2020 ? 9/30/2021), 2105NJ5ADM (10/1/2020 ? 9/30/2021) Compliance Requirement: Special Tests and Provisions: Provider Eligibility Type of Finding Material Weakness in Internal Control Over Compliance, Material Noncompliance Criteria or specific requirement: Compliance: In order to receive Medicaid payments, providers must: (1) be licensed in accordance with federal, state, and local laws and regulations to participate in the Medicaid program (42 CFR sections 431.107 and 447.10; and Section 1902(a)(9) of the Social Security Act (42 USC 1396a(a)(9)); (2) screened and enrolled in accordance with 42 CFR Part 455, Subpart E (sections 455.400 through 455.470); and make certain disclosures to the state (42 CFR Part 455, Subpart B, sections 455.100 through 455.106). Medicaid managed care network providers are subject to the same disclosure, screening, enrollment, and termination requirements that apply to Medicaid fee-for-service providers in accordance with 42 CFR Part 438, Subpart H. Providers who have been barred from participation by the Office of the Inspector General (OIG) exclusion list are not eligible to be enrolled in the Medicaid program. (See 42 CFR 455.436). Control: Per 2 CFR section 200.303(a), a 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 comply 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: The Department of Health and Human Services (the Department) did not maintain documentation to support provider eligibility to participate in the Medicaid program. The provider eligibility requirement is administered by a 3rd-party that is required to determine and document the provider?s eligibility with the Department?s requirements. Provider files were incomplete, containing expired licenses or missing key documentation supporting eligibility. Context: The Department contracts with a 3rd party provider to manage medical provider eligibility. The 3rd party provider is responsible for verifying providers? license statuses and that providers meet health and safety standards. We noted that medical provider files maintained by the 3rd party contractor did not consistently support providers? eligibility and compliance with the State?s health and safety standards in accordance with federal and state requirements. A sample of 60 provider files was selected for testing and the following exceptions were noted: ? 20 of 60 provider files did not have an active license on file. The provider license was either expired or missing altogether. ? 2 of 60 provider files did not contain the provider agreement checklist. Questioned costs: Undetermined. Cause: Internal controls of the 3rd party provider were ineffective in ensuring that all required documentation was obtained and maintained in provider files. The Department?s controls over the 3rd party contractor were ineffective in detecting the errors. Effect: Medicaid claims may be paid to ineligible providers which may result in unallowed program costs. The Department is not compliant with the State?s plan for Medicaid. Recommendation: We recommend that the Department continue to review the 3rd party provider?s procedures for determining and documenting provider eligibility and compliance with related State and Federal requirements. The Department should periodically review provider files to determine if all required documentation is maintained in the files. Views of responsible officials: The State has attempted to access data files that would provide current licensure data to our contracted vendor that has not been available or obtainable from the State?s licensing agencies. Continuing efforts to outreach providers by sending a license expiration letter to providers 45 days prior to the license expiration date have also been less than successful. Access concerns have discouraged State efforts to deny claims because of expired licenses. It is important to note that the State?s expectations are that providers are properly licensed, but have failed to communicate this information to our contracted vendor. Licensure information for all enrolling providers and those subject to revalidation are screened in accordance with ACA requirements. The contracted vendor?s staff will be re-trained on the importance of having license information on file for the providers being enrolled. The vendor has also been approved to take screenshots of providers? licensing information from licensing websites in lieu of the provider sending in paper copies. These actions will help to ensure that licensing information is captured and maintained for each provider.

Reference Number: 2020-001 Prior Year Finding: N/A Federal Agency: U.S. Department of Labor State Agency: Department of Labor and Workforce Development Federal Program: Unemployment Insurance CFDA Number: 17.225 Award Number and Year: All grant awards All grant years Compliance Requirement-Other: Information Technology General Controls Type of Finding: Significant Deficiency in Internal Control Criteria or specific requirement: Control: 2 CFR, Part 200 ? Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, Subpart D, section 200.303 requires that non-Federal entities receiving Federal awards establish and maintain effective internal controls 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. As part of the an entity?s internal controls to reasonably ensure compliance over Federal laws and regulations, an entity must maintain an effective control environment over their information technology systems used to generate and process information to administer Federal programs in accordance with the respective rules and regulations that govern the program. Condition: The New Jersey Local Office Online Payment System (NJLOOPS) application management is provided by the Department of Labor and Workforce Development (DLWD) staff. The NJLOOPS application is an essential system hosted within Office of Information Technology?s (OIT) infrastructure used by DLWD for unemployment insurance eligibility, claims, benefit calculations, and payments. 1. Management did not document system changes that management applied to the production application environment per the DLWD Application Change Management Policy or the overarching (OIT) Change Management Guidelines. Documentation around the testing and approval of changes were verbally communicated and not formally documented, as stated in the policy. 2. There was a lack of segregation of duties between application development and promotion of code to production in the NJLOOPS environment. Management granted developers (including contractors) the ability to develop code and to promote code to production. There is a procedural workflow in place to prevent the same individual from developing and moving a change to the production environment; however, there is no technical limitation. Context: None Questioned costs: None Cause: Due to limitations on staffing and increased demand on IT resources related to responding to the additional requirements of the pandemic's unemployment program, the agency was unable to comply with its internal change management procedures requirements. Effect: Noncompliance with the requirements of internal change management procedures related to documentation and segregation of duties could increase the risk of potential unauthorized changes occurring to the application. Statistically valid: Yes Recommendation: We recommend following the statewide change management policy and formally document the request, testing, and approval of all changes related to the NJLOOPS application. Additionally, DLWD should assess their segregation of duties control environment to prevent the same user from developing and promoting a system change to the production environment. Views of responsible officials: The Division of Information Technology (DIT) utilizes the FootPrints system to document all change control requests made by program areas within the New Jersey Department of Labor. This system will be utilized to ensure that all system changes are documented including changes requested, programmatic work performed, testing, and approval of the effort for promotion to the Production environment. The FootPrints system will document all actions taken, the signoffs by the application development staff, the testing efforts by quality assurance testing staff, and the sign off and approval to move the changes to the Production environment. In addition, the team will improve the documentation by including Change Control number and Service Request numbers in the Subject line of change control request associated emails. This will be fully operational in FY 2022 and all new change requests in the current FY 2021 will be documented in this manner. With regard to segregation of duties, there are two individuals within the DIT that have the ability to promote code to the Production environment. Procedures will be enforced that will not allow a developer to promote their own code to Production and this has been reinforced as of April 26, 2021.

Reference Number: 2020-002 Prior Year Finding: 2019-007 Federal Agency: U.S. Department of Labor State Agency: Department of Labor and Workforce Development Federal Program: Unemployment Insurance CFDA Number: 17.225 Award Number and Year: UI-32614-19-55-A-34 (2020) Compliance Requirement: Period of Performance Type of Finding: Significant Deficiency in Internal Control, Other Matters Criteria or specific requirement: Compliance ? CFR section 200.309 - Period of performance. A non-Federal entity may charge to the Federal award only allowable costs incurred during the period of performance (except as described in ? 200.461 Publication and printing costs) and any costs incurred before the Federal awarding agency or pass-through entity made the Federal award that were authorized by the Federal awarding agency or pass-through entity. Control ? Per 2 CFR section 200.303(a), a 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: Expenditures charged to the grant by the Department of Labor and Workforce Development (the Department) in the amount of $1,036 were incurred prior to the start of the grant?s period of performance. Context: Ten of 60 expenditure transactions selected for testing were incurred prior to the award start date of October 1, 2019. Questioned costs: $1,036 Cause: Accounting staff identified and charged program costs to the incorrect grant. The Program?s review process did not detect the error nor take timely corrective action. Effect: The Department was not compliant with the grant?s period of performance which could result in the grantor?s disallowance of the costs. Statistically valid: Yes Recommendation: We recommend that the Department review its procedures to ensure that expenditures charged to the program are incurred within the grant period of performance. Views of responsible officials: At the time the expenditures were paid, the DLWD Accounts Payable unit thought that the FY 2019 award did not have available funding remaining. So as to not delay payment, they charged the expenditures to the FY 2020 award. The Department?s current policy includes detailed review of fiscal year end cut off procedures by the respective Accounting Supervisors. The transactions in question fell outside the scope of that review process. DLWD has since expanded its review procedures and is assessing the need for a fiscal analyst in their Accounts Payable Unit. Additionally, the Accounts Payable Unit standard operating procedures have been updated to include contacting the Accounting Supervisor of the respective program area if any prior year invoice is presented for payment. Corrective actions are expected to be completed by September 30, 2021.

Reference Number: 2020-003 Prior Year Finding: N/A Federal Agency: U.S. Department of Labor State Agency: Department of Labor and Workforce Development Federal Program: Unemployment Insurance CFDA Number: 17.225 Award Number and Year: UI-32614-19-55-A-34 (2020) Compliance Requirement: Reporting (UI-3 Special Report) Type of Finding: Significant Deficiency in Internal Control, Other Matters Criteria or specific requirement: Compliance - The UI-3 Report is a quarterly report of staff years worked and paid by program category. Key line items are one through seven of Section A. DOL requires the report to be submitted within 30 days after the end of the quarter. Control - Per 2 CFR section 200.303(a), a 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: The UI-3 Report for the quarter-ended June 30, 2020 is required to be submitted by July 31, 2020. However, the report was not submitted until August 12, 2020. Context: None Questioned costs: None Cause: The Department?s supervisory review and approval control was not operating effectively to ensure that the report was submitted timely. Effect: The Department was not compliant with the grant?s reporting submission requirements which could result in the grantor?s withholding of subsequent grant awards. Statistically valid: Yes Recommendation: We recommend that the Department review its policies procedures to ensure that the UI-3 report is submitted by the required deadline. Views of responsible officials: At the time of reporting for the UI-3 Special Report, DOL staff had limited access to the building due to COVID-19 remote working restrictions, which prevented timely access to needed information. Additionally, the DOL were contending with staff outages due to COVID-19 health situations. Since that time, DOL has addressed the remote working limitations that caused the report submission to be 12 days late. Corrective action will be implemented for this finding for the period ending June 30, 2021.

Reference Number: 2020-004 Prior Year Finding: 2019-008 Federal Agency: U.S. Department of Labor State Agency: Department of Labor and Workforce Development Federal Program: Unemployment Insurance CFDA Number: 17.225 Award Number and Year: UI-29857-17-55-A-34 (2017), UI-31382-18-55-A-34 (2018), UI-32614-19-55-A-34 (2019), UI-32614-19-55-A-34 (2020) Criteria or specific requirement: Compliance ? The Improper Payments Elimination and Recovery Act (IPERA) of 2010 codified the requirement for valid statistical estimates of improper payments. State Workforce Agencies (SWA) are required by 20 CFR section 602.11(d) to operate and maintain a quality control system. The Benefits Accuracy Measurement (BAM) program is Department of Labor?s (DOL) quality control system designed to assess the accuracy of UI benefit payments and denied claims, unless the SWA is exempted from such requirement (20 CFR section 602.22). The program estimates error rates, that is, numbers of claims improperly paid or denied and dollar amounts of benefits improperly paid or denied, by projecting the results from investigations of small random samples to the universe of all claims paid and denied in a State. Specifically, the SWA?s BAM unit is required to draw a weekly sample of payments and denied claims, complete prompt and in-depth investigations to determine the degree of accuracy in the administration of the State Unemployment Compensation program and Federal law (20 CFR section 602.21(d)). DOL has promulgated investigational requirements and instructions in ET Handbook No. 395 (see below), pursuant to 20 CFR section 602.30(a). As presented in the handbook, the investigation involves a review of the records, and contacting the claimant, employers, and third parties (either in-person, by telephone, by fax) to complete standard questionnaires and conduct new and original fact-finding to assess all of the information pertinent to the paid or denied claim that was sampled. BAM investigators review cases for adherence to State law as well as Federal law and official policy. For claims that were overpaid, underpaid, or erroneously denied, the BAM investigator determines the amount of payment error or, for erroneously denied claims, the potential eligibility of the claimant; the cause of and the responsibility for any payment error; the point in the UI claims process at which the error was detected; and actions taken by the agency and employer prior to the payment or denial decision that is in error. BAM covers State UC, UC for Federal Employees (UCFE), and UC for Ex-Service Members (UCX). Excerpt from ET Handbook No. 395, 5th Edition, Benefit Accuracy Measurement State Operations Handbook (page VI-11): Prompt completion of investigations is important to ensure the integrity of the information being collected by questioning claimant and employers before the passage of time adversely affects recollections. Prompt entry of associated data is necessary for both the SWA and the Department of Labor to maintain current databases. Therefore, the following time limits are established for completion of all cases for the year: - A minimum of 70 percent of cases must be completed within 60 days of the week ending date of the batch, and 95 percent of cases must be completed within 90 days of the ending date of the calendar year. - A minimum of 98 percent of cases for the year must be completed within 120 days of the ending data of the calendar year. Control ? Per 2 CFR section 200.303(a), a 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: The Department of Labor and Workforce Development (the Department) did not review the required number of cases within the time limits required by the U.S. Department of Labor. Context: The Department completed 85% of cases within 90 days or less, which is under the 95% minimum requirement. The Department completed 88% of cases within 120 days or less, which is under the 98% minimum requirement. Questioned costs: Undetermined Cause: The Department?s Benefits Accuracy Measurement Unit (BAM) currently has a limited number of resources to complete the reviews due to turnover. Effect: Untimely BAM case reviews could allow inaccurate benefit payments to be undetected, resulting in the potential for ongoing payment errors. Statistically valid: Yes Recommendation: We recommend that the Department comply with its policies and procedures and complete case reviews within the required number of days as stipulated by the U.S. Department of Labor. Views of responsible officials: The Division of Unemployment Insurance currently has eight BAM investigators and the ideal staffing level for the unit to meet current case review requirements is 10. One of the current eight on staff was also newly hired in March 2020, right as the pandemic began, and was unable to be completely trained at that time on the BAM job responsibilities. This was also due to the overwhelming workload demands from the increased UI claims filed once the pandemic hit New Jersey, leaving only seven fully trained BAM Technicians available to perform the function of this operation. Due to the increased overall demand for UI services in all areas of the Division, New Jersey requested a waiver from having to review BAM cases for Denied Claims Accuracy (DCA) from USDOL. This waiver was granted at the onset of the pandemic in March 2020 and continues through June 2021. Some BAM staff have been temporarily reassigned to other units within the Division to assist with high workloads where their skills are most appropriate. This will continue for the coming months, until workloads are back to a more manageable number.

Reference Number: 2020-005 Prior Year Finding: N/A Federal Agency: U.S. Department of Labor State Agency: Department of Labor and Workforce Development Federal Program: Unemployment Insurance CFDA Number: 17.225 Award Number and Year: UI-32614-19-55-A-34 (2020) Compliance Requirement: Eligibility Type of Finding Material Weakness in Internal Control, Material Noncompliance Criteria or specific requirement: Compliance ? State Workforce Agencies (SWA) responsibilities include: (1) establishing specific, detailed policies and operating procedures which comply with the requirements of federal laws and regulations; (2) determining the state UI tax structure; (3) collecting state UI contributions from employers (commonly called ?unemployment taxes?); (4) determining claimant eligibility and disqualification provisions; (5) making payment of UI benefits to claimants; (6) managing the program?s revenue and benefit administrative functions; (7) administering the programs in accordance with established policies and procedures; and (8) enacting state UC law that conforms with federal UC law. Control ? Per 2 CFR section 200.303(a), a 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 ending June 30, 2020, the President signed the CARES Act into law that authorized additional funding under the Unemployment Insurance program. This pandemic-related funding was significant and expanded the population of eligible individuals to support changes in employment status caused by COVID-19. Additionally, there was a priority on distributing funds under self-attestation strategy with limited verification to expedite disbursement of funds and support individuals in greatest need. As a result, several states experienced significant fraudulent claims. The U.S. Department of Labor and the State have partnered to investigate the extent and methods used to perpetuate the fraud. For the State, given the extent and circumstances, eligibility determinations made by the management were following the existing policies and procedures for this pandemic funding. However, by design to meet Federal and State expectations, the policies and procedures did not include verification procedures of eligibility. The procedures and policy accommodations contributed to vulnerabilities within the Unemployment Insurance program. Questioned costs: Undetermined and under investigation by both federal and local authorities. Cause: The State experienced unprecedented claims volume with increased funding and additional program requirements with a priority for efficient distribution from both the U.S. Department of Labor and State officials. Management made decisions to relax verification procedures to meet demand and program expectations. Effect: By relaxing verification procedures, the unemployment insurance program became more vulnerable to fraudulent claims. Statistically valid: Not applicable Recommendation: We recommend considering additional internal controls that management could implement to efficiently verify program eligibility while providing timely payment to program beneficiaries. Views of responsible officials: The New Jersey Department of Labor and Workforce Development (DLWD) recognizes that there is no one solution to address fraud and will consider implementing additional controls to efficiently verify program eligibility including one currently being evaluated with an external vendor. This vendor software has the ability to assign a device fingerprint to a claim which will enable DLWD to both track the location of the device and establish a timing sequence for the claim duration. Also, DLWD is in discussions with three other vendors to review their fraud prevention proposals. Furthermore, DLWD has implemented many anti-fraud measures to assist with eligibility verification. These controls include: ? SPLUNK software- an application used at the time a claim is filed to search for commonalities including IP address, phone number, and email address. ? ID.ME ? As of March 29, 2021 DLWD began utilizing the software from a vendor ID.ME - all initial UI claims are now validated through ID.ME to validate a claimant?s identity. Any claims not successfully validated are placed on hold and no benefits are issued until investigated by DLWD. Existing fraud control measures for eligibility verification include: ? New Jersey Department of Corrections weekly match of incarceration data vs benefit collection; ? Death Match ? matching Vital Statistic death data records vs weekly UI benefit payment rolls; ? Foreign IP - flag and suspend any online certification for benefits made from outside the United States; and ? Interstate Cross -match conflicting claims between States. The State also has an existing data sharing agreement with the National Association for State County and Workforce Agencies? Integrity Data Center (IDH) to review initial claims that are in the IDH data repository of other states for multiple state claim filings and perform Identity Data Verification (IDV) using the metrics established by IDH?s vendor.

Reference Number: 2020-006 Prior Year Finding: N/A Federal Agency: U.S. Department of Labor State Agency: Department of Corrections Federal Program: Adult Education ? Basic Grants to States CFDA Number: 84.002 Award Number and Year: V002A170031 (2018), V002A180031 (2019), V002A190031 (2020) Compliance Requirement: Allowable Costs (Effort Reporting) Type of Finding Significant Deficiency in Internal Control, Other Matters Criteria or specific requirement: Compliance ? Per 2 CFR ? 200.430 (a), costs of compensation are allowable to the extent that they satisfy the specific requirements of this part, and that the total compensation for individual employees: (1) Is reasonable for the services rendered and conforms to the established written policy of the non-Federal entity consistently applied to both Federal and non-Federal activities; (2) Follows an appointment made in accordance with a non-Federal entity's laws or rules or written policies and meets the requirements of Federal statute, where applicable; and (3) Is determined and supported as provided in paragraph (i) of this section, Standards for Documentation of Personnel Expenses, when applicable. Per 2 CFR ? 200.430 (i), charges to federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: ? Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated, ? Be incorporated into the official records of the non-Federal entity, ? Reasonably reflect the total activity for which the employee is compensated by the non-Federal entity, not exceeding 100% of compensated activities, ? Encompass both federally assisted, and all other activities compensated by the non-Federal entity on an integrated basis, but may include the use of subsidiary records as defined in the non- Federal entity's written policy, ? Comply with the established accounting policies and practices of the non-Federal entity, ? Support the distribution of the employee's salary or wages among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non- Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. Control ? Per 2 CFR section 200.303(a), a 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 comply with the 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: For one of 60 samples, management could not support the hours and related wages charged to the grant. Context: During pay period 25, which included the date of December 13, 2019, one employee worked at the Albert C. Wagner Youth Correctional Facility. This facility subsequently closed in January 2020 and outstanding timesheets were transferred by management to the Garden State Youth Correctional Facility. Attempts by Human Resources to recover the timesheet selected for testing were unsuccessful. Questioned costs: $2,854 Cause: Management was not able to locate stored records. Effect: Management may charge unsubstantiated payroll costs to a program in error. Statistically valid: Yes Recommendation: We recommend that the Department strengthen its procedures that allow them to properly maintain all relevant supporting documentation, including timesheets, even under uncommon circumstances to substantiate all hours and wages charged to the grant. Views of responsible officials: The New Jersey Department of Corrections (NJDOC) understands the importance of proper record retention and the ability for the agency to provide required documents during periodic audits, Open Public Records Act (OPRA) requests, litigation and any other times where the department is required to produce said documents. The NJDOC will continue to remind all supervisors, managers, directors and alike, of the importance for proper record retention, and the ability to provide requested documents as needed. A memorandum will be drafted and issued prior to June 30, 2021 to all NJDOC staff reminding them of the importance of proper record retention.

Reference Number: 2020-007 Prior Year Finding: 2019-016, 2018-008 Federal Agency: U.S. Department of Health and Human Services State Department Name: Department of Health and Social Services State Division Name: Division of Medicaid and Medical Services Federal Program: Children?s Health Insurance Program (CHIP) Medicaid Cluster CFDA Number: 93.767, 93.775, 93.777, 93.778 Award Number and Year: 1805-NJ5021 (2018), 1905-NJ5021 (2019),2005-NJ5021 (2020) 1805-NJ5MAP (2018), 1805-NJ5ADM (2018),1905-NJ5MAP (2019), 1905-NJ5ADM (2019) Compliance Requirement: Special Tests and Provisions - Provider Eligibility (Screening and Enrollment), Provider Health and Safety Standards Type of Finding: Significant Deficiency in Internal Control, Other Matters Criteria or specific requirement: Compliance ? Provider Eligibility: In order to receive Medicaid payments, providers of medical services furnishing services must be licensed in accordance with Federal, State, and local laws and regulations to participate in the Medicaid program (42 CFR sections 431.107 and 447.10; and Section 1902(a)(9) of the Social Security Act (42 USC 1396a(a)(9)) and the providers must make certain disclosures to the State (42 CFR part 455, subpart B, sections 455.100 through 455.106). Providers Health and Safety Standards: Providers must meet the prescribed health and safety standards for hospital, nursing facilities, and ICF/MR (42 CFR pat 442). The standards may be modified in the State plan. Control ? Per 2 CFR section 200.303(a), a 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: The Department of Health and Human Services (the Department) contracts with a 3rd party provider to manage medical provider eligibility. The 3rd party provider is responsible for verifying providers? license statuses and that providers meet health and safety standards. We noted that medical provider files maintained by the 3rd party contractor did not consistently support providers? eligibility and compliance with the State?s health and safety standards in accordance with federal and state requirements. Out of a sample of 60 provider files, the following was noted: ? Eight provider files did not have an active active license on file; ? Nine provider files did not contain the provider agreement checklist. ? One provider file did not contain the agreement between the provider and the State Context: none Questioned costs: Undetermined. Cause: Internal controls of the 3rd party provider were ineffective in ensuring that all required documentation was obtained and maintained in provider files. The Department?s controls over the 3rd party contractor were ineffective in detecting the errors. Effect: Medicaid claims may be paid to ineligible providers which may result in unallowed program costs. The Department is not compliant with the State?s plan for Medicaid. Recommendation: We recommend that the Department continue to review the 3rd party provider?s procedures for determining and documenting provider eligibility and compliance with related State and Federal requirements. The Department should periodically review provider files to determine if all required documentation is maintained in the files. Views of responsible officials: The Division of Medical Assistance and Health Services (DMAHS) reports no material change to the FY 2019 CAP response for this repeat finding as detailed in the State?s FY 2020 Summary Schedule of Prior Years Findings. Updates to the FY2019 CAP plan include that the licensing field was expanded in calendar year 2020 and the DMAHS is also moving forward to capture active license information and build system claim edits to ensure payment for claims are only made to providers with active licenses. Also, the DMAHS will initiate its Provider Enrollment Revalidation process effective the 3rd quarter of calendar year 2021.

Reference Number: 2020-008 Prior Year Finding: N/A Federal Agency: U.S. Department of Health and Human Services State Agency: Department of Health Federal Program: HIV Prevention Activities Health Department Based CFDA Number: 93.940 Award Number and Year: 6 NU62PS924524-01-04 (2018), 18NU62PS924524 (2019), 5 NU62PS924524-03-00 (2020), 6 NU62PS924524-03-02 (2020) Compliance Requirement: Allowable Costs/Cost Principles Type of Finding Significant Deficiency in Internal Control, Other Matters Criteria or specific requirement: Compliance: Per 2 CFR 200.403, Except where otherwise authorized by statute, costs must meet the following general criteria to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable under these principles. (b) Conform to any limitations or exclusions outlined in these principles or the Federal award regarding types or amount of cost items. (c) Be consistent with policies and procedures that apply uniformly to Federally financed and other activities of the non-Federal entity. (d) Be accorded consistent treatment. A cost may not be assigned to a Federal award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to the Federal award as an indirect cost. (e) Be determined following generally accepted accounting principles (GAAP), except for state and local governments and Indian tribes only, as otherwise provided for in this part. (f) Not be included as a cost or used to meet cost sharing or matching requirements of any other Federally financed program in either the current or a prior period. See also ?200.306 Cost sharing or matching paragraph (b). (g) Be adequately documented. Control: Per 2 CFR section 200.303(a), a 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 comply with the 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: We noted missing documentation supporting one of 30 sampled disbursements. The total amount of the disbursement was $85. Context: None Questioned costs: $85 Cause: Due to personnel changes, the Department was unable to locate the supporting documentation. Effect: The Department was unable to assure that the adjusted cost was allowable following the program requirements. Statistically valid: Yes Recommendation: We recommend that the Department review its current retention policy to ensure that all program-related documentation is retained and readily available following the State?s retention policy. Views of responsible officials: The expense in question totaling $85.00 for refuse disposal services was presented to Accounts Payable during the 90-day close-out period for this federal grant. This was also the same time period when the close-out of the State?s fiscal year-end occurred. There is a high-volume of document processing that occurs during the year-end closeout period and that most likely led to the storing of the documents supporting this expenditure in the wrong file. Under normal circumstances the NJDOH maintains two years of fiscal records on site prior to sending to offsite storage in addition to the current fiscal year. In FY 2021 that would allow for FY 2021, FY 2020, and FY 2019 records to be maintained onsite. The NJDOH moved to a new building in December 2020 resulting in all fiscal records needing to be boxed and moved. The new building has a smaller footprint allowing for less square footage available for file cabinets. Seeking to ensure that there would be sufficient file space available for all fiscal units in the new, open-concept shared space along with minimizing moving files twice, a decision was made to send fiscal year 2019 records offsite sooner than normally done. In FY 2022 the NJDOH will return to the current record retention policy and maintain two years of prior fiscal records along with the current year. This will allow for the records to be onsite for future single audit periods.Reference Number: 2020-008 Prior Year Finding: N/A Federal Agency: U.S. Department of Health and Human Services State Agency: Department of Health Federal Program: HIV Prevention Activities Health Department Based CFDA Number: 93.940 Award Number and Year: 6 NU62PS924524-01-04 (2018), 18NU62PS924524 (2019), 5 NU62PS924524-03-00 (2020), 6 NU62PS924524-03-02 (2020) Compliance Requirement: Allowable Costs/Cost Principles Type of Finding Significant Deficiency in Internal Control, Other Matters Criteria or specific requirement: Compliance: Per 2 CFR 200.403, Except where otherwise authorized by statute, costs must meet the following general criteria to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable under these principles. (b) Conform to any limitations or exclusions outlined in these principles or the Federal award regarding types or amount of cost items. (c) Be consistent with policies and procedures that apply uniformly to Federally financed and other activities of the non-Federal entity. (d) Be accorded consistent treatment. A cost may not be assigned to a Federal award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to the Federal award as an indirect cost. (e) Be determined following generally accepted accounting principles (GAAP), except for state and local governments and Indian tribes only, as otherwise provided for in this part. (f) Not be included as a cost or used to meet cost sharing or matching requirements of any other Federally financed program in either the current or a prior period. See also ?200.306 Cost sharing or matching paragraph (b). (g) Be adequately documented. Control: Per 2 CFR section 200.303(a), a 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 comply with the 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: We noted missing documentation supporting one of 30 sampled disbursements. The total amount of the disbursement was $85. Context: None Questioned costs: $85 Cause: Due to personnel changes, the Department was unable to locate the supporting documentation. Effect: The Department was unable to assure that the adjusted cost was allowable following the program requirements. Statistically valid: Yes Recommendation: We recommend that the Department review its current retention policy to ensure that all program-related documentation is retained and readily available following the State?s retention policy. Views of responsible officials: The expense in question totaling $85.00 for refuse disposal services was presented to Accounts Payable during the 90-day close-out period for this federal grant. This was also the same time period when the close-out of the State?s fiscal year-end occurred. There is a high-volume of document processing that occurs during the year-end closeout period and that most likely led to the storing of the documents supporting this expenditure in the wrong file. Under normal circumstances the NJDOH maintains two years of fiscal records on site prior to sending to offsite storage in addition to the current fiscal year. In FY 2021 that would allow for FY 2021, FY 2020, and FY 2019 records to be maintained onsite. The NJDOH moved to a new building in December 2020 resulting in all fiscal records needing to be boxed and moved. The new building has a smaller footprint allowing for less square footage available for file cabinets. Seeking to ensure that there would be sufficient file space available for all fiscal units in the new, open-concept shared space along with minimizing moving files twice, a decision was made to send fiscal year 2019 records offsite sooner than normally done. In FY 2022 the NJDOH will return to the current record retention policy and maintain two years of prior fiscal records along with the current year. This will allow for the records to be onsite for future single audit periods.

Reference Number: 2020-009 Prior Year Finding: N/A Federal Agency: U.S. Department of Health and Human Services State Agency: Department of Health Federal Program: HIV Prevention Activities Health Department Based CFDA Number: 93.940 Award Number and Year: 6NU62PS924524-01-04 (2018), 18NU62PS924524 (2019), 5NU62PS924524-03-00 (2020), 6NU62PS924524-03-02 (2020) Compliance Requirement: Period of Performance Type of Finding Significant Deficiency in Internal Control, Other Matters Criteria or specific requirement: Compliance ? CFR section 200.309 - Period of performance. A non-Federal entity may charge to the Federal award only allowable costs incurred during the period of performance (except as described in ? 200.461 Publication and printing costs) and any costs incurred before the Federal awarding agency or pass-through entity made the Federal award that was authorized by the Federal awarding agency or pass-through entity. August 2020 Compliance Supplement - Unless the federal awarding agency or pass-through entity authorizes an extension, a non-federal entity must liquidate all obligations incurred under the federal award not later than 90 calendar days after the end date of the period of performance as specified in the terms and conditions of the federal award (2 CFR section 200.343(b)). Control ? Per 2 CFR section 200.303(a), a 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 comply with the 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: 1. One of 22 expenditure transactions selected for testing was incurred after the end of the grant?s period of performance. 2. One of 14 transactions selected for testing unliquidated obligations was paid more than 90 days after the end of the grant?s period of performance. Context: 1. The costs for the referenced sample were incurred in March 2020, which was after the award end date of December 31, 2019. 2. The invoice for the referenced sample was paid on April 22, 2020, which was greater than 90 days after the end date of the period of performance of December 31, 2019. Questioned costs: $24,202 Cause: In both exceptions, accounting staff identified and charged program costs to the incorrect grant. The Department?s review process did not detect the error nor take timely corrective action. Effect: The Department was not compliant with the grant?s period of performance, which could result in the grantor?s disallowance of the costs. Statistically valid: Yes Recommendation: We recommend that the Department review its procedures to ensure that expenditures charged to the program is incurred within the grant period of performance. Views of responsible officials: Transactions received for processing after an award?s period of performance and extended closeout/liquidation period has ended will now require an additional approval from the federal fund manager, who oversees timing and reporting restrictions, for processing. The federal fund manager will be responsible for acquiring a time extension, if necessary, or take other necessary corrective actions to ensure the transaction is in compliance with the grant award?s period of performance requirements. This NJDOH procedural change is effective as of June 1, 2021.

Reference Number: 2020-010 Prior Year Finding: N/A Federal Agency: U.S. Department of Health and Human Services State Agency: Department of Human Services Federal Program: Block Grants for Community Mental Health Services CFDA Number: 93.958 Award Number and Year: 18B1NJCMHS (2018), 19B2NJCMHS (2019), 20B1NJCMHS (2020) Compliance Requirement: Allowable Costs (Effort Reporting) Type of Finding Significant Deficiency in Internal Control, Noncompliance Criteria or specific requirement: Compliance ? Per 2 CFR ? 200.430 (a), costs of compensation are allowable to the extent that they satisfy the specific requirements of this part, and that the total compensation for individual employees: (1) Is reasonable for the services rendered and conforms to the established written policy of the non-Federal entity consistently applied to both Federal and non-Federal activities; (2) Follows an appointment made in accordance with a non-Federal entity?s laws and/or rules or written policies and meets the requirements of Federal statute, where applicable; and (3) Is determined and supported as provided in paragraph (i) of this section, Standards for Documentation of Personnel Expenses, when applicable. Per 2 CFR ? 200.430 (i), charges to federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: ? Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable and properly allocated, ? Be incorporated into the official records of the non-Federal entity, ? Reasonably reflect the total activity for which the employee is compensated by the non-Federal entity, not exceeding 100% of compensated activities, ? Encompass both federally assisted, and all other activities compensated by the non-Federal entity on an integrated basis, but may include the use of subsidiary records as defined in the non-Federal entity?s written policy, ? Comply with the established accounting policies and practices of the non-Federal entity, ? Support the distribution of the employee's salary or wages among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. Control ? Per 2 CFR section 200.303(a), a 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: For one of 34 samples, the employee was on ?leave without pay.? However, federal grant funds for this program were charged. Total wages per the payroll register were $3,654. Context: None Questioned costs: $3,654 Cause: The program used annual salary costs for allocations instead of actual payroll costs incurred for each pay period. Effect: Program funds were utilized improperly, and the grant is overcharged. Statistically valid: Yes Recommendation: We recommend that the Department implement policies and procedures that allow them to correctly charge employee time and effort to the program that is supported by certified timesheets. This should include possible refinement of the review and approval process. Views of responsible officials: The Division?s procedure of allocating employees? annual salaries to the Mental Health Block Grant (in proportion to their work on eligible activities) ordinarily results in correct charge-backs. However, as noted in the Finding, the allocation was incorrect in only one case where the employee was on unpaid leave for several months. In response to this Finding, the Division has already implemented a change in procedure where fiscal staff will use the actual payroll costs incurred for each employee as the basis for allocation, and not the annual salaries. This change made effective as of May 2021 will prevent this issue from recurring. DMHAS will also reimburse the federal Mental Health Block Grant for the amount that was incorrectly charged.

Reference Number: 2020-011 Prior Year Finding: N/A Federal Agency: U.S. Department of Health and Human Services State Agency: Department of Human Services Federal Program: Block Grants for Community Mental Health Services CFDA Number: 93.958 Award Number and Year: 18B1NJCMHS (2018) Compliance Requirement: Special Tests and Provisions - Earmarking Type of Finding: Significant Deficiency in Internal Control, Other Matters Criteria or specific requirement: Compliance ? States must allocate 10 percent of grant funds awarded for FFY 2018 to implement programs showing strong evidence of effectiveness for individuals with a diagnosis of Early Serious Mental Illness or a first episode psychosis only. (Pub. L. No. 114-113 (129 Stat. 2609) and MHBG 10 Percent Set-Aside Guidance February 8, 2016 (http://www.samhsa.gov/grants/block-grants/resources)). Control ? Per 2 CFR section 200.303(a), a 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: The FY18 grant closed during the audit period. The Department spent only 9.07% of these grant funds on first episode psychosis costs which is below the required 10%. Context: None Questioned costs: None Cause: The monitoring control associated with this requirement does not appear to be at the correct precision level. The grant amount awarded had increased and the Department had not increased the contract ceilings on the related contracts nor notified the providers of their increased allotment. It appears the requirement was not being monitored closely or frequently enough to catch this. Effect: When earmarking requirements are not monitored closely enough, this could result in compliance with the requirements not being met. Statistically valid: Yes Recommendation: We recommend the Department review and potentially revise its monitoring review control to ensure it is at the correct precision level, both in terms of level of review and frequency, to ensure compliance with the requirement is met. Views of responsible officials: The Division of Mental Health and Addiction Services (DMHAS) realized an increase in the Mental Health Block Grant allocation for FFY18. The allocation was originally $14.5 million but was increased to $18.96 million (not counting the Technical Assistance funding). The First Episode Psychosis (FEP) contracts with community providers were originally set at levels that would have met the 10% requirement. However, the increase in the grant amount resulted in a higher target, which was not met. It has taken time for the FEP providers to ramp up capacity to meet these higher targets for service delivery. In addition, part of the shortfall indicated in the audit finding resulted from the providers underspending their contractual ceilings. We estimate that if actual spending was at the ceilings, the Division would have increased its set aside spending to 9.7%. As of May 2021, the Fiscal Office has established procedures where spending targets are actively discussed with program and contracting staff at least every month. At these meetings, potential shortfalls based on actual spending data will be identified and specific steps to address them will be outlined and made part of meeting agendas.

Reference Number: 2019-001Prior Year Finding: N/AFederal Agency: United States Department of AgricultureState Agency: Department of HealthFederal Program: Special Supplemental Nutrition Program for Women, Infants, and Children (WIC)CFDA Number: 10.557Award Number and Year: INJ700704 (2016-2019)Compliance Requirement: Period of PerformanceType of Finding: Significant Deficiency in Internal Control, NoncomplianceCriteria or specific requirement:Compliance ? CFR section 200.309 - Period of performance.A non-Federal entity may charge to the Federal award only allowable costs incurred during the period of performance (except as described in ? 200.461 Publication and printing costs) and any costs incurred before the Federal awarding agency or pass-through entity made the Federal award that were authorized by the Federal awarding agency or pass-through entity.Control ? Per 2 CFR section 200.303(a), a 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:Expenditures charged to the grant by the Department of Health (the Department) in the amount of $429 were incurred prior to the start of the grant?s period of performance.Context:One of the five expenditure transactions selected for testing was incurred in August 2018 which was prior to the award start date of October 1, 2018.Questioned costs:$429Cause:Accounting staff identified and charged program costs to the incorrect grant. The Department?s review process did not detect the error nor take timely corrective action.Effect:The Department was not compliant with the grant?s period of performance which could result in the grantor?s disallowance of the costs.Recommendation:We recommend that the Department review its procedures to ensure that expenditures charged to the program are incurred within the grant period of performance.Views of responsible officials:Accepted. The transaction identified in this finding was the result of an oversight that was not detected during an internal review due to the temporary unavailability of the Grants Specialist handling the account. The Department of Health?s Office of Budget and Financial Planning has since reviewed its Standard Operating Procedures (SOP) and will ensure that all future monthly billings undergo the required review by appropriate staff when availability is limited, and that documents will be approved by the appropriate Internal Control supervisor(s) before processing by accounting and procurement.An Expenditure Modification (EM) transaction was processed on February 5, 2020 to remove the charge from the account and reflect the necessary adjustment for this finding. This corrective action was completed while audit fieldwork was still in progress.

Reference Number: 2019-002Prior Year Finding: N/AFederal Agency: U.S. Department of AgricultureState Agency: Department of AgricultureFederal Program: Child and Adult Care Food Program (CACFP)CFDA Number: 10.558Award Number and Year: 1NJ300304 (2019)Compliance Requirement: Eligibility for SubrecipientsType of Finding: Significant Deficiency in Internal Control, NoncomplianceCriteria or specific requirement:Compliance ? State agencies may disburse CACFP funds only to those organizations that meet the eligibility requirements stated in the following program requirements: (1) generic requirements for all institutions at 7 CFR section 226.15 and 42 USC 1766(a)(6) and (d)(1); (2) institution type definitions in 7 CFR section 226.2 (3) additional requirements for sponsoring organizations at 7 CFR section 226.16; (4) additional requirements for child care centers (whether independent or sponsored) at 7 CFR section 226.17; (5) additional requirements for day care homes (which must be sponsored) at 7 CFR section 226.18; (6) additional requirements for outside-school-hours centers at 7 CFR section 226.19; (7) additional requirements for adult day care centers (whether independent or sponsored) at 7 CFR section 226.19a; (8) additional requirements for at risk afterschool programs at 7 CFR section 226.17a; and (9) additional requirements for emergency shelters at 42 USC 1766(t). Eligible child care centers include public, private non-profit, and certain for-profit child care centers, HeadStart programs, and other entities which are licensed or approved to provide day care services.For-profit child care and outside-school-hours care centers may participate in the CACFP if they meet either of the following two criteria: (1) at least 25 percent of the enrolled children or 25 percent of the licensed capacity, whichever is less, are funded under Title XX of the Social Security Act; or (2) at least 25 percent of the children in their care are eligible for free or reduced price meals. Children who participate only in the at-risk afterschool component of the program must not be considered in determining whether the institution met this 25 percent threshold (42 USC 1766(a)(2)(B); 7 CFR section 226.11(c)(4)).Control ? Per 2 CFR section 200.303(a), a 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:A subrecipient organization?s non-profit 501(c)(3) status had been revoked in 2015 but its eligibility was reviewed and approved by the Department of Education (the Department) in fiscal year 2019 using non-profit subrecipient requirements instead of for-profit subrecipient requirements.Context:Eligibility was incorrectly determined for one of forty subrecipients tested.Questioned costs:Undetermined.Cause:The organizational status for the one subrecipient was not updated in the Department?s records. Internal review process failed to detect the error.Effect:Funding may be provided to an ineligible subrecipient organization if the program uses the incorrect eligibility criteria.Recommendation:We recommend that the Department review its current subrecipient eligibility process to ensure that organizations are properly classified and that they are being reviewed for eligibility against the correct criteria.Views of responsible officials:Accepted. The New Jersey Department of Agriculture (NJDOA) finds that we were in error and did not adequately substantiate the organizational status of the subrecipient cited. In response to the recommendation provided in the finding, please refer to the details of our Application Approval procedures for approving new and renewing non-profit institutions for the CACFP as documented in our corrective action plan.All private non-profit institutions must be reviewed and verified for maintaining federal tax-exempt status when applying or reapplying, maintain a current 501(c)(3) document, and must not be listed on the IRS Tax-Exempt Revocation list or have been reinstated. Staff will be retrained on the Application Approval procedures to determine organizational status before approving a subrecipient as a non-profit institution.

Reference Number: 2019-003Prior Year Finding: 2018-011Federal Agency: U.S. Department of Housing and Urban DevelopmentState Agency: Department of Community AffairsFederal Program: Lower Income Housing Assistance Program ? Section 8 Moderate RehabilitationCFDA Number: 14.856Award Number and Year: NJ912 (2019)Compliance Requirement: EligibilityType of Finding: Material Weakness in Internal Control, Material noncomplianceCriteria or specific requirement:Compliance ? The Public Housing Agency (PHA) or owner, as applicable, must: a. Verify the eligibility of applicants by (a) obtaining signed applications that contain the information needed to determine eligibility (including designation as elderly, disabled, or homeless, if applicable), income, rent, and order of selection; (b) conducting verifications of family income and other pertinent information (such as assets, full time student and immigration status, and unusual medical expenses) through third parties; (c) documenting inspections and tenant certifications, as appropriate; and, (d) determining that tenant income did not exceed the maximum limit set by HUD for the PHA?s jurisdiction, as shown in HUD?s published notice transmitting the Limits for Low-Income and Very Low-Income Families Under the Housing Act of 1937. For the Mod Rehab SRO program, eligible individuals must be homeless upon entry into the program. (24 CFR sections 880.603, 881.601, 882.514, 882.808, 833.701, 884.214, 886.119, and 886.318) b. Determine the total tenant rent payment in accordance with 24 CFR section 5.613. c. Select participants from the waiting list in accordance with the admission policies in its administrative plan and maintain documentation which shows that, at the time of admission, the family actually met the preference criteria that determined the family?s place on the waiting list. d. Reexamine family income and composition at least once every 12 months and adjust the total rent payment and housing assistance payment, as necessary (24 CFR sections 5.617, 880.603, 881.601, 882.515, 884.218, 886.124, and 886.324).Control - Per 2 CFR section 200.303(a), a 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:Supporting documentation over tenant eligibility was not adequately maintained by the Department of Community Affairs (the Department) and income was not properly calculated and reported as follows:1. Third party verification related to program eligibility was not provided for FY 2019 for one tenant participating in the program. The Department is required to document third-party verifications obtained and used to support the tenant?s eligibility.2. The rent amount of $928 in the tenant file of one tenant did not match the Housing Assistance Payments (HAP) register amount of $895 (variance of $33). The correct amount was included in the HAP register, but the incorrect print out was included in the tenant file.3. One tenant file incorrectly calculated income as $9,794 (biweekly salary of $816.20 x 12 months); correct calculation of income should have been $19,589 (biweekly salary of $816.20 x 24 weeks), a difference of $9,795.4. One tenant file contained unreported income of $24,981 during the lease contract.5. The Section 8 Checklist related to program eligibility was not provided for FY 2019 for four tenants participating in the program. The Section 8 checklist that shows approval, via signature of the Housing Specialist, of the supporting documentation over tenant eligibility was not adequately maintained. Approval of this Checklist is the Department?s internal control used to ensure compliance with eligibility requirements.Context:One of the sixty tenant files did not contain third-party verifications to support the eligibility for the audit period. One of the sixty tenant files included a rent amount that did not agree to the HAP register. Two of the sixty tenant files incorrectly reported tenant income based on miscalculation or unreported income. Four of the sixty tenant files did not contain a Section 8 Checklist to support the approval of the eligibility determination for the audit period.Questioned costs:Undetermined.Cause:Supervisory review failed to detect the errors.Effect:The Department?s tenant files do not consistently support the tenant eligibility which may allow an ineligible participant to receive program benefits.Recommendation:We recommend that the Department review current tenant eligibility procedures to ensure that proper documentation is obtained and maintained to support eligibility determinations.Views of responsible officials:Accepted. This is a repeat finding from the prior FY 2018 audit. Corrective actions for this finding were not fully implemented for the FY 2019 audit period ended June 30, 2019 and there is no change to the original plan as procedures were reviewed and modified at the beginning of FY 2020 to ensure future compliance with ensuring proper eligibility documentation is obtained and maintained.

Reference Number: 2019-004Prior Year Finding: 2018-013Federal Agency: U.S. Department of Housing and Urban DevelopmentState Agency: Department of Community AffairsFederal Program: Lower Income Housing Assistance Program ? Section 8 Moderate RehabilitationCFDA Number: 14.856Award Number and Year: NJ912 (2019)Compliance Requirement: Special Reporting ? HUD-50058Type of Finding: Material Weakness in Internal Control, Material NoncomplianceCriteria or specific requirement:Compliance - The Public Housing Agency (PHA) is required to submit form HUD-50058 electronically to HUD each time the PHA completes an admission, annual reexamination, interim reexamination, portability move-in, or other change of unit for a family. The PHA must also submit the Family Report when a family ends participation in the program or moves out of the PHA?s jurisdiction under portability.The HUD-50058 must be submitted within 60 days of the effective date as required by PIH notice 2011-65.Control - Per 2 CFR section 200.303(a), a 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:1. Housing Assistance Payments (HAP) reported on the HUD-50058 form did not agree with documentation in tenant files:A. One tenant file documented and identified the HAP payment as $1,013 but it was reported on the HUD-50058 form as $948; a difference of $65 per month for three months ($195).B. One tenant file selected for testing was not provided by the Department and CLA was unable to perform the test. The tenant received benefit payments of $915 per month for three months ($2,745) during the audit period.2. Three of 60 HUD-50058 forms selected for testing were not submitted within 60 days of the effective date, as required by PIH notice 2011-65.Context:One of the 60 tenant HAP payments reported on the HUD-50058 form did not agree to documentation in the tenant file and one of the 60 tenant files selected for testing was not provided. Three of the 60 HUD-50058 forms were not submitted by the required deadline.Questioned costs:? $195 ($65 variance reported for three months)? $2,745 ($915 HAP issued for three months)Cause:Internal controls were not operating effectively to ensure the department could locate all tenant files. In addition, the Department?s supervisory review and approval control was not operating effectively to ensure that information reported in HUD-50058 form was properly supported and that forms were submitted timely.Effect:The data reported to the grantor was not supported by the Department?s records.Recommendation:We recommend that the Department review its procedures to ensure that information reported to the grantor is accurate and properly supported by documentation in tenant files and that all HUD-50058 forms are submitted by required deadlines.Views of responsible officials:Accepted. This is a repeat finding from the prior FY 2018 audit. Corrective actions for this finding were not fully implemented for the FY 2019 audit period ended June 30, 2019 and there is no change to the original plan as procedures were reviewed and modified at the beginning of FY 2020 to ensure future compliance that the 50058 form is accurate and properly supported by documentation in the tenant file.

Reference Number: 2019-005Prior Year Finding: N/AFederal Agency: U.S. Department of Housing and Urban DevelopmentState Agency: Department of Community AffairsFederal Program: Lower Income Housing Assistance Program ? Section 8 Moderate RehabilitationCFDA Number: 14.856Award Number and Year: NJ912 (2019)Compliance Requirement: Special Tests and Provisions ? Contract Rent AdjustmentsType of Finding: Significant Deficiency in Internal Control, NoncomplianceCriteria or specific requirement:Compliance - The Public Housing Agency (PHA) or owner applies or ensures annual adjustments to contract rents are applied. The Housing Assistance Payment (HAP) contract specifies the method to be used to determine rent adjustments. Adjustments must not result in material differences between rents charged for assisted units and comparable unassisted units except as those differences existed at contract execution. Special adjustments to contract rents, within the original contract term, may also be made to the extent deemed necessary by the PHA or HUD (24 CFR sections 880.609, 881.601, 882.410, 882.808?, 883.701, 884.109, 886.112, and 886.312).Control - Per 2 CFR section 200.303(a), a 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:The Department of Community Affairs (the Department) was unable to provide one tenant file.Context:One of 40 tenant files selected was not available for testing.Questioned costs:Undetermined.Cause:The Department?s internal controls were ineffective in preventing the misplacement of a tenant file. Supervisory review did not detect or prevent the error.Effect:The data reported to the grantor was not supported by the Department?s records.Recommendation:We recommend that the Department review current procedures and make necessary changes to ensure that information reported to the grantor is accurate and properly supported by documentation in the tenant file and that all tenant files are properly filed and available.Views of responsible officials:Accepted. As recommended, the New Jersey Department of Community Affairs (DCA) will review current procedures to determine if the procedures are adequate and make the necessary changes to ensure that the information reported to the grantor is accurate and properly supported by documentation in the tenant file.

Reference Number: 2019-006Prior Year Finding: N/AFederal Agency: U.S. Department of LaborState Agency: Department of Labor and Workforce DevelopmentFederal Program: Unemployment InsuranceCFDA Number: 17.225Award Number and Year:Compliance Requirement: UI-27992-16-55-A-34 (2016), UI-29857-17-55-A-34 (2017), UI-31382-18-55-A-34 (2018), UI-32614-19-55-A-34 (2019).EligibilityType of Finding: Significant Deficiency in Internal Control, NoncomplianceCriteria or specific requirement:Compliance ? Under State Unemployment Compensation laws, a worker?s benefit rights depend on the amount of the worker?s wages and/or weeks of work in covered employment in a ?base period.? While most States define the base period as the first 4 of the last 5 completed calendar quarters prior to the filing of the claim, other base periods may be used. To qualify for benefits, a claimant must have earned a certain amount of wages or have worked a certain number of weeks or calendar quarters within the base period or meet some combination of wage and employment requirements.Control - Per 2 CFR section 200.303(a), a 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:The Department of Labor and Workforce Development (the Department) lacked adequate evidence that a monetary eligibility determination was made for a particular claimant.Context:For 1 out of 60 claimants tested, the Department was unable to provide documentation confirming that a monetary determination letter was sent to the claimant?s former employer.Questioned costs:Undetermined.Cause:The Department?s supervisory review and approval control was not operating effectively to ensure that documentation existed to support compliance with eligibility determination requirements.Effect:An ineligible claimant may receive program benefits.Recommendation:We recommend that the Department follow its internal control procedures to ensure that eligibility determinations are made in accordance with State and Federal regulations and that all required documentation exists in claimant files.Views of responsible officials:Accepted. The Department of Labor and Workforce Development (DLWD) will review current procedures related to the distribution of monetary determination letters to ensure they are adequate to achieve compliance. Procedures will also be reiterated to staff responsible for sending the letters to ensure that going forward all letters are sent timely and maintained for supporting documentation purposes.

Reference Number: 2019-007Prior Year Finding: N/AFederal Agency: U.S. Department of LaborState Agency: Department of Labor and Workforce DevelopmentFederal Program: Unemployment InsuranceCFDA Number: 17.225Award Number and Year: UI-32614-19-55-A-34 (2019)Compliance Requirement: Period of PerformanceType of Finding: Significant Deficiency in Internal Control, NoncomplianceCriteria or specific requirement:Compliance ? CFR section 200.309 - Period of performance.A non-Federal entity may charge to the Federal award only allowable costs incurred during the period of performance (except as described in ? 200.461 Publication and printing costs) and any costs incurred before the Federal awarding agency or pass-through entity made the Federal award that were authorized by the Federal awarding agency or pass-through entity.Control ? Per 2 CFR section 200.303(a), a 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:Expenditures charged to the grant by the Department of Labor and Workforce Development (the Department) in the amount of $1,071 were incurred prior to the start of the grant?s period of performance.Context:Twelve of 19 expenditure transactions selected for testing were incurred prior to the award start date of October 1, 2018.Questioned costs:$1,071Cause:Accounting staff identified and charged program costs to the incorrect grant. The Program?s review process did not detect the error nor take timely corrective action.Effect:The Department was not compliant with the grant?s period of performance which could result in the grantor?s disallowance of the costs.Recommendation:We recommend that the Department review its procedures to ensure that expenditures charged to the program are incurred within the grant period of performance.Views of responsible officials:Accepted. The Department of Labor and Workforce Development (DLWD) has reviewed their current Travel Policy & Procedures and have made updates to the document. Additionally, Accounts Payable staff who process the travel reimbursements have received training on the updated policy and procedures. Transactions that did not comply with the period of performance policy have been corrected. Additionally, travel activity is now monitored as part of DLWD?s monthly fiscal reporting process performed by the Appropriations Accounting Unit.

Reference Number: 2019-008Prior Year Finding: N/AFederal Agency: U.S. Department of LaborState Agency: Department of Labor and Workforce DevelopmentFederal Program: Unemployment InsuranceCFDA Number: 17.225Award Number and Year: UI-27992-16-55-A-34 (2016), UI-29857-17-55-A-34 (2017), UI-31382-18-55-A-34 (2018), UI-32614-19-55-A-34 (2019)Compliance Requirement: Special Tests and Provisions ? UI Benefit PaymentsType of Finding: Significant Deficiency in Internal Control, NoncomplianceCriteria or specific requirement:Compliance ? The Improper Payments Elimination and Recovery Act (IPERA) of 2010 codified the requirement for valid statistical estimates of improper payments. SWAs are required by 20 CFR section 602.11(d) to operate and maintain a quality control system. The Benefits Accuracy Measurement (BAM) program is DOL?s quality control system designed to assess the accuracy of UI benefit payments and denied claims, unless the SWA is exempted from such requirement (20 CFR section 602.22). The program estimates error rates, that is, numbers of claims improperly paid or denied and dollar amounts of benefits improperly paid or denied, by projecting the results from investigations of small random samples to the universe of all claims paid and denied in a State. Specifically, the SWA?s BAM unit is required to draw a weekly sample of payments and denied claims, complete prompt and in-depth investigations to determine the degree of accuracy in the administration of the State UC and Federal law (20 CFR section 602.21(d)). DOL has promulgated investigational requirements and instructions in ET Handbook No. 395 (see below), pursuant to 20 CFR section 602.30(a). As presented in the handbook, the investigation involves a review of the records, and contacting the claimant, employers, and third parties (either in-person, by telephone, or by fax) to complete standard questionnaires and conduct new and original fact-finding to assess all of the information pertinent to the paid or denied claim that was sampled. BAM investigators review cases for adherence to State law as well as Federal law and official policy. For claims that were overpaid, underpaid, or erroneously denied, the BAM investigator determines the amount of payment error or, for erroneously denied claims, the potential eligibility of the claimant; the cause of and the responsibility for any payment error; the point in the UI claims process at which the error was detected; and actions taken by the agency and employer prior to the payment or denial decision that is in error. BAM covers State UC, UCFE, and UCX.Excerpt from ET Handbook No. 395, 5th Edition, Benefit Accuracy Measurement State Operations Handbook (page VI-11): Prompt completion of investigations is important to ensure the integrity of the information being collected by questioning claimant and employers before the passage of time adversely affects recollections. Prompt entry of associated data is necessary for both the SWA and the Department of Labor to maintain current databases. Therefore, the following time limits are established for completion of all cases for the year.- A minimum of 70 percent of cases must be completed within 60 days of the week ending date of the batch, and 95 percent of cases must be completed within 120 days of the ending date of the calendar year.- A minimum of 98 percent of cases for the year must be completed within 120 days of the ending data of the calendar year.Control ? Per 2 CFR section 200.303(a), a 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:The Department of Labor and Workforce Development (the Department) did not review the required number of cases within the time limits required by the U.S. Department of Labor.Context:The Department completed 89% of cases within 90 days or less, which is under the 95% minimum requirement. The Department completed 91% of cases within 120 days or less, which is under the 98% minimum requirement. In addition, the Department took over 120 days to complete 8% of cases, which is greater than the 2% maximum allowed for over 120 days.Questioned costs:Undetermined.Cause:The Department?s Benefits Accuracy Measurement Unit (BAM) did not comply with its procedures regarding time requirements of case review completions.Effect:Untimely BAM case reviews could allow inaccurate benefit payments to be undetected, resulting in the potential for ongoing payment errors.Recommendation:We recommend that the Department comply with its policies and procedures and complete case reviews within the required number of days as stipulated by the U.S. Department of Labor.Views of responsible officials:Accepted. The Benefits Accuracy Measurement (BAM) unit would optimally have ten (10) UI Technicians II and one or two UI Technicians III on staff to properly and timely complete all of their work and ensure compliance with the program?s minimum review percentage requirements. Currently the unit has eight UI Technicians II and zero UI Technicians III on staff, with another UI Technician II scheduled to retire as of May 1, 2020. The Division has permission to fill one vacant UI Technician II position, which will leave the unit with a total of eight Technicians II after the retirement in May. DLWD is working on a comprehensive hiring plan for the next three to six months that will include adding two more UI Technicians II and at least one UI Technician III to the unit to have a full complement of trained BAM Technicians on board.

Reference Number: 2019-009Prior Year Finding: N/AFederal Agency: U.S. Department of EducationState Agency: Department of EducationFederal Program: Title I ? Grants to Local Educational AgenciesCFDA Number: 84.010Award Number and Year:S010A160030.16B (2017), S010A170030.17B (2018), S010A180030.18A (2019)Compliance Requirement: Earmarking ? Special Rule for Targeting School Improvement Funds.Type of Finding: Significant Deficiency in Internal Control, NoncomplianceCriteria or specific requirement:Compliance ? Per 2 CFR ? 200.100(a)(2) each SEA must ratably reduce the allocations of LEAs and also follow the special rule described below to reserve for school improvement activities the greater of:- Seven percent of the SEA?s FY 2018 Title I award; or- The sum of the total amount that the SEA reserved for school improvement under section 1003(a) from its FY 2016 Title I award (general, 4 percent of that award) and the amount of the SEA?s FY 2016 School Improvement Grants (SIG) allocation under section 1003(g).Special Rule: In reserving funds for school improvement from FY 2018 and subsequent years? allocations, an SEA may not reduce an LEA?s Title I, Part A allocation below the prior year?s amount. If funds are insufficient to reserve the amount described in the two bullets above, the SEA is not required to reserve this amount.Control ? Per 2 CFR section 200.303(a), a 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:The Department of Education (the Department) did not ensure that each LEA was allocated at least 100% of their prior year?s allocation with respect to school improvement activity funds.Context:For one out of 40 LEA SIA allocations reviewed, the LEA was allocated fewer funds for school improvement activities in the current year than in the prior year.Questioned costs:Undetermined.Cause:The SIA allocation process is a component of a much larger and more complex Title I allocation process. The SIA allocation is done iteratively, where each iteration sees allocated funds being taken from LEAs with excess allocations and given to LEAs with deficiencies. Program personnel have determined that three iterations of allocation adjustments are typically appropriate for this segment of the allocation process. Because the process is considered complete after the third allocation, the deficiency in funds for the identified LEA was not identified, and a fourth iteration, which would have adjusted this LEA?s allocation, was not completed.Effect:An LEA may be allocated an incorrect amount of Title IA funds for school improvement activities.Recommendation:We recommend that the Department implement policies and procedures that adequately detect all insufficient allocations and ensure that LEAs receive the correct amount of Title IA funds.Views of responsible officials:Accepted. For the FY 2020-21 Title I, Part A allocation process, a column will be added to the end of each School Improvement Activities (SIA) reduction iteration which will indicate each Local Education Agency (LEA) that is not allocated 100% of their prior year allocations. SIA reduction iterations will continue to be run until all LEAs have received an allocation of at least 100% of their prior year?s allocation.

Reference Number: 2019-010Prior Year Finding: N/AFederal Agency: U.S. Department of EducationState Agency: Department of EducationFederal Program: Special Education Cluster (IDEA)CFDA Number: 84.027, 84.173Award Number and Year:H027A160100-16A (2017), H027A170100-17B (2018), H027A180100-18A (2019), H173A160114 (2017), H173A170114 (2018), H173A180114 (2019)Compliance Requirement: Allowable Costs (Effort Reporting)Type of Finding: Significant Deficiency in Internal Control, NoncomplianceCriteria or specific requirement:Compliance ? Per 2 CFR ? 200.430 (a), costs of compensation are allowable to the extent that they satisfy the specific requirements of this part, and that the total compensation for individual employees: (1) Is reasonable for the services rendered and conforms to the established written policy of the non-Federal entity consistently applied to both Federal and non-Federal activities; (2) Follows an appointment made in accordance with a non-Federal entity?s laws and/or rules or written policies and meets the requirements of Federal statute, where applicable; and (3) Is determined and supported as provided in paragraph (i) of this section, Standards for Documentation of Personnel Expenses, when applicable.Per 2 CFR ? 200.430 (i), charges to federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must:? Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable and properly allocated;? Be incorporated into the official records of the non-Federal entity;? Reasonably reflect the total activity for which the employee is compensated by the non-Federal entity, not exceeding 100% of compensated activities;? Encompass both federally assisted and all other activities compensated by the non-Federal entity on an integrated basis, but may include the use of subsidiary records as defined in the non-Federal entity?s written policy;? Comply with the established accounting policies and practices of the non-Federal entity;? Support the distribution of the employee's salary or wages among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity.Control ? Per 2 CFR section 200.303(a), a 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:The Department of Education (the Department) did not properly adjust actual time charged to the program for two employees:? The Federal Time & Activity Report for one employee properly calculated 38.13% to be charged to the program but the Program incorrectly charged 80% to the program.? The Federal Time & Activity Report for one employee properly calculated 74.85% to be charged to the program but the Program incorrectly charged 85.61% to the program.Context:For two of 40 payroll transactions selected for testing, the related adjustments to reconcile the amount of time the employee worked on the program were improperly calculated.Questioned costs:$9,033Cause:The State?s payroll system does not allow employees to be charged to multiple accounts and the Department relies on a manual process to adjust employees? wages to align them with their certified timesheets. This process includes several levels of review and approval before adjustments are made to the accounting system and this manual process is prone to human error.Effect:Unsupported time and effort expenditures may allow costs to be charged to the program in error.Recommendation:We recommend that the Department implement policies and procedures that allow them to correctly calculate and charge employee time and effort to the program that is supported by certified timesheets.Views of responsible officials:Accepted. The State of New Jersey?s payroll system has limitations that do not allow employees to be charged to multiple accounts. As a result of these limitations, the Department of Education (DOE) relies on a manual process to adjust employees? wages to align them with their certified timesheets. In any given quarter, there are over 100 manual adjustments made to tie to certified timesheets. There are several levels of review and approval before these adjustments are made in the accounting system. Nevertheless, since the process is extremely manual, there is always a chance for human error to occur.Going forward, the DOE Office of Budget & Accounting will have another employee, not involved in performing the adjustments, reconcile the manual adjustments with the certified timesheets and payroll to ensure accuracy. Additionally, in an attempt to reduce the amount of manual quarterly adjustments, the Office of Budget & Accounting is working with program offices to identify work responsibilities of spilt funded employees to align them to a single funding source which will eliminate the need for certain salary splits.

Reference Number: 2019-011Prior Year Finding: N/AFederal Agency: U.S. Department of EducationState Agency: Department of EducationFederal Program: Title I Grants to Local Educational AgenciesEnglish Language Acquisition State GrantsSpecial Education Cluster (IDEA)Supporting Effective Instruction State GrantsCFDA Number: 84.010, 84.027, 84.173, 84.365, and 84.367Award Number and Year: S010A160030.16B (2017), S010A170030.17B (2018), S010A180030.18A (2019), S365A160030 (2017), S365A170030 (2018), S365A180030 (2019), H027A160100-16A (2017), H027A170100-17B (2018), H027A180100-18A (2019), H173A160114 (2017), H173A170114 (2018), H173A180114 (2019), S367A160029-16B (2017), S367A170029-17B (2018), S367A180029-18A (2019)Compliance Requirement: Subrecipient MonitoringType of Finding: Significant Deficiency in Internal Control, NoncomplianceCriteria or specific requirement:Compliance ? 2 CFR, Part 200 ? Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) imposes requirements on pass-through entities in oversight of subawards. Subpart D, ?200.331(b) requires that pass-through entities evaluate each subrecipient's risk of noncompliance with Federal statutes, regulations, and the terms and conditions of the subaward for purposes of determining the appropriate subrecipient monitoring. Subpart D, ?200.331(d) requires pass-through entities monitor the activities of subrecipients 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: (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; (3) Issuing a management decision for audit findings pertaining to the Federal award provided to the subrecipient from the pass-through entity as required by ?200.521 Management decision.The New Jersey Department of Education (the Department) issued a procedure, New Jersey?s Consolidated Monitoring of Federal Programs, which describes the process the DOE uses to comply with Uniform Guidance subrecipient monitoring requirements. Procedures include using a risk analysis to select 45 subrecipients to be monitored each year via site visit in combination with other monitoring tools.Control ? Per 2 CFR section 200.303 Internal Controls: The non-Federal entity must: (a) 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:Although the Department completed some subrecipient monitoring procedures, including maintaining documented review of subrecipient financial documentation and performance reports as required by Uniform Guidance, we noted that the Department performed only 6 site visits of the 45 required per the Department?s procedure manual.Context:Documentation for site visits was only completed for six subrecipients, 39 less than the required number of site visits required each year per the Department?s procedure manual.Questioned costs:Undetermined.Cause:In 2018, the Department began the process of reviewing and revising its subrecipient monitoring process. As part of the revision process they temporarily suspended all current monitoring visits and related documentation. The monitoring process began again during the latter part of 2019.Effect:The Department is not performing monitoring of its subrecipients as required by 2 CFR Part 200.Recommendation:The Department should follow its documented on-site monitoring procedures, to ensure that the required number of site visits are completed annually and that subrecipients are monitored as required by 2 CFR Part 200.Views of responsible officials:Accepted. The New Jersey Department of Education (DOE) updated the New Jersey Collaborative Monitoring of Federal Programs procedure manual for FY 2020 in September 2019. The new procedure manual reflects both the revised risk analysis and the tiered approach it is taking in FY 2020 towards identifying the subrecipients to receive either intensive support (on-site monitoring), targeted support (desk review monitoring), or universal support (technical assistance). Additional revisions will be made to the procedures manual to ensure compliance with the FY 2019 Single Audit finding related to internal controls/policies and procedures for subrecipient monitoring:? Update the procedure manual to include a section that outlines the NJDOE activities performed for targeted support;? Update the number of teams providing both intensive and targeted support;? Update the number of intensive and targeted support to be performed in FY 2020; and? Define Universal Support and its schedule.

Reference Number: 2019-012Prior Year Finding: N/AFederal Agency: U.S. Department of Health and Human ServicesState Agency: Department of Community AffairsFederal Program: Low-Income Home Energy AssistanceCFDA Number: 93.568Award Number and Year: G-1901NJLIEA (2019), G-1801NJLIEA (2018),G-1702NJLIEA (2017)Compliance Requirement: Reporting (Performance Reporting)Type of Finding: Significant Deficiency in Internal Control, NoncomplianceCriteria or specific requirement:Compliance ? LIHEAP Performance Data Form (OMB No 0970-0449) ? State grantees must submit this report by January 31st regarding the prior Federal fiscal year. The first section of the report is the Grantee Survey that covers sources and allocation of funding. The rest of the report is regarding performance metrics, mostly related to home energy burden targeting and reduction, as well as the continuity of home energy service.Control ? Per 2 CFR section 200.303(a), a 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:The LIHEAP Performance Data Form for the period October 1, 2017 to September 30, 2018 was submitted on June 14, 2019, approximately four months after the due date of January 31, 2019.Context:Although the performance report was filled out correctly and properly reconciled to supporting documentation, the report was submitted late. Supervisory review control did not catch this error.Questioned costs:None.Cause:The Supervisor responsible for the approval and submission of program performance reports retired prior to submitting the form. The new individual who assumed this position in May 2019 identified the oversight, but was unable to submit the form until he received credentials to log into the Online Data Collection (OLDC) System website to submit the form.Effect:The performance report was submitted late.Recommendation:We recommend that the Department review current procedures to determine that they are adequate to ensure that performance reports are accurately completed, and reviewed and submitted timely.Views of responsible officials:Accepted. After the retirement of two Program Supervisors, within a span of three months, there was a gap in filling the position. The new Program Supervisor was hired on April 29, 2019. Upon resumption, the Program Supervisor obtained the credentialing to the Online Data Collection System (OLDC) portal and promptly submitted the report. Going forward, the new Program Supervisor will be responsible for submitting future reports to OLDC with oversight from the Assistant Division Director. Another member of the LIHEAP staff has also been given access to the OLDC portal for proper coverage.

Reference Number: 2019-013Prior Year Finding: N/AFederal Agency: U.S. Department of Health and Human ServicesState Agency: Department of Community AffairsFederal Program: Low-Income Home Energy AssistanceCFDA Number: 93.568Award Number and Year: G-1901NJLIEA (2019), G-1801NJLIEA (2018),G-1702NJLIEA (2017)Compliance Requirement: Subrecipient MonitoringType of Finding: Significant Deficiency in Internal Control, NoncomplianceCriteria or specific requirement:Compliance ? Per 2 CFR section 200.331(d): Pass-through entities 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: (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. (3) Issuing a management decision for audit findings pertaining to the Federal award provided to the subrecipient from the pass-through entity as required by ?200.521 Management decision.Per 2 CFR section 200.331 (f): Verify that every subrecipient is audited as required by Subpart F?Audit Requirements of this part when it is expected that the subrecipient's Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in ?200.501 Audit requirements.Control ? Per 2 CFR section 200.303(a), a 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:One subrecipient?s completed monitoring report required a corrective action plan (CAP) but it was not submitted by the grantee as required by the results letter issued by the Department of Community Affairs (the Department) to the subrecipient. Subrecipient monitoring controls did not identify that the CAP was not received, nor was there evidence the Department followed up to obtain the CAP.Context:The Department completed the monitoring report for this subrecipient, noting findings in a results letter dated January 4, 2019; the results letter required a CAP to be submitted to the Department no later than February 8, 2019. As of February 5, 2020, the CAP had not been received by the Department.Questioned costs:None.Cause:Subrecipient monitoring controls were not effective to ensure the timely receipt of CAPs, nor to ensure appropriate follow-up for items not received by deadlines stated in results letters.Effect:The Department is not in compliance with subrecipient monitoring requirements, as noted above.Recommendation:We recommend that the Department review its subrecipient monitoring processes and controls to ensure that monitoring reports are completed in accordance with federal requirements, that CAPS are received timely, and that the Department reviews and follows up on subrecipient CAPs, as applicable.Views of responsible officials:Accepted. After the retirement of two Program Supervisors, within a span of three months, there was a gap in filling the position. The new Program Supervisor was hired on April 29, 2019. Due to the gap in filling the position, the required Corrective Action Plan (CAP) response from the subrecipient agency was not received. The Department has initiated efforts to ensure that it is received, and we have also implemented a procedure to ensure that all future CAPs are received timely through follow-up and visits by the Field Monitors to ensure compliance.

Reference Number: 2019-014Prior Year Finding: N/AFederal Agency: U.S. Department of Health and Human ServicesState Agency: Department of Community AffairsFederal Program: Community Services Block GrantCFDA Number: 93.569Award Number and Year: G-1901NJCOSR (2019), G-18B1NJCOSR (2018),G-17B1NJCOSR (2017)Compliance Requirement: Subrecipient MonitoringType of Finding: Significant Deficiency in Internal Control, NoncomplianceCriteria or specific requirement:Compliance ? 2 CFR, Part 200 ? Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) imposes requirements on pass-through entities in oversight of subawards. Subpart D, ?200.331(b) requires that pass-through entities evaluate each subrecipient's risk of noncompliance with Federal statutes, regulations, and the terms and conditions of the subaward for purposes of determining the appropriate subrecipient monitoring. Subpart D, ?200.331(d) requires pass-through entities monitor the activities of subrecipients 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: (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; (3) Issuing a management decision for audit findings pertaining to the Federal award provided to the subrecipient from the pass-through entity as required by ?200.521 Management decision.In addition, States must conduct full on-site reviews of each eligible entity once every 3 years to check conformity with performance goals, administrative standards, financial management rules, and other requirements. States must conduct an onsite review of each newly designated entity immediately after the completion of the first year in which such entity receives CSBG funding. Follow-up reviews, including prompt return visits to eligible entities and their programs, are required for entities that fail to meet the goals, standards, and requirements established by the State (42 USC 9914(a)).If a State finds a need for corrective action, the State must (1) inform the subgrantee of the deficiency and require correction; (2) offer training and technical assistance and report to the Office of Community Services (OCS) on that assistance, or explain why providing such assistance was not appropriate; (3) receive an improvement plan from the subgrantee within 60 days; and (4) not later than 30 days after receiving the improvement plan either approve it or specify the reasons why it cannot be approved (42 USC 9915). If the subgrantee fails to remedy the deficiency, the State may initiate proceedings to terminate the subgrantee?s eligibility or reduce its funding (42 USC 9908(b)(8) and 42 USC 9915(a)(5)).Control ? Per 2 CFR section 200.303(a), a 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:Three subrecipients requiring corrective action received result letters from the Department of Community Affairs (the Department) more than one year after initial review was completed. Initial third party monitoring reviews were conducted as required, however, corresponding result letters were not sent until after audit test work revealed the letters had not previously been sent.Context:Three of eight subrecipients selected for testing did not receive a timely result letter requesting a corrective action plan.Questioned costs:None.Cause:The Department?s monitoring process and controls were not operating effectively to ensure timely communication to subrecipients and follow-up on receipt of corrective action plans. Supervisory review failed to detect the errors.Effect:The Department is not in compliance with the requirements of 42 USC 9914 and 9915 and the subrecipient monitoring requirements of the Uniform Guidance, as detailed above.Recommendation:We recommend that the Department review its subrecipient monitoring processes and controls to ensure that monitoring reports are completed in accordance with federal requirements, that CAPS are received timely, and that the Department reviews and follows up on subrecipient CAPs, as applicable.Views of responsible officials:Accepted. In order to ensure timely release of both the programmatic monitoring report, as completed by DCA staff in the spring of each year, and the fiscal monitoring report, as completed by the engaged independent auditing firm in the late summer of each year, DCA will now provide CSBG agencies with two separate monitoring reports and each shall be released within 60 days of the monitoring site visit.

Reference Number: 2019-015Prior Year Finding: N/AFederal Agency: U.S. Department of Health and Human ServicesState Agency: Department of Human ServicesFederal Program: Child Care and Development Fund ClusterCFDA Number: 93.575, 93.596Award Number and Year: G1601NJCCDF (2016), G1701NJCCDF (2017)G1801NJCCDF (2018), G1901NJCCDF (2019)Compliance Requirement: Subrecipient MonitoringType of Finding: Significant Deficiency in Internal Control, NoncomplianceCriteria or specific requirement:Compliance: 2 CFR 200.331(a) states that all pass-through entities must ensure that every subaward is clearly identified to the subrecipient as a subaward and includes information 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.Control: Per 2 CFR section 200.303(a), a 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 audit, we noted that the Department?s subaward agreements did not identify the total federal award at the time the subaward was issued. In accordance with Uniform Guidance, the Department is required to notify the subrecipient of federal subaward amount at the time the subaward is issued, as well as, timely notifications of subaward modifications.The Department?s subaward provided a total contract ceiling amount which is an estimated amount of the available program funds. As part of the year-end close-out process, the Department performed a reconciliation of the program costs to determine the actual subaward amount. Once the year-end reconciliation is complete, the Department notified the subrecipient of the actual subaward amount. The subrecipient is unaware of the actual federal award amount until after year-end.Context:The subaward agreement for 8 out of 8 subrecipients identified a total contract ceiling amount instead of the actual subaward amount.Questioned costs:None noted, the subrecipients? costs were allowable.Cause:The Department?s current process was established to provide an estimated award amount instead of actual, and to determine the actual subaward as part of the year-end reconciliation process.Effect:The Department subaward did not comply with Uniform Guidance 2 CFR 200.331 which requires the pass-through entity to identify the dollar amount made available under each Federal award.Recommendation:We recommend that the Department update the subrecipient subawards to ensure that the subawards comply with Uniform Guidance requirements.Views of responsible officials:Accepted. At the time of contract award the Department of Human Services? Division of Family Development (DFD), the State level pass-through entity, provides each subrecipient a total contract ceiling amount and the amount of federal funding contained within the total contract amount. The amount of federal funding within the CCDF block grant is initially an estimate since the federal allocations are not fully finalized for three to six months after the beginning of each Federal Fiscal Year. In addition, allocations for State vs. Federal funding are determined in accordance with the federally approved Cost Allocation Plans utilized by DFD for federal reporting and claiming purposes on a quarterly basis.Going forward, the DFD Office of Budgetary and Financial Management and the DFD Contract Office will work together to develop a process and accompanying procedures to update the amount of federal funding and report same to the subrecipient on a periodic basis. The process will be developed and implemented on or before June 30, 2020.

Reference Number: 2019-016Prior Year Finding: 2018-008Federal Agency: U.S. Department of Health and Human ServicesState Agency: Department of Human ServicesFederal Program: Medicaid ClusterCFDA Number: 93.775, 93.777, 93.778Award Number and Year: 1805-NJ5MAP (2018), 1805-NJ5ADM (2018),1905-NJ5MAP (2019), 1905-NJ5ADM (2019)Compliance Requirement: Special Tests and Provisions - Provider Eligibility (Screening and Enrollment), Provider Health and Safety StandardsType of Finding: Significant Deficiency in Internal Control, NoncomplianceCriteria or specific requirement:Compliance ? Provider Eligibility: In order to receive Medicaid payments, providers of medical services furnishing services must be licensed in accordance with Federal, State, and local laws and regulations to participate in the Medicaid program (42 CFR sections 431.107 and 447.10; and Section 1902(a)(9) of the Social Security Act (42 USC 1396a(a)(9)) and the providers must make certain disclosures to the State (42 CFR part 455, subpart B, sections 455.100 through 455.106).Providers Health and Safety Standards: Providers must meet the prescribed health and safety standards for hospital, nursing facilities, and ICF/MR (42 CFR pat 442). The standards may be modified in the State plan.Control ? Per 2 CFR section 200.303(a), a 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:The Department of Health and Human Services (the Department) contracts with a 3rd party provider to manage medical provider eligibility. The 3rd party provider is responsible for verifying providers? license statuses and that providers meet health and safety standards. We noted that medical provider files maintained by the 3rd party contractor did not consistently support providers? eligibility and compliance with the State?s health and safety standards in accordance with federal and state requirements. The following was noted:? One provider license expired September 30, 2015 and an updated, active license was not obtained and on file;? Five provider files did not contain the provider agreement checklist.Context:Of the 60 samples selected for testing, the active license status for one provider was not available for review and five files were missing the provider agreement checklist.Questioned costs:Undetermined.Cause:Internal controls of the 3rd party provider were ineffective in ensuring that all required documentation was obtained and maintained in provider files. The Department?s controls over the 3rd party contractor were ineffective in detecting the errors.Effect:Medicaid claims may be paid to ineligible providers which may result in unallowed program costs. The Department is not compliant with the State?s plan for Medicaid.Recommendation:We recommend that the Department continue to review the 3rd party provider?s procedures for determining and documenting provider eligibility and compliance with related State and Federal requirements. The Department should periodically review provider files to determine if all required documentation is maintained in the files.Views of responsible officials:Accepted. The DHS Division of Medical Assistance and Health Services (DMAHS) acknowledges the outstanding issues related to expired provider licenses. Access to data files, which would provide current licensure data to DXC Technology, has not been available from the State?s licensing agencies. Although continuing efforts to outreach providers by sending a license expiration letter to providers 45 days prior to the license expiration date have been less than successful. Access concerns, which would result from denying claims for expired licenses, have discouraged State efforts to deny claims because of expired licenses. It is important to note that State expectations are that providers are properly licensed, but have failed to communicate this information to DXC Technology. Licensure information for all enrolling providers and those subject to revalidation are screened in accordance with ACA requirements.A recent decision shall capture licensure information available from PECOS, NPPES and the MCO database. PECOS/DEX does not provide full licensure information. However, the match rate with NPPES was approximately 90 percent, which is intended to be the primary source for licensure data. MCO provider network files would be the secondary source of license data. In addition, DXC will expand the existing MMIS license number field to be able to capture a full license number.System modifications to address the licensure issue shall include:? Addition of a new `fully-capable? license field to MMIS;? Displaying the new license field on line as part of the NJMMIS Provider Reference File;? A `one-time? update to the new field will be made from the NPPES/MCO files.? Provider Enrollment reports shall be created;? A system-generated provider letter shall be generated to notify providers of their inactive licensure status. This letter would replace manual interventions currently required by DXC Technology to communicate these letters to providers.? A new edit will be created for billing, servicing providers with a pend disposition. One edit shall be created for servicing providers and one edit shall be created for billing providers. Claims would be pended and recycled. If a provider does not submit a new license by the close of the pended claim period, DXC Technology shall deny any requests for claim payments.? Providers shall be notified by Medicaid Newsletter regarding the importance of communicating to DXC Technology current license information to avoid unnecessary denials of FFS claim payments.The anticipated target date for completion of this project is July 1, 2020.The provider Checklist for five providers was not available for review.? DXC Technology Provider Enrollment Unit shall complete a Provider Checklist for the five (5) providers identified by the audit. For three of the five identified it should be noted that DDD is a sister State Division; Horizon NJ Health is one of five (5) Medicaid contracted managed care organizations and Woodbine is a State-owned Developmental Center. For these institutional providers, the Checklist shall be applied to the fullest extent possible.

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