REGION 3B AREA AGENCY ON AGINGNon-Profit

Program Name – (Aging Cluster) U.S Department of Health and Human Services, ALN #93.044/93.045/93.053 Pass-through Entity – State of Michigan, Department of Health and Human Services (MDHHS) Finding Type – Noncompliance, Significant Deficiency in internal controls Criteria - Under the State of Michigan’s Required Expenditure Policy for FY 2025, Area Agencies on Aging are required to expend at least 10 percent of their original OAA Title III B allotment on In Home Services. The “original OAA” is defined as the amount of Title III B funds available prior to transfers, and excludes any funds carried over from a previous year. This 10 percent represents a minimum required expenditure (earmarking requirement) for In Home Services. Condition - For FY 2025, Region 3 B Area Agency on Aging did not meet the minimum 10 percent In Home Services expenditure requirement for its OAA Title III B original allotment. The agency’s original Title III B allotment subject to the earmarking requirement was $213,544, resulting in a required minimum In Home Services expenditure of $21,354 (10 percent of $213,544). The agency expended $3,861 for In Home Services, or approximately 1.81 percent of the original allotment, resulting in a shortfall of $17,493 below the required minimum. Cause - Management did not have sufficient monitoring processes in place to ensure that In Home Services expenditures were planned and tracked throughout the year in relation to the 10 percent earmarking requirement for the Title III B original allotment. Effect - Because the minimum expenditure (earmarking) requirement was not met, the agency was not in compliance with the State of Michigan’s Required Expenditure Policy for OAA Title III B In Home Services for FY 2025. The State notified the agency of a $17,493 shortfall and requested a corrective action plan. Questioned Costs ($0) - While the agency failed to meet the required 10 percent earmarking for In Home Services, the pass through entity has not required repayment or identified particular expenditures to be disallowed, and the noncompliance does not lend itself to a specific amount of noncompliant expenditures to be questioned Perspective Information - This condition related to the FY 2025 OAA Title III B award. Total Title III B expenditures for the year were approximately $213,544, of which $3,861 (1.81 percent) was expended for In Home Services. Recommendation - We recommend management implement procedures to plan and monitor In Home Services expenditures throughout the year to ensure that at least 10 percent of the original Title III B allotment is expended on In Home Services. This should include incorporating the earmarking requirement into the annual budgeting process, establishing periodic reviews of cumulative In Home Services expenditures against the required minimum, and taking timely corrective action when actual expenditures fall behind targeted levels. View of Responsible Officials – Management agrees with the finding and has submitted a corrective action plan. During the year, the Agency prioritized the expenditure of available ARPA funds and state funding in accordance with guidance received. This funding strategy resulted in OAA Title III-B In-Home Services expenditures being lower than budgeted, leading to the reported underspending.

Finding 2021-001 Program Name ? (Aging Cluster) U.S. Department of Health and Human Services, ALN #93.044/93.045/93.053 Pass-through Entity ?? Not applicable. Finding Type ? Noncompliance, Significant Deficiency in internal controls Criteria ? The Michigan Department of Health and Human Services, Aging, and Adult Services (AASA), Operating Standards for Service Programs comprises the operating guidelines to be followed by providers of services to older persons in Michigan. Per the guidance in Operating Standard C-4, the Organization shall conduct assessments annually on a minimum of ten percent of those direct service providers being assessed each fiscal year, restarting the cycle after all providers servicing at least ten clients have been assessed. Per the guidance in Operating Standard C-5, the Organization must conduct a forma on-site assessment of each subcontractor?s programmatic and fiscal performance each fiscal year. Condition ? While the audits of each program were completed by the end of fiscal year 2021, the financial and registered dietitian audits were not completed. Questioned Costs ? None Context ? The Organization did not complete the required financial and registered dietitian audits for the year ended September 30, 2021. Cause/Effect ? The Organization did not follow the requirements included in the Operating Standards for Service Programs manual. The effect of the Organization not following the required policies is that sub-recipients are not appropriately monitored. Recommendation: The Organization should review its internal control policies and processes and create plan to ensure sub-recipients are appropriately monitored.

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