EIN: 510539518
UEI: R96RFDTXEFG9
Data as of August 25, 2026
Management decision deadline — for entities that funded this organization
The FAC accepted this audit on April 29, 2025. Under 2 CFR 200.521(d), a pass-through entity that provided federal funds to this organization for this audit period must issue a management decision on these findings by October 29, 2025 (300 days ago).
What is a management decision? →Our examination of reporting requirements associated with CNC revealed that the GaDOE failed to submit subaward data to the FSRS. Therefore, all first-tier subawards of $30,000 or more, and the associated subaward data, was not reflected on the USASpending.gov website as required. Cause: The GaDOE had established procedures in place to comply with the FFATA reporting requirements for federal awards, but the GaDOE ceased FFATA reporting when it was removed from the Office of Management and Budget (OMB) Compliance Supplement in anticipation of the transition to the proposed new federal reporting model. When FFATA reporting reappeared on the OMB Compliance Supplement, the GaDOE reinstated FFATA reporting procedures for all federal programs and hired a new staff member in June 2022 to solely assist with bringing all FFATA reporting up to date for all federal programs. However, reporting for CNC proved to be challenging due to the continuously changing award amounts based on the number of claims each month. The GaDOE submitted a request to the USDA to report FFATA information on an annual basis, but that request was denied. Therefore, the GaDOE is currently formulating a method that will allow for compliance with CNC FFATA monthly reporting requirements in a more efficient manner. Effect: The deficiencies noted in the FFATA reporting process resulted in noncompliance with federal regulations. Without effective controls in place to ensure compliance with federal reporting requirements, the transparency objective associated with the FFATA requirements was not achieved as the general public was unable to review expenditure data associated with the State of Georgia’s CNC programs. Recommendation: We recommend that the GaDOE: • Finalize processes and procedures associated with the CNC FFATA reporting requirements; • Incorporate additional oversight, training, and/or staff to aid in the identification of subawards to be reported and the reporting of appropriate data elements, as applicable, in a timely manner; and • Maintain documentation of subaward agreements and the determination of whether each subaward should be entered into the FSRS in compliance with the FFATA reporting requirements. Views of Responsible Officials: We concur with this finding.
Show full finding ▾Hide full finding ▴2024-014 Improve Controls over Transparency Act Reporting Compliance Requirement: Reporting Internal Control Impact: Material Weakness Compliance Impact: Material Noncompliance Federal Awarding Agency: U.S. Department of Agriculture Pass-Through Entity: None AL Numbers and Titles: 10.553 – School Breakfast Program 10.555 – Nutritional School Lunch Program 10.556 – Special Milk Program for Children 10.582 – Fresh Fruit and Vegetable Program Federal Award Numbers: 225GA324N1099 (Year: 2022), 225GA324N1199 (Year: 2022), 235GA324N1099 (Year: 2023), 235GA324N1199 (Year: 2023), 235GA323N8903 (Year: 2023), 235GA324L1603 (Year: 2023), 245GA324N1099 (Year: 2024), 245GA324N1199 (Year: 2024), 245GA324L1603 (Year: 2024) Questioned Costs: None Identified Repeat of Prior Year Finding: 2023-012 Description: The Georgia Department of Education should improve internal controls to ensure that subaward information associated with the Federal Funding Accountability and Transparency Act is reported appropriately and timely. Background Information: The Child Nutrition Cluster (CNC) is comprised of various programs that are intended to assist states in administering and overseeing food service program operators that provide healthful, nutritious meals to eligible children in public and non-profit private schools, residential child care institutions, and summer programs. This Cluster of programs also fosters healthy eating habits in children by providing fresh fruits and fresh vegetables to children attending elementary and schools and encourages the domestic consumption of nutritious agricultural commodities. Funds associated with the CNC program are provided to the Georgia Department of Education (GaDOE) for allocation to eligible subrecipients. Because the GaDOE subgrants program funds to various entities, the GaDOE must comply with the Federal Funding Accountability and Transparency Act of 2006 (FFATA). The FFATA requirements were signed into law on September 26, 2006 in an effort to give the American public access to information on how their tax dollars are being spent. Criteria: As a recipient of federal awards, the GaDOE is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls. Under the FFATA (Public Law 109-282), as codified in Title 2 CFR Part 170, Reporting Subaward and Executive Compensation Information, recipients of grants or cooperative agreements, including the GaDOE, who make first-tier subawards of $30,000 or more are required to register in the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Subaward data, such as the subaward date, subawardee Unique Entity Identifier number, amount of subaward, subaward obligation/action date, date of report submission, and subaward number, are submitted through the FSRS and accessible to the general public through the USASpending.gov website. Condition: Our examination of reporting requirements associated with CNC revealed that the GaDOE failed to submit subaward data to the FSRS. Therefore, all first-tier subawards of $30,000 or more, and the associated subaward data, was not reflected on the USASpending.gov website as required. Cause: The GaDOE had established procedures in place to comply with the FFATA reporting requirements for federal awards, but the GaDOE ceased FFATA reporting when it was removed from the Office of Management and Budget (OMB) Compliance Supplement in anticipation of the transition to the proposed new federal reporting model. When FFATA reporting reappeared on the OMB Compliance Supplement, the GaDOE reinstated FFATA reporting procedures for all federal programs and hired a new staff member in June 2022 to solely assist with bringing all FFATA reporting up to date for all federal programs. However, reporting for CNC proved to be challenging due to the continuously changing award amounts based on the number of claims each month. The GaDOE submitted a request to the USDA to report FFATA information on an annual basis, but that request was denied. Therefore, the GaDOE is currently formulating a method that will allow for compliance with CNC FFATA monthly reporting requirements in a more efficient manner. Effect: The deficiencies noted in the FFATA reporting process resulted in noncompliance with federal regulations. Without effective controls in place to ensure compliance with federal reporting requirements, the transparency objective associated with the FFATA requirements was not achieved as the general public was unable to review expenditure data associated with the State of Georgia’s CNC programs. Recommendation: We recommend that the GaDOE: • Finalize processes and procedures associated with the CNC FFATA reporting requirements; • Incorporate additional oversight, training, and/or staff to aid in the identification of subawards to be reported and the reporting of appropriate data elements, as applicable, in a timely manner; and • Maintain documentation of subaward agreements and the determination of whether each subaward should be entered into the FSRS in compliance with the FFATA reporting requirements. Views of Responsible Officials: We concur with this finding.
We have prepared procedures for Federal Funding Accountability and Transparency Act (FFATA) reporting specifically for USDA. We shifted a current GaDOE accounting manager's job duties to include assisting the Assistant Director of Accounting with overall FFATA reporting duties. The addition of an experienced staff member to assist with FFATA data gathering, reconciling, and reporting will allow for the Assistant Director of Accounting to focus on completing the more complex FFATA Reporting for USDA in a timely manner.
2023-012
Our audit of the reporting requirements for the CVA program revealed the following deficiencies: • A sample of four FFR reports out of a population of 22 was randomly selected for testing using a non-statistical sampling method. Evidence of review and approval or a comparable internal control procedure was not maintained for three of the four reports reviewed. • The four PMT reports submitted for the fiscal year under review were reviewed by the auditors. Evidence of review and approval or a comparable internal control procedure was not maintained for three of the four reports reviewed. • A sample of 47 FFATA reports out of a population of 231 was randomly selected for testing using a non-statistical sampling method. Evidence of review and approval or a comparable internal control procedure was not maintained for any of reports reviewed. Additionally, 43 of the 47 reports were not submitted to the FSRS within the required timeframe. Cause: Internal controls for the FFR reports were not in place for the first two quarters of fiscal year 2024 due to a lack of sufficient staffing. Internal controls for the PMT reports were not in place for the first three quarters of fiscal year 2024 since the associated policy was still in development until that time. However, formal controls were documented and put in place in the third and fourth quarters of the fiscal year for both the FFR and PMT reports, respectively. For the FFATA reports, a control policy was put in place after fiscal year end. This led to no evidence of controls and untimely submissions for FFATA reports submitted during the year under review. Effect: The timing deficiency noted in the FFATA reporting process resulted in noncompliance with federal regulations as required by the USDOJ. Furthermore, though it does not appear that inappropriate information was transmitted on the PMT, FFR or FFATA reports, this could occur if appropriate controls are not documented and functioning properly. Recommendation: The CJCC should ensure that all control policies created over the FFR, PMT and FFATA reporting processes are implemented and that evidence of each control is maintained on file. Additionally, we recommend that the CJCC maintain a tracking log of FFATA reports to ensure that they are submitted within the required timeframe. Views of Responsible Officials: We concur with this finding. CJCC acknowledged previous findings during SFY2023 Audit (FA-471-23-01). As it pertains to the audit finding FA-471-23-01 for SFY2023, the Federal Financial (FFR) report and the Performance Measurement Tool (PMT) corrective actions were taken by CJCC in quarters 3 & 4 of SF20Y24 when they were recognized, respectively. The FFATA corrective action plan listed below was fully implemented as of August 7th, 2024.
Show full finding ▾Hide full finding ▴2024-031 Continue to Improve Controls over Reporting Compliance Requirement: Reporting Internal Control Impact: Material Weakness Compliance Impact: Nonmaterial Noncompliance Federal Awarding Agency: U.S. Department of Justice Pass-Through Entity: None AL Number and Title: 16.575 – Crime Victim Assistance Federal Award Numbers: 2018-V2-GX-0066 (Year: 2018), 2019-V2-GX-0019 (Year: 2019), 2020-V2-GX-0014 (Year: 2020), 15POVC-21-GG-00619-ASSI (Year: 2021), 15POVC-22-GG-00691-ASSI (Year: 2022), 15POVC-23-GG-00435-ASSI (Year: 2023) Questioned Costs: None Identified Repeat of Prior Year Finding: 2023-024 Description: The Criminal Justice Coordinating Council, an attached agency of the Georgia Bureau of Investigation, should continue to improve internal controls over required financial, performance, and Federal Funding Accountability and Transparency Act reporting to ensure that information is reported appropriately and timely. Background Information: The Crime Victim Assistance (CVA) Program, created under the 1984 Victims of Crime Act, provides federal funding to support victim assistance and compensation programs, to provide training for diverse professionals who work with victims, to develop projects to enhance victims’ rights and services, and to undertake public education and awareness activities on behalf of crime victims. The Georgia Criminal Justice Coordinating Council (CJCC) was designated as the custodian of the CVA funds for the State of Georgia. In that capacity, the CJCC is required to report details associated with CVA expenditures to the U.S. Department of Justice (USDOJ). This expenditure information is submitted through the JustGrants portal and is reflected on the quarterly SF-425 Federal Financial Report (FFR). In addition, the CJCC is required to report information relevant to the performance and activities of the CVA program to the USDOJ on the quarterly Performance Management Tool (PMT). Lastly, funds associated with the CVA program are provided to the CJCC for allocation to eligible subrecipients. Because the CJCC subgrants program funds to various entities, the CJCC must comply with the Federal Funding Accountability and Transparency Act of 2006 (FFATA). The FFATA requirements were signed into law on September 26, 2006 in an effort to give the American public access to information on how their tax dollars are being spent. Criteria: As a recipient of federal awards, the CJCC is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls. Under the FFATA (Public Law 109-282), as codified in Title 2 CFR Part 170, Reporting Subaward and Executive Compensation Information, recipients of grants or cooperative agreements, including the CJCC, who make first-tier subawards of $30,000 or more are required to register in the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Subaward data, such as the subaward date, subawardee Unique Entity Identifier number, amount of subaward, subaward obligation/action date, date of report submission, and subaward number, are submitted through the FSRS and accessible to the general public through the USASpending.gov website. Condition: Our audit of the reporting requirements for the CVA program revealed the following deficiencies: • A sample of four FFR reports out of a population of 22 was randomly selected for testing using a non-statistical sampling method. Evidence of review and approval or a comparable internal control procedure was not maintained for three of the four reports reviewed. • The four PMT reports submitted for the fiscal year under review were reviewed by the auditors. Evidence of review and approval or a comparable internal control procedure was not maintained for three of the four reports reviewed. • A sample of 47 FFATA reports out of a population of 231 was randomly selected for testing using a non-statistical sampling method. Evidence of review and approval or a comparable internal control procedure was not maintained for any of reports reviewed. Additionally, 43 of the 47 reports were not submitted to the FSRS within the required timeframe. Cause: Internal controls for the FFR reports were not in place for the first two quarters of fiscal year 2024 due to a lack of sufficient staffing. Internal controls for the PMT reports were not in place for the first three quarters of fiscal year 2024 since the associated policy was still in development until that time. However, formal controls were documented and put in place in the third and fourth quarters of the fiscal year for both the FFR and PMT reports, respectively. For the FFATA reports, a control policy was put in place after fiscal year end. This led to no evidence of controls and untimely submissions for FFATA reports submitted during the year under review. Effect: The timing deficiency noted in the FFATA reporting process resulted in noncompliance with federal regulations as required by the USDOJ. Furthermore, though it does not appear that inappropriate information was transmitted on the PMT, FFR or FFATA reports, this could occur if appropriate controls are not documented and functioning properly. Recommendation: The CJCC should ensure that all control policies created over the FFR, PMT and FFATA reporting processes are implemented and that evidence of each control is maintained on file. Additionally, we recommend that the CJCC maintain a tracking log of FFATA reports to ensure that they are submitted within the required timeframe. Views of Responsible Officials: We concur with this finding. CJCC acknowledged previous findings during SFY2023 Audit (FA-471-23-01). As it pertains to the audit finding FA-471-23-01 for SFY2023, the Federal Financial (FFR) report and the Performance Measurement Tool (PMT) corrective actions were taken by CJCC in quarters 3 & 4 of SF20Y24 when they were recognized, respectively. The FFATA corrective action plan listed below was fully implemented as of August 7th, 2024.
Federal Financial Report (FFR) processes are updated as follows: • Federal Financial Report responsibilities are distributed on a per grant basis to the members of the Criminal Justice Coordinating Council (CJCC) Budget Team. • Because the US DOJ Just Grants system does not allow for review or secondary viewers in the financial reporting system, the FFRs are to be saved digitally by the completing analyst/director. • FFRs will be reviewed with written certification of review by a budget team member that was not responsible for the primary submission of the report for each grant. • Any corrections will be made within the period of correction for the report to prevent a misstated report from becoming permanent record. Performance Measures Tool (PMT) processes are updated as follows: • Implemented a PMT data review and approval process that leverages Microsoft Planner to send messages to those involved and track the completion of review and approval by the manager. Prepared Federal Funding Accountability and Transparency Act (FFATA) reports processes are updated as follows: • FFATA Subrecipient Reporting is reviewed and approved by the Director of Grant Operations and submitted by the Grant Operations/Compliance Unit Staff to FSRS based upon the established reporting calendar.
2023-024
Our audit of the Unemployment Compensation Fund (UCF) included a review of benefit payments related to regular UC, SEB, and CARES Act UI programs. A sample of 60 UI benefit payment transactions processed by the DOL was randomly selected for testing using a non-statistical sampling method. In addition, eight individually significant UI benefit payment transactions were selected for testing. The following deficiencies were identified for improper payments totaling $100,400: • In five instances, claimants of the PUA program did not provide proof of wages or income. • Claimants did not self-certify that they are able to work, available for work, and actively seeking work each week they claimed benefits in five instances. Questioned Costs: Upon testing a sample of $18,287 in UI program payments, known questioned costs of $1,501 were identified. Using the population of UI payments sampled, which totaled $378,805,499, we project likely questioned costs to be approximately $31,730,589. In addition, other known questioned costs were identified as noted below: • $747 for improper payments associated with individually significant benefit payments tested; and • $98,152 for improper COVID-related payment amounts associated with the sample of benefit payments selected for testing. The known questioned costs identified for improper payments totaled $100,400. Cause: The DOL management implemented a flawed employer-filed claim process that did not allow for the monitoring of the employees’ ability to work and wage verification requirements. The employer-filed claim process also did not allow for claimants to self-certify for weeks benefits were claimed. In addition, the DOL must manually review proof of employment or self-employment or a valid offer to begin employment and proof of wages for all PUA claims. This is a very time-consuming process and the DOL does not have the resources to review the volume of PUA claims in a timely manner. Effect: Without effective controls, the DOL increases its risk of providing benefits to ineligible claimants and not detecting improper payments. The deficiencies in eligibility determinations also resulted in noncompliance with federal regulations and questioned costs. While funds for benefit payments are not provided to states through grant awards, states are awarded funds to administer these programs. Grant provisions allow the grantor to penalize the DOL for noncompliance by suspending or terminating the award or withholding future awards. This may prevent eligible individuals from receiving benefits in the future. Recommendation: The DOL management should develop and implement internal controls over eligibility and claims processing to ensure procedures are consistently enforced and operate effectively. Management should also provide training on procedures for processing unemployment claims for programs created by the CARES Act. Strong monitoring controls should be implemented, as well, to ensure that the DOL achieves its objectives in complying with the eligibility requirements for the various UC programs. Specifically, the DOL should develop a process for claimants to self-certify for benefits when a claim is submitted by an employer on the claimant’s behalf. Additionally, the DOL management should develop analytical procedures and queries to identify payments that have been made to claimants without identify verification should be developed. Furthermore, the DOL management should develop IT controls to stop the release of payment until identity and eligibility requirements are substantiated and verified. The DOL management should also develop and implement procedures to stop or reduce payments when individuals do not provide required documentation. Views of Responsible Officials: We concur with this finding.
Show full finding ▾Hide full finding ▴2024-032 Improve Controls over Eligibility Determinations Compliance Requirement: Eligibility Internal Control Impact: Material Weakness Compliance Impact: Material Noncompliance Federal Awarding Agency: U.S. Department of Labor Pass-Through Entity: None AL Numbers and Titles: 17.225 – Unemployment Insurance 17.225 – COVID-19 – Unemployment Insurance Federal Award Numbers: EUISSA2055A13 (Year: 2020), UI347102055A13 (Year: 2020), UI356432155A13 (Year: 2021), UI370592155A13 (Year: 2021), UI372182255A13 (Year: 2022), UI379762260A13 (Year: 2022), UI393172355A13 (Year: 2023), 23A60UB000032 (Year: 2023), 23A60UB000074 (Year: 2023), 23A60UB000117 (Year: 2023), 23A60UR000037 (Year: 2023), 24A55UT000008 (Year: 2024), 24A55UI000019 (Year: 2024), 24A60UR000063 (Year: 2024) Questioned Costs: $100,400 Repeat of Prior Year Findings: 2023-028, 2022-028, 2021-035 Description: The Georgia Department of Labor did not have effective internal controls in place to ensure unemployment benefit payments were made correctly and only to eligible claimants. Background Information: The Unemployment Insurance (UI) program, created by the Social Security Act (Pub. L. No. 74-271), provides Unemployment Compensation (UC) benefits to workers who are unemployed through no fault of their own and are seeking reemployment. To receive benefits, claimants must be able to work, available for work, and actively seeking work. On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law. The CARES Act was designed to mitigate the economic effects of the COVID-19 pandemic in a variety of ways, including providing additional UI provisions. Title II, Subtitle A of the CARES Act, authorizes the following temporary UI programs: • Federal Pandemic Unemployment Compensation (FPUC) – The FPUC program provides eligible individuals with $600 per week in addition to the weekly benefit amount they receive from certain other UC programs. • Pandemic Emergency Unemployment Compensation (PEUC) – The PEUC program provides up to 13 weeks of benefits to individuals who have exhausted all rights to regular compensation under State law or Federal law with respect to a benefit year that ended on or after July 1, 2019, have no rights to regular compensation with respect to a week under any other State or Federal UC law, are not receiving compensation with respect to such week under the UC law of Canada, and are able to work, available to work, and actively seeking work. • Pandemic Unemployment Assistance (PUA) – The PUA program provides up to 39 weeks of benefits to those individuals who are not eligible for regular UC or extended benefits under State or Federal law or PEUC, including those who have exhausted all rights to such benefits. In addition, the State Extended Benefits (SEB) program, which is an extension of UC benefits, becomes available for payment when the State’s 13-week insured unemployment rate (IUR) exceeds 5% and pays claimants up to an additional 13 weeks of compensation. Under the SEB program, the State is required to provide 50% of the amounts paid to the majority of eligible SEB claimants, which are those not covered by Federal law or special provisions of State law. However, under the CARES Act, the U.S. Department of Labor will reimburse the State at 100% of eligible costs for the SEB program. The State of Georgia became eligible to pay SEB May 10, 2020. However, the first payable weekending date (WED) was on July 4, 2020, as the first payable WED of PEUC was April 4, 2020. Further, the last payable WED for SEB was February 6, 2021. Criteria: As a recipient of federal awards, the Georgia Department of Labor (DOL) is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls. The Uniform Guidance, Section 200.53 - Improper Payments states: “(a) Improper payment means any payment that should not have been made or that was made in an incorrect amount (including overpayments and underpayments) under statutory, contractual, administrative, or other legally applicable requirements; and (b) Improper payment includes any payment to an ineligible party, any payment for an ineligible good or service, any duplicate payment, any payment for a good or service not received (except for such payments where authorized by law), any payment that does not account for credit for applicable discounts, and any payment where insufficient or lack of documentation prevents a reviewer from discerning whether a payment was proper.” Additionally, provisions included in Title 20 CFR Section 604.3(a) state, “A State may pay UC only to an individual who is able to work and available for work for the week for which UC is claimed.” Furthermore, Title II, Subtitle A of the CARES Act provides specific eligibility guidance for the FPUC, PEUC, and PUA programs. Condition: Our audit of the Unemployment Compensation Fund (UCF) included a review of benefit payments related to regular UC, SEB, and CARES Act UI programs. A sample of 60 UI benefit payment transactions processed by the DOL was randomly selected for testing using a non-statistical sampling method. In addition, eight individually significant UI benefit payment transactions were selected for testing. The following deficiencies were identified for improper payments totaling $100,400: • In five instances, claimants of the PUA program did not provide proof of wages or income. • Claimants did not self-certify that they are able to work, available for work, and actively seeking work each week they claimed benefits in five instances. Questioned Costs: Upon testing a sample of $18,287 in UI program payments, known questioned costs of $1,501 were identified. Using the population of UI payments sampled, which totaled $378,805,499, we project likely questioned costs to be approximately $31,730,589. In addition, other known questioned costs were identified as noted below: • $747 for improper payments associated with individually significant benefit payments tested; and • $98,152 for improper COVID-related payment amounts associated with the sample of benefit payments selected for testing. The known questioned costs identified for improper payments totaled $100,400. Cause: The DOL management implemented a flawed employer-filed claim process that did not allow for the monitoring of the employees’ ability to work and wage verification requirements. The employer-filed claim process also did not allow for claimants to self-certify for weeks benefits were claimed. In addition, the DOL must manually review proof of employment or self-employment or a valid offer to begin employment and proof of wages for all PUA claims. This is a very time-consuming process and the DOL does not have the resources to review the volume of PUA claims in a timely manner. Effect: Without effective controls, the DOL increases its risk of providing benefits to ineligible claimants and not detecting improper payments. The deficiencies in eligibility determinations also resulted in noncompliance with federal regulations and questioned costs. While funds for benefit payments are not provided to states through grant awards, states are awarded funds to administer these programs. Grant provisions allow the grantor to penalize the DOL for noncompliance by suspending or terminating the award or withholding future awards. This may prevent eligible individuals from receiving benefits in the future. Recommendation: The DOL management should develop and implement internal controls over eligibility and claims processing to ensure procedures are consistently enforced and operate effectively. Management should also provide training on procedures for processing unemployment claims for programs created by the CARES Act. Strong monitoring controls should be implemented, as well, to ensure that the DOL achieves its objectives in complying with the eligibility requirements for the various UC programs. Specifically, the DOL should develop a process for claimants to self-certify for benefits when a claim is submitted by an employer on the claimant’s behalf. Additionally, the DOL management should develop analytical procedures and queries to identify payments that have been made to claimants without identify verification should be developed. Furthermore, the DOL management should develop IT controls to stop the release of payment until identity and eligibility requirements are substantiated and verified. The DOL management should also develop and implement procedures to stop or reduce payments when individuals do not provide required documentation. Views of Responsible Officials: We concur with this finding.
GDOL Response: GDOL acknowledges this is a repeated finding from previous years and is partially resolved, therefore the Department concurs with this finding and offers the following response. GDOL’s current UI Information Technology (IT) system was developed in 1982 using mainframe “legacy’ technology. Due to the system’s age and other limitations, many automated processes and corrections cannot be fixed and/or easily implemented. As such, many processes must be handled manually by staff. This includes reviewing all the Pandemic Unemployment Assistance (PUA) proof documents submitted to determine the validity and eligibility for each PUA claim. Based on the volume of workload and staff limitations, GDOL has been unable to quickly complete this manual review to correct the finding. It is anticipated this manual review will continue throughout the FY25 audit review period. The modernized UI system will include controls over eligibility determination for current and future unemployment programs. Employer-Filed Claims (EFC) are submitted by employers on behalf of the claimant. The employer is responsible for attesting to the employment status and weekly earnings of the claimant for the EFC submitted. An affidavit certifying that the employer has obtained earnings from other employment as well as other requirements must be completed before EFCs can be entered or uploaded. Claimants for which EFCs submitted are considered to be still attached to the employer and are exempt from the requirement to register for employment services per Georgia Employment Security Law Rule 300-2-4-.02. Such individuals are not required to be nor certify on a weekly basis to be able, available and actively seeking work. We recognize the state auditor's recommendations to add the self-certification. However, the current unemployment system is aged and distressed. GDOL’s limited technology resources will hinder our ability to update our current system to satisfy the state audit’s recommendation. Therefore, we acknowledge that this finding will persist until a system-wide resolution is implemented in the new modernized UI system. GDOL will include a self-certification process for employer-filed claims in the new solution. GDOL has procured a vendor to build and implement a modernized UI system. We are also pursuing data analytics tools to expedite the identification and detection of fraudulent activities. These tools will also be incorporated into the modernized solution. Summary: GDOL greatly appreciates the feedback and recommendations and will ensure they are incorporated into the new UI modernized system which is planned to be implemented in Spring 2026.
2023-027
Upon review of the procedures that the DOL established to process partial claims submitted by employers, deficiencies were noted. The DOL did not require employees to self-certify that they were able to work, available for work, and actively seeking work each week they received benefits. Furthermore, the claimant was unable to self-report additional wages and income the employee may have received from sources other than the employer that initially filed the claim. While auditors were unable to determine the total dollar amount of improper payments associated with these deficiencies, a review of all benefit payment transactions occurring during the fiscal year under review indicated that the following dollar amounts of benefit payments were submitted and certified by 936 employers that were for 23,391 individual claimants: • Regular Unemployment Compensation (UC) - $18,198,226 • State Extended Benefits (SEB) - $5,866 • Federal Pandemic Unemployment Compensation (FPUC) - $407,700 • Pandemic Emergency Unemployment Compensation (PEUC) - $28,216 • Reemployment Trade Adjustment Assistance (RTAA) - $112 Questioned Costs: Though likely questioned costs may exist, these amounts are unknown as sufficient data to analyze benefit payment transactions associated with these employer-filed claims was not available. The following Assistance Listing Numbers would be affected if questioned costs did exist: 17.225 and 17.225 – COVID-19. Cause: The DOL management implemented a flawed employer-filed claim process that did not allow for the monitoring of the employees’ ability to work and wage verification requirements. Effect: These deficiencies resulted in noncompliance with federal regulations and the Uniform Guidance. Due to lack of controls over employer-filed claims, specifically the inability for claimants to self-certify, it is likely that claimants were paid benefits that they were not eligible to receive. Because eligibility for UC benefits is based on claimants demonstrating that they meet certain eligibility requirements on a weekly basis, the suspension of the requirement for claimants to certify eligibility on a weekly basis did not allow the DOL to determine whether continuing claimants remained eligible for benefits. The State of Georgia’s failure to administer its UI program in conformity and substantial compliance with federal law can result in loss of the State’s certification and loss of its administrative grant to operate the UC program and/or its employers’ tax credits under Federal Unemployment Tax Act (FUTA). Recommendation: We recommend that the DOL develop a process when an employer-filed claim is submitted that requires the employee to create an account with the DOL, verify information, and self-certify employment status for the week being claimed. We also recommend that the DOL develop controls to prevent the release of payments when identity and eligibility requirements have not been substantiated and verified. In addition, we recommend that the DOL develop analytical procedures and queries to identify improper payments linked to employer-filed claims. Views of Responsible Officials: We concur with this finding.
Show full finding ▾Hide full finding ▴2024-033 Improve Controls over Employer-Filed Claims Compliance Requirement: Eligibility Internal Control Impact: Material Weakness Compliance Impact: Material Noncompliance Federal Awarding Agency: U.S. Department of Labor Pass-Through Entity: None AL Numbers and Titles: 17.225 – Unemployment Insurance 17.225 – COVID-19 – Unemployment Insurance Federal Award Numbers: EUISSA2055A13 (Year: 2020), UI347102055A13 (Year: 2020), UI356432155A13 (Year: 2021), UI370592155A13 (Year: 2021), UI372182255A13 (Year: 2022), UI379762260A13 (Year: 2022), UI393172355A13 (Year: 2023), 23A60UB000032 (Year: 2023), 23A60UB000074 (Year: 2023), 23A60UB000117 (Year: 2023), 23A60UR000037 (Year: 2023), 24A55UT000008 (Year: 2024), 24A55UI000019 (Year: 2024), 24A60UR000063 (Year: 2024) Questioned Costs: Unknown Repeat of Prior Year Findings: 2023-029, 2022-032 Description: The Department of Labor should improve internal controls over employer-filed Unemployment Compensation claims. Background Information: The Unemployment Insurance (UI) program, created by the Social Security Act (Pub. L. No. 74-271), provides Unemployment Compensation (UC) benefits to workers who are unemployed through no fault of their own and are seeking reemployment. To receive benefits, claimants must be able to work, available for work, and actively seeking work. On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law. The CARES Act was designed to mitigate the economic effects of the COVID-19 pandemic in a variety of ways, including providing additional UI provisions. Additionally, in response to the COVID-19 public health emergency, the National Emergency declaration by the President on March 13, 2020, and the Public Health State of Emergency declared by Governor Brian Kemp on March 14, 2020, the former Georgia Department of Labor (DOL) Commissioner Mark Butler enacted Emergency Rule 300-2-4-0.5, containing Rule 300-2-4-.09(l) Partial Unemployment on March 16, 2020. The emergency rule allowed employers to file claims online on-behalf of their full-time and part-time employees with respect to any week during which an employee worked less than full-time due to a partial or total company shutdown caused by the COVID-19 public health emergency. To file on-behalf of the employee, the employer must download and submit the DOL template, which requires the employer to input all the necessary identity, demographic, work, and wage information to establish a claim. After the employer has submitted the file, the DOL benefit payment system will automatically process the claim. A monetary determination will be made based on the wages the DOL has on-file. The DOL, then, sends the employee a Benefit Determination (Form DOL-411G), which reflects whether they met the wage requirements to establish a benefit year and a valid claim. If a valid claim is established, the determination lists the weekly benefit amount, maximum benefit amount, and maximum number of weeks. Criteria: As a recipient of federal awards, the DOL is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls. The Uniform Guidance, Section 200.53 - Improper Payments states, “(a) Improper payment means any payment that should not have been made or that was made in an incorrect amount (including overpayments and underpayments) under statutory, contractual, administrative, or other legally applicable requirements; and (b) Improper payment includes any payment to an ineligible party, any payment for an ineligible good or service, any duplicate payment, any payment for a good or service not received (except for such payments where authorized by law), any payment that does not account for credit for applicable discounts, and any payment where insufficient or lack of documentation prevents a reviewer from discerning whether a payment was proper.” Additionally, provisions included in Title 20 CFR Section 604.3(a) state, “A State may pay UC only to an individual who is able to work and available for work for the week for which UC is claimed.” Condition: Upon review of the procedures that the DOL established to process partial claims submitted by employers, deficiencies were noted. The DOL did not require employees to self-certify that they were able to work, available for work, and actively seeking work each week they received benefits. Furthermore, the claimant was unable to self-report additional wages and income the employee may have received from sources other than the employer that initially filed the claim. While auditors were unable to determine the total dollar amount of improper payments associated with these deficiencies, a review of all benefit payment transactions occurring during the fiscal year under review indicated that the following dollar amounts of benefit payments were submitted and certified by 936 employers that were for 23,391 individual claimants: • Regular Unemployment Compensation (UC) - $18,198,226 • State Extended Benefits (SEB) - $5,866 • Federal Pandemic Unemployment Compensation (FPUC) - $407,700 • Pandemic Emergency Unemployment Compensation (PEUC) - $28,216 • Reemployment Trade Adjustment Assistance (RTAA) - $112 Questioned Costs: Though likely questioned costs may exist, these amounts are unknown as sufficient data to analyze benefit payment transactions associated with these employer-filed claims was not available. The following Assistance Listing Numbers would be affected if questioned costs did exist: 17.225 and 17.225 – COVID-19. Cause: The DOL management implemented a flawed employer-filed claim process that did not allow for the monitoring of the employees’ ability to work and wage verification requirements. Effect: These deficiencies resulted in noncompliance with federal regulations and the Uniform Guidance. Due to lack of controls over employer-filed claims, specifically the inability for claimants to self-certify, it is likely that claimants were paid benefits that they were not eligible to receive. Because eligibility for UC benefits is based on claimants demonstrating that they meet certain eligibility requirements on a weekly basis, the suspension of the requirement for claimants to certify eligibility on a weekly basis did not allow the DOL to determine whether continuing claimants remained eligible for benefits. The State of Georgia’s failure to administer its UI program in conformity and substantial compliance with federal law can result in loss of the State’s certification and loss of its administrative grant to operate the UC program and/or its employers’ tax credits under Federal Unemployment Tax Act (FUTA). Recommendation: We recommend that the DOL develop a process when an employer-filed claim is submitted that requires the employee to create an account with the DOL, verify information, and self-certify employment status for the week being claimed. We also recommend that the DOL develop controls to prevent the release of payments when identity and eligibility requirements have not been substantiated and verified. In addition, we recommend that the DOL develop analytical procedures and queries to identify improper payments linked to employer-filed claims. Views of Responsible Officials: We concur with this finding.
GDOL Response: GDOL acknowledges this is a repeated finding from previous years and is partially resolved, therefore the Department concurs with this finding and offers the following response. GDOL’s limited technology resources and funding will hinder our ability to update our current system to satisfy the state audit’s recommendation. Therefore, we acknowledge that this finding will persist until a system-wide resolution is implemented in the new modernized UI system. GDOL will include a self-certification and dual certification process for employer-filed claims in the new solution. GDOL will also secure data analytic tools to aid GDOL staff with the identification of potential improper or fraudulent Payments, which will include payments linked to employer filed claims.
2023-029
The ETA-9130 reports for the quarters ending September 2023 and June 2024 were reviewed to ensure that program and administrative expenditures were reported in a timely and accurate manner. For five of the 65 reports tested, the amounts reported did not agree with the amounts reflected in the accounting records. All variances were noted on the September 2023 reports while none of the June 2024 reports had exceptions. Variances identified on each report are as follows: Description Award Number Report Date Federal Share of Expenditures Federal Share of Unliquidated Obligations Total Federal Obligations Unliquidated Balance PEUC Administration FY21 UI347102055A13-UI34710CI0 9/30/2023 - 93,173 93,173 (93,173) PEUC Administration FY22 UI347102055A13-UI34710NJ0 9/30/2022 797,640 22,598 820,238 (820,238) PUA Administration FY22 UI347102055A13-UI34710MT0 9/30/2023 (1,662,243) - (1,662,243) 1,662,243 UI State Administration FY21 UI356432155A13- UI35643DO0 9/30/2023 - 1,279,858 1,279,858 (1,279,858) Unemployment Insurance FY21 UI370592155A13-UI37059KI0 9/30/2023 100,703 179,960 280,663 (280,663) Cause: Separate ETA-9130 reports must be completed for each program and each fund source (subaccount) awarded to the DOL. While the DOL utilizes one general ledger report to prepare some ETA-9130 reports, the DOL uses multiple general ledger reports to prepare other ETA-9130 reports. In the instances of over obligated grant awards, the reporting system does not allow the preparer to enter more expenditures than funds authorized. Though new processes of gathering and reviewing the financial information were implemented after the first quarter of the fiscal year, these processes were not in place for the reports submitted for the quarter ending September 2023. Effect: The submitting of inaccurate ETA-9130 reports resulted in noncompliance with federal regulations and the Uniform Guidance for the UI program as noted above. Additionally, submitting incorrect reports diminishes the U.S. Department of Labor’s ability to effectively monitor the UI program. Recommendation: We recommend that the DOL review existing policies and procedures to ensure that it has established and is maintaining internal controls related to compliance with federal laws, regulations, and program compliance reports. This review should specifically address requirements for preparing the ETA-9130 reports. The DOL should ensure that personnel responsible for the ETA-9130 reports are appropriately trained and are familiar with these compliance requirements. Views of Responsible Officials: We concur with this finding.
Show full finding ▾Hide full finding ▴2024-034 Improve Controls over Financial Reporting Compliance Requirement: Reporting Internal Control Impact: Significant Deficiency Compliance Impact: Nonmaterial Noncompliance Federal Awarding Agency: U.S. Department of Labor Pass-Through Entity: None AL Numbers and Titles: 17.225 – Unemployment Insurance 17.225 – COVID-19 – Unemployment Insurance Federal Award Numbers: UI347102055A13 (Year: 2020), UI356432155A13 (Year: 2021), UI370592155A13 (Year: 2021) Questioned Costs: None Identified Repeat of Prior Year Findings: 2023-026, 2021-037 Description: The Georgia Department of Labor submitted inaccurate financial reports for the Unemployment Insurance Program to the U.S. Department of Labor. Background Information: The Unemployment Insurance (UI) program, created by the Social Security Act (Pub. L. No. 74-271), provides Unemployment Compensation (UC) benefits to workers who are unemployed through no fault of their own and are seeking reemployment. To receive benefits, claimants must be able to work, available for work, and actively seeking work. On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law. The CARES Act was designed to mitigate the economic effects of the COVID-19 pandemic in a variety of ways, including providing additional UI provisions. Title II, Subtitle A of the CARES Act, authorizes the following temporary UI programs: • Federal Pandemic Unemployment Compensation (FPUC) – The FPUC program provides eligible individuals with $600 per week in addition to the weekly benefit amount they receive from certain other UC programs. • Pandemic Emergency Unemployment Compensation (PEUC) – The PEUC program provides up to 13 weeks of benefits to individuals who have exhausted all rights to regular compensation under State law or Federal law with respect to a benefit year that ended on or after July 1, 2019, have no rights to regular compensation with respect to a week under any other State or Federal UC law, are not receiving compensation with respect to suck week under the UC law of Canada, and are able to work, available to work, and actively seeking work. • Pandemic Unemployment Assistance (PUA) – The PUA program provides up to 39 weeks of benefits to those individuals who are not eligible for regular UC or extended benefits under State or Federal law or PEUC, including those who have exhausted all rights to such benefits. The Georgia Department of Labor (DOL) is responsible for reporting expenditures related to these programs to the U.S. Department of Labor’s Employment and Training Administration (ETA). Every grant awarded by the ETA requires accurate quarterly and annual reporting as a part of sound financial and management responsibilities. This reporting supports the ETA’s ability to measure fund utilization for performance accountability and assess compliance with statutory expenditure requirements. This information also helps measure successful outcomes for participants, ensure sound service delivery and reporting practices, and determine whether the federal funds achieved maximum benefit. The ETA-9130, Financial Status Report is used to report program and administrative expenditures. The DOL is required to submit quarterly financial reports for each UI program that they operate within 45 days after the end of reporting quarter. Financial data is required to be reported cumulatively from grant inception through the end of each reporting period. Criteria: As a recipient of federal awards, the DOL is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls. Additionally, provisions included in the Uniform Guidance, Section 200.302(a) state, in part, that “the non-Federal entity’s financial management systems must… be sufficient to permit the preparation of reports required by general and program-specific terms and conditions.” In addition, provisions included in the Uniform Guidance, Section 200.302(b)(2) state, in part, that the non-Federal entity’s financial management systems must provide for “accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements.” Condition: The ETA-9130 reports for the quarters ending September 2023 and June 2024 were reviewed to ensure that program and administrative expenditures were reported in a timely and accurate manner. For five of the 65 reports tested, the amounts reported did not agree with the amounts reflected in the accounting records. All variances were noted on the September 2023 reports while none of the June 2024 reports had exceptions. Variances identified on each report are as follows: Description Award Number Report Date Federal Share of Expenditures Federal Share of Unliquidated Obligations Total Federal Obligations Unliquidated Balance PEUC Administration FY21 UI347102055A13-UI34710CI0 9/30/2023 - 93,173 93,173 (93,173) PEUC Administration FY22 UI347102055A13-UI34710NJ0 9/30/2022 797,640 22,598 820,238 (820,238) PUA Administration FY22 UI347102055A13-UI34710MT0 9/30/2023 (1,662,243) - (1,662,243) 1,662,243 UI State Administration FY21 UI356432155A13- UI35643DO0 9/30/2023 - 1,279,858 1,279,858 (1,279,858) Unemployment Insurance FY21 UI370592155A13-UI37059KI0 9/30/2023 100,703 179,960 280,663 (280,663) Cause: Separate ETA-9130 reports must be completed for each program and each fund source (subaccount) awarded to the DOL. While the DOL utilizes one general ledger report to prepare some ETA-9130 reports, the DOL uses multiple general ledger reports to prepare other ETA-9130 reports. In the instances of over obligated grant awards, the reporting system does not allow the preparer to enter more expenditures than funds authorized. Though new processes of gathering and reviewing the financial information were implemented after the first quarter of the fiscal year, these processes were not in place for the reports submitted for the quarter ending September 2023. Effect: The submitting of inaccurate ETA-9130 reports resulted in noncompliance with federal regulations and the Uniform Guidance for the UI program as noted above. Additionally, submitting incorrect reports diminishes the U.S. Department of Labor’s ability to effectively monitor the UI program. Recommendation: We recommend that the DOL review existing policies and procedures to ensure that it has established and is maintaining internal controls related to compliance with federal laws, regulations, and program compliance reports. This review should specifically address requirements for preparing the ETA-9130 reports. The DOL should ensure that personnel responsible for the ETA-9130 reports are appropriately trained and are familiar with these compliance requirements. Views of Responsible Officials: We concur with this finding.
After the September 2023 quarter, controls were put in place to ensure accurate Federal quarterly reports. These controls included preparing the report based on our accounting records, e.g. the general ledger. Another control is that the Chief Financial Officer or her designee reviews all reports and compares them to the general ledger prior to signature, approval and our submission to the grantor. Furthermore, periodic reviews by program fiscal staff during the performance period take place to closely monitor activity. GDOL will continue to follow the updated procedures and internal controls. As we transition to GA@Work, the system itself will control overspending and provide alerts.
2023-026
In an effort to assess risk and plan audit procedures, auditors obtained an understanding of the internal controls over the processes for identifying and recording overpayments. In performing these procedures, the DOL stated that crossmatches used to identify possible overpayments are run three to six months after a quarter’s benefits have been paid. Additionally, it is our understanding that after the DOL runs a wage crossmatch for a quarter, the quarter is not run again. In this case, if an employer does not report wages for its employee timely to the DOL, the wages would not be in the crossmatch performed. Based upon this information, auditors requested a complete population of overpayment cases and a reconciliation of the population to data to the financial statements. Auditors planned to select a sample of overpayment cases that the DOL had established during the fiscal year under review and verify that the DOL was properly identifying and processing overpayments. Although the DOL provided a population of overpayment cases, auditors could not summarize the data to match amounts reported on the financial statements. The data provided by the DOL is very limited, reflecting only total overpayments established, paid, and remaining balances by claimant at year-end. All amounts are grouped together and can contain multiple overpayments established on different dates. Auditors could not distinguish important information, such as the date the overpayment was established, weekending dates for the weeks determined to be overpaid, when the original benefit was paid, and whether the overpayment was caused by fraud. Furthermore, auditors inquired if overpayment data in the system of record was reconciled to the billing system and the DOL stated they did not perform such reconciliation. While auditors were unable to verify that the population of overpayment cases was complete and accurate, auditors chose to test the overpayment data to gain a better understanding of and review controls and processes and follow up on the prior year findings. Using the data provided, the auditors selected and tested a sample of 60 claimants out of a population of 21,409 that had overpayments established during fiscal year 2024. During testing, the auditors identified the following exceptions: • Two instances in which a completed employer fact finding letter was not available for review at the time of testing. • One instance in which the overpayment determination letter did not notify the claimant of a 15% fraud penalty. Auditors also noted ten other cases in which the DOL determined the cause of overpayment to be non-fraud while auditors concluded the cause should be fraud. After inquiring about the cases, the DOL provided auditors with a documented policy detailing the criteria used to determine fraud. While the criteria is confidential, auditors raise questions about the reasonableness of the policy and if the DOL had considered the United States Department of Labor (USDOL) best practices or industry standards used by neighboring states. Furthermore, auditors noted claimants could have a fraud overpayment in one quarter and a non-fraud overpayment in the subsequent quarter though the overpaid weeks related to consecutive weeks and occurred in the same benefit year. Finally, auditors noted an instance in which an overpayment case was opened in September 2021, but the case was not assigned to a staff member and no further action was taken after a fact finding letter was not returned by an employer. The case remains open and has not been reexamined in three years. Cases such as this are automatically closed after 60 days if there is no potential fraud suspected but remain open when potential fraud is suspected. It is unknown how many cases have been automatically closed and how many remain open without being assigned or further investigated. Cause: The DOL did not have the ability to easily run transaction-level or claimant-level queries for overpayments in their systems. Furthermore, the DOL did not reconcile overpayment data to subsystems, federal reports, or accounting records and was not able to do so in a timely manner when requested by the Department of Audits and Accounts and the State Accounting Office. Additionally, the DOL stated that industry standards nor best practices were considered when developing their policies for identifying fraud-related cases and the parameters of their crossmatch used to identify possible overpayments. Lastly, the IT system used to determine overpayments only reviews the overpaid weeks during a particular quarter and does not consider the overpaid weeks as they cross over through multiple quarters. Effect: Due to the lack of controls, there is an increased risk that possible fraudulent claims and improper benefits paid will not be identified and investigated timely. The deficiencies in the identification and recording of benefit overpayments resulted in noncompliance with federal and state regulations. Additionally, inaccurate reports were likely filed with USDOL. Furthermore, the lack of accurate and complete data associated with benefit overpayments prevented auditors from testing compliance requirements associated with overpayments on a complete population. These unknown factors, along with additional issues, are the basis for our adverse opinion on the UI program. Recommendation: The DOL management should develop and implement procedures to identify and record benefit overpayments in a timely and accurate manner. These procedures should allow for the tracking of information by fiscal year and periodic reconciliation of detail records to the general ledger and various required reports. We also recommend that the DOL reperform each quarterly crossmatch for one year to ensure wages submitted late by employers are included in the crossmatch to identify any exceptions that might be missed due to late submissions. Additionally, we recommend that the DOL implement controls that would allow for the consideration of fraud criteria for overpayments in consecutive quarters or within a benefit year. The DOL should also consult with the USDOL and neighboring states to determine best practices for industry standards on the criteria used to establish fraud overpayments. Finally, we recommend that the DOL identify all unassigned overpayment cases that have been initiated and begin to review those cases starting from the oldest initiated cases. Views of Responsible Officials: We concur with this finding.
Show full finding ▾Hide full finding ▴2024-035 Improve Controls over the Identification, Recording, and Reporting of Overpayments Compliance Requirement: Special Tests and Provisions Internal Control Impact: Material Weakness Compliance Impact: Material Noncompliance Federal Awarding Agency: U.S. Department of Labor Pass-Through Entity: None AL Numbers and Titles: 17.225 – Unemployment Insurance 17.225 – COVID-19 – Unemployment Insurance Federal Award Numbers: EUISSA2055A13 (Year: 2020), UI347102055A13 (Year: 2020), UI356432155A13 (Year: 2021), UI370592155A13 (Year: 2021), UI372182255A13 (Year: 2022), UI379762260A13 (Year: 2022), UI393172355A13 (Year: 2023), 23A60UB000032 (Year: 2023), 23A60UB000074 (Year: 2023), 23A60UB000117 (Year: 2023), 23A60UR000037 (Year: 2023), 24A55UT000008 (Year: 2024), 24A55UI000019 (Year: 2024), 24A60UR000063 (Year: 2024) Questioned Costs: None Identified Repeat of Prior Year Findings: 2023-030, 2022-029, 2021-038, 2020-038 Description: The Georgia Department of Labor did not maintain adequate controls over the identification, recording, and reporting of benefit overpayments associated with the Unemployment Insurance programs. Background Information: The Unemployment Insurance (UI) program, created by the Social Security Act (Pub. L. No. 74-271), provides Unemployment Compensation (UC) benefits to workers who are unemployed through no fault of their own and are seeking reemployment. To receive benefits, claimants must be able to work, available for work, and actively seeking work. On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law. The CARES Act was designed to mitigate the economic effects of the COVID-19 pandemic in a variety of ways, including providing additional UI provisions. Title II, Subtitle A of the CARES Act, authorizes the following temporary UI programs: • Federal Pandemic Unemployment Compensation (FPUC) – The FPUC program provides eligible individuals with $600 per week in addition to the weekly benefit amount they receive from certain other UC programs. • Pandemic Emergency Unemployment Compensation (PEUC) – The PEUC program provides up to 13 weeks of benefits to individuals who have exhausted all rights to regular compensation under State law or Federal law with respect to a benefit year that ended on or after July 1, 2019, have no rights to regular compensation with respect to a week under any other State or Federal UC law, are not receiving compensation with respect to such week under the UC law of Canada, and are able to work, available to work, and actively seeking work. • Pandemic Unemployment Assistance (PUA) – The PUA program provides up to 39 weeks of benefits to those individuals who are not eligible for regular UC or extended benefits under State or Federal law or PEUC, including those who have exhausted all rights to such benefits. In addition, the State Extended Benefits (SEB) program, which is an extension of UC benefits, becomes available for payment when the State’s 13-week insured unemployment rate (IUR) exceeds 5% and pays claimants up to an additional 13 weeks of compensation. Under the SEB program, the State is required to provide 50% of the amounts paid to the majority of eligible SEB claimants, which are those not covered by Federal law or special provisions of State law. However, under the CARES Act, the U.S. Department of Labor will reimburse the State at 100% of eligible costs for the SEB program. The State of Georgia became eligible to pay SEB May 10, 2020. However, the first payable weekending date (WED) was on July 4, 2020, as the first payable WED of PEUC was April 4, 2020. Further, the last payable WED for SEB was February 6, 2021. Criteria: As a recipient of federal awards, the DOL is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls. Title 34, Chapter 8, Article 9 of the Official Code of Georgia Annotated (OCGA) §34-8-254 defines overpayments as the sum of benefits received by any person while any conditions for the receipt of benefits were not fulfilled or while the person was disqualified from receiving benefits. OCGA §34-8-254 assigns legal responsibility and authority for the collection of overpayments to the Commissioner of the DOL. Additionally, per the UI Report Handbook No. 401, the ETA 227 and ETA 902P reports are required to be submitted to the U.S. Department of Labor in a timely and accurate manner. The ETA 227 reports are due quarterly on the first day of the second month after the quarter of reference, and all applicable date on the ETA 227 reports should be traceable to the data regarding overpayments and recoveries in the state’s financial accounting system. The ETA 902P report is due on the 30th of the month following the month to which data relate and should contain monthly data on PUA activities. Condition: In an effort to assess risk and plan audit procedures, auditors obtained an understanding of the internal controls over the processes for identifying and recording overpayments. In performing these procedures, the DOL stated that crossmatches used to identify possible overpayments are run three to six months after a quarter’s benefits have been paid. Additionally, it is our understanding that after the DOL runs a wage crossmatch for a quarter, the quarter is not run again. In this case, if an employer does not report wages for its employee timely to the DOL, the wages would not be in the crossmatch performed. Based upon this information, auditors requested a complete population of overpayment cases and a reconciliation of the population to data to the financial statements. Auditors planned to select a sample of overpayment cases that the DOL had established during the fiscal year under review and verify that the DOL was properly identifying and processing overpayments. Although the DOL provided a population of overpayment cases, auditors could not summarize the data to match amounts reported on the financial statements. The data provided by the DOL is very limited, reflecting only total overpayments established, paid, and remaining balances by claimant at year-end. All amounts are grouped together and can contain multiple overpayments established on different dates. Auditors could not distinguish important information, such as the date the overpayment was established, weekending dates for the weeks determined to be overpaid, when the original benefit was paid, and whether the overpayment was caused by fraud. Furthermore, auditors inquired if overpayment data in the system of record was reconciled to the billing system and the DOL stated they did not perform such reconciliation. While auditors were unable to verify that the population of overpayment cases was complete and accurate, auditors chose to test the overpayment data to gain a better understanding of and review controls and processes and follow up on the prior year findings. Using the data provided, the auditors selected and tested a sample of 60 claimants out of a population of 21,409 that had overpayments established during fiscal year 2024. During testing, the auditors identified the following exceptions: • Two instances in which a completed employer fact finding letter was not available for review at the time of testing. • One instance in which the overpayment determination letter did not notify the claimant of a 15% fraud penalty. Auditors also noted ten other cases in which the DOL determined the cause of overpayment to be non-fraud while auditors concluded the cause should be fraud. After inquiring about the cases, the DOL provided auditors with a documented policy detailing the criteria used to determine fraud. While the criteria is confidential, auditors raise questions about the reasonableness of the policy and if the DOL had considered the United States Department of Labor (USDOL) best practices or industry standards used by neighboring states. Furthermore, auditors noted claimants could have a fraud overpayment in one quarter and a non-fraud overpayment in the subsequent quarter though the overpaid weeks related to consecutive weeks and occurred in the same benefit year. Finally, auditors noted an instance in which an overpayment case was opened in September 2021, but the case was not assigned to a staff member and no further action was taken after a fact finding letter was not returned by an employer. The case remains open and has not been reexamined in three years. Cases such as this are automatically closed after 60 days if there is no potential fraud suspected but remain open when potential fraud is suspected. It is unknown how many cases have been automatically closed and how many remain open without being assigned or further investigated. Cause: The DOL did not have the ability to easily run transaction-level or claimant-level queries for overpayments in their systems. Furthermore, the DOL did not reconcile overpayment data to subsystems, federal reports, or accounting records and was not able to do so in a timely manner when requested by the Department of Audits and Accounts and the State Accounting Office. Additionally, the DOL stated that industry standards nor best practices were considered when developing their policies for identifying fraud-related cases and the parameters of their crossmatch used to identify possible overpayments. Lastly, the IT system used to determine overpayments only reviews the overpaid weeks during a particular quarter and does not consider the overpaid weeks as they cross over through multiple quarters. Effect: Due to the lack of controls, there is an increased risk that possible fraudulent claims and improper benefits paid will not be identified and investigated timely. The deficiencies in the identification and recording of benefit overpayments resulted in noncompliance with federal and state regulations. Additionally, inaccurate reports were likely filed with USDOL. Furthermore, the lack of accurate and complete data associated with benefit overpayments prevented auditors from testing compliance requirements associated with overpayments on a complete population. These unknown factors, along with additional issues, are the basis for our adverse opinion on the UI program. Recommendation: The DOL management should develop and implement procedures to identify and record benefit overpayments in a timely and accurate manner. These procedures should allow for the tracking of information by fiscal year and periodic reconciliation of detail records to the general ledger and various required reports. We also recommend that the DOL reperform each quarterly crossmatch for one year to ensure wages submitted late by employers are included in the crossmatch to identify any exceptions that might be missed due to late submissions. Additionally, we recommend that the DOL implement controls that would allow for the consideration of fraud criteria for overpayments in consecutive quarters or within a benefit year. The DOL should also consult with the USDOL and neighboring states to determine best practices for industry standards on the criteria used to establish fraud overpayments. Finally, we recommend that the DOL identify all unassigned overpayment cases that have been initiated and begin to review those cases starting from the oldest initiated cases. Views of Responsible Officials: We concur with this finding.
GDOL Response: GDOL acknowledges this is a repeated finding from previous years, therefore the Department concurs with this finding and offers the following response. GDOL now freezes the overpayment data at the end of every month so we can conduct periodic reconciliation of the overpayment records. This will allow discrepancies to be identified faster and resolved before the deadline to submit the report for the specified period. GDOL consults with USDOL’s national 227 reporting specialists on an ongoing basis to work towards a reconciliation of previously submitted reports. Federal regulations require an actual person to review and establish fraudulent overpayments. Due to the volume of claims and the number of cross matches to be performed on all state and federal pandemic programs, it requires multiple GDOL staffing levels to manually review all cross matches, requiring increased levels of state and federal funding. A cross match cannot be assumed to be an overpayment. GDOL must investigate cross matches and provide due process to all parties. GDOL developed an aggressive plan to complete all crossmatches. As of June 2024, GDOL was caught up and resume our regular crossmatch schedule. The current unemployment system is aged and distressed. GDOL’s limited technology resources will hinder our ability to update our current system to perform reconciliation between the multiple tools used to perform different functions. Therefore, we acknowledge that this finding may persist until a system-wide resolution is implemented in the new modernized UI system. The Department has a significant number of pending and potential overpayment investigations that may result in either a non-fraud or fraud determination. We are utilizing merit and time-limited staff to maximize productivity by conducting fact-finding interviews, assessing case details, creating overpayments in the system, and making overpayment determinations. The statutes provide that an overpayment be established up to four years after such occurrence, act, or omission. Additionally, GDOL has procured a vendor to build and implement a modernized UI system slated to be launched in 2026. We will continue to utilize available resources to investigate and establish overpayments in the legacy system as quickly as possible and will continue to do so within the program parameters in the new system. Throughout CY 2024, GDOL participated in quarterly meetings with United States Department of Labor (USDOL) and other regional states to discuss fraud, overpayment issues and best practices used. These meetings will continue in CY2025. Summary: GDOL greatly appreciates the feedback and recommendations and will ensure these and USDOL’s recommendations are incorporated into our new modernized system which is expected to be implemented in the Spring 2026.
2023-030
Our audit of the UI program revealed deficiencies in the operation of internal controls over the BAM program. We identified a total of 934 paid and denied BAM cases for the fiscal year under review. From this population, 17 cases were selected as individually significant, and a sample of 60 cases from the remaining population was randomly selected for testing using a non-statistical sampling method. The following deficiencies were identified: • For one case, the Summary of Investigation form and narrative was not completed. • Four cases were completed and reviewed by the same person. Cause: During the audit period, the DOL experienced high turnover within the BAM program and limited staff resources during their annual peer review. The limited staff led to the breakdown in the completion of the Summary of Investigation form and the availability of personnel with the appropriate experience to review completed BAM cases. Effect: The deficiencies in BAM investigation procedures resulted in noncompliance with federal regulations. In addition, though no UC claim decisions associated with the BAM cases tested were found to be inappropriate, failure to perform established quality control procedures may result in benefit payments to ineligible recipients or the denial of benefits to eligible recipients. Furthermore, grant provisions allow the grantor to penalize the DOL for noncompliance by suspending or terminating the award or withholding future awards. This may prevent eligible individuals from receiving benefits in the future. Recommendation: The DOL management should strengthen internal controls over BAM investigations to ensure its established policies and procedures are consistently followed and operating effectively. In addition, the DOL should develop a plan to address the performance of controls when management transitions and staff turnover occurs. Views of Responsible Officials: We concur with this finding.
Show full finding ▾Hide full finding ▴2024-036 Improve Controls over the Benefits Accuracy Measurement Program Compliance Requirement: Special Tests and Provisions Internal Control Impact: Significant Deficiency Compliance Impact: Nonmaterial Noncompliance Federal Awarding Agency: U.S. Department of Labor Pass-Through Entity: None AL Numbers and Titles: 17.225 – Unemployment Insurance 17.225 – COVID-19 – Unemployment Insurance Federal Award Numbers: EUISSA2055A13 (Year: 2020), UI347102055A13 (Year: 2020), UI356432155A13 (Year: 2021), UI370592155A13 (Year: 2021), UI372182255A13 (Year: 2022), UI379762260A13 (Year: 2022), UI393172355A13 (Year: 2023), 23A60UB000032 (Year: 2023), 23A60UB000074 (Year: 2023), 23A60UB000117 (Year: 2023), 23A60UR000037 (Year: 2023), 24A55UT000008 (Year: 2024), 24A55UI000019 (Year: 2024), 24A60UR000063 (Year: 2024) Questioned Costs: None Identified Description: The Georgia Department of Labor should improve internal controls over the Benefits Accuracy Measurement program. Background Information: The Unemployment Insurance (UI) program, created by the Social Security Act (Pub. L. No. 74-271), provides Unemployment Compensation (UC) benefits to workers who are unemployed through no fault of their own and are seeking reemployment. To receive benefits, claimants must be able to work, available for work, and actively seeking work. State Workforce Agencies (SWAs), including the Georgia Department of Labor, are required to operate and maintain a quality control system. The Benefits Accuracy Management (BAM) program is the U.S. Department of Labor’s quality control system designed to assess the accuracy of UI benefit payments and denied claims unless the SWA is excepted from such requirement. The program estimates the number 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. Criteria: As a recipient of federal awards, the Georgia Department of Labor (DOL) is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls. Provisions included in Title 20 CFR Section 602.21 reflect the standard methods and procedures to be used by each state in performing quality control reviews and require the SWA’s BAM unit to draw a weekly sample of payments and denied claims and complete prompt and in-depth case investigations to determine the degree of accuracy and timeliness in the administration of the State UC law and federal programs with respect to benefit determinations, benefit payments, and revenue collections. In addition, the BAM State Operations Handbook (ET Handbook No. 395) states on page VI-10 that “each completed case must contain a Summary of Investigation. Each SWA must develop a format which includes, at a minimum, a narrative that explains the pertinent facts of the case: the basis for any decision that an error was made and any complexities of the case, e.g., difficulty obtaining information, evaluation of statements taken (i.e. how the investigator resolved a conflict in statements or why one party was found to be more credible the other), reasons for delay, or any special circumstances that occurred. Alternately, this may be satisfied by appropriate reference to explanations elsewhere in the case file. The summary should not introduce any new information. In other words, the summary must be substantiated by documentation in the case file. The investigator must sign and date the document.” Condition: Our audit of the UI program revealed deficiencies in the operation of internal controls over the BAM program. We identified a total of 934 paid and denied BAM cases for the fiscal year under review. From this population, 17 cases were selected as individually significant, and a sample of 60 cases from the remaining population was randomly selected for testing using a non-statistical sampling method. The following deficiencies were identified: • For one case, the Summary of Investigation form and narrative was not completed. • Four cases were completed and reviewed by the same person. Cause: During the audit period, the DOL experienced high turnover within the BAM program and limited staff resources during their annual peer review. The limited staff led to the breakdown in the completion of the Summary of Investigation form and the availability of personnel with the appropriate experience to review completed BAM cases. Effect: The deficiencies in BAM investigation procedures resulted in noncompliance with federal regulations. In addition, though no UC claim decisions associated with the BAM cases tested were found to be inappropriate, failure to perform established quality control procedures may result in benefit payments to ineligible recipients or the denial of benefits to eligible recipients. Furthermore, grant provisions allow the grantor to penalize the DOL for noncompliance by suspending or terminating the award or withholding future awards. This may prevent eligible individuals from receiving benefits in the future. Recommendation: The DOL management should strengthen internal controls over BAM investigations to ensure its established policies and procedures are consistently followed and operating effectively. In addition, the DOL should develop a plan to address the performance of controls when management transitions and staff turnover occurs. Views of Responsible Officials: We concur with this finding.
Effective November 16, 2024, GDOL restructured the Benefit Accuracy Measurement (BAM) unit to strengthen internal controls by incorporating a secondary review process prior to the final review by the supervisor. This process allows the reconciliation of discrepancies and validates the accuracy of the case findings prior to the supervisory review. If the reviewer identifies questionable items during the review, the case is returned to the auditor for corrections and updates. Once completed, it is returned back to the reviewer for an additional review, sign-off, and then submission to the supervisor for review and closure. Beginning April 2025, an initiative will be implemented to train staff to perform quality checks. Staff will review a sample of cases completed by other auditors in the previous quarter and provide feedback. This plan is being established to posture staff to supplement gaps in resources if the need arises and address challenges, such as, attrition. This allows staff to effectively fulfill the responsibility of reviewing cases and preparing them for official signoff in a timely manner. Summary: GDOL greatly appreciates the feedback and recommendations and has and will continue to take appropriate measures to ensure the established BAM procedures are followed.
Our examination of compliance with Procurement and Suspension and Debarment regulations for the Cash Assistance program revealed that the DHS did not follow the State of Georgia’s ongoing contract management process for the continuation of services. The DHS was also unable to provide a written notice of extension or amendment to continue services and was unable to provide documentation of written permission from the SPD. Cause: Through discussion with the DHS management, the DHS relied on the contractor to replace cash assistance cards that were lost or undeliverable in the prior year under the original terms of the contract rather than extending or amending the contract. Effect: Without a valid contract extension or amendment, federal funds may be used in a manner that is not in compliance with federal provisions and the Georgia Procurement Manual. Recommendation: The DHS should improve internal controls as they relate to the procurement and contracting processes to ensure that all contract extensions or amendments follow the processes established in the Georgia Procurement Manual. Views of Responsible Officials: Georgia Department of Human Services concurs with the finding.
Show full finding ▾Hide full finding ▴2024-037 Improve Controls over the Procurement Process Compliance Requirement: Procurement and Suspension and Debarment Internal Control Impact: Material Weakness Compliance Impact: Material Noncompliance Federal Awarding Agency: U.S. Department of the Treasury Pass-Through Entity: None AL Number and Title: 21.027 – COVID-19 – Coronavirus State and Local Fiscal Recovery Funds Federal Award Number: SLFRP1029 (Year: 2023) Questioned Costs: None Identified Description: The Georgia Department of Human Services should improve internal controls to ensure that they are complying with the State of Georgia’s Procurement Policy. Background Information: The Coronavirus State Fiscal Recovery Fund, (CSLFRF), provides direct payments to states, US territories, Tribal governments, metropolitan cities, counties, and non-entitlement units of local government to: 1. Respond to the public health emergency with respect to Coronavirus Disease 2019(COVID-19) or its negative economic impacts, including by providing assistance to households, small businesses, nonprofits, and impacted industries, such as tourism, travel, and hospitality; 2. Respond to workers performing essential work during the COVID-19 public health emergency by providing premium pay to eligible workers of the recipient that perform essential work or by providing grants to eligible employers that have eligible workers who are performing essential work; 3. Provide government services, to the extent of the reduction in revenue of the eligible entities due to the COVID-19 public health emergency relative to revenues collected in the most recent full fiscal year of the eligible entities prior to the emergency; and 4. Make necessary investments in water, sewer, or broadband infrastructure. In August 2022, the Governor’s Office of Planning and Budget (OPB) dedicated more than $1 billion of CSLFRF federal funds to the Department of Human Services (DHS) to establish the Cash Assistance program. The Cash Assistance program provided one-time cash assistance of up to $350 for active enrollees of the Medicaid, PeachCare for Kids, Supplemental Nutrition Assistance Program, and/or Temporary Assistance for Needy Families government benefit programs in response to the negative economic impacts of the COVID-19 public health emergency. Criteria: As a recipient of federal awards, the DHS is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls. The DHS is also required to comply with the procurement standards set forth in 2 CFR 200.317 through 2 CFR 200.327 of the Uniform Guidance. Pursuant to 2 CFR 200.317, “When procuring property and services under a Federal award, a State must follow the same policies and procedures it uses for procurements from its non-Federal funds.” As a state agency, the DHS adheres to the State of Georgia Procurement Manual issued by the Department of Administrative Services (DOAS). Per the State of Georgia Procurement Manual, all contract extensions must occur in writing and require the supplier’s consent. The State Procurement Department’s (SPD) prior consent to the contract extension may also be required depending on the type of extension. Condition: Our examination of compliance with Procurement and Suspension and Debarment regulations for the Cash Assistance program revealed that the DHS did not follow the State of Georgia’s ongoing contract management process for the continuation of services. The DHS was also unable to provide a written notice of extension or amendment to continue services and was unable to provide documentation of written permission from the SPD. Cause: Through discussion with the DHS management, the DHS relied on the contractor to replace cash assistance cards that were lost or undeliverable in the prior year under the original terms of the contract rather than extending or amending the contract. Effect: Without a valid contract extension or amendment, federal funds may be used in a manner that is not in compliance with federal provisions and the Georgia Procurement Manual. Recommendation: The DHS should improve internal controls as they relate to the procurement and contracting processes to ensure that all contract extensions or amendments follow the processes established in the Georgia Procurement Manual. Views of Responsible Officials: Georgia Department of Human Services concurs with the finding.
Beginning in FY2025, the Department of Human Services (DHS) Office of Procurement Services (OPS) began reviewing new contracts in the new contracting system, Contract Lifecycle Management (CLM) System for compliance with State Procurement Rules and Regulations. In addition, OPS will extend the review to include all contract requests (new, amendments, extensions, and renewals). During the additional review, OPS will inform the program of any requests that are not in compliance with the Procurement Rules and Regulations before the contract is fully executed. OPS also reviewed prior contractual amendments, extensions, and renewals within the CLM System at the requisition level for compliance with the State Procurement Rules and Regulations. If an infraction was found, the program was notified and informed of the State Procurement Rules and Regulations.
• Noncompliance with travel policies • Noncompliance with payroll expense policies and procedures Cause: • Lack of sufficient controls for proper review and approval of travel authorizations and expensed transactions associated with sponsored award expenses • Lack of sufficient controls to ensure time and effort is properly charged to sponsored awards • Lack of consistency enforcing payroll expense policies for sponsored award management Effect: Payroll and travel expenditures may not be in compliance with federal or grant award provisions. Recommendation: • Complete and approve spend authorizations before travel to validate the necessity and reasonableness of expenses. • Include detailed justifications in spend authorizations for the travel purpose and award benefit. • Require sufficient justification for payroll expenses charged to sponsored awards, particularly for significant variances in effort. • Update internal control policies to enhance oversight and verification of time and effort reporting. This should include clear guidelines on the documentation required to support the work performed and the consequences of non-compliance. Views of Responsible Officials: Management agrees with the finding. See management’s corrective action plan.
Show full finding ▾Hide full finding ▴2024-038 Noncompliance with Payroll and Travel Expense Policies and Procedures Compliance Requirements: Activities Allowed or Unallowed Allowable Costs/Cost Principles Internal Control Impact: Significant Deficiency Compliance Impact: Nonmaterial Noncompliance Federal Awarding Agencies: Various Pass-Through Entities: Various AL Numbers and Titles: Various – Research and Development Cluster Federal Award Numbers: Various Questioned Costs: None Identified Description: The University did not comply with payroll and travel expense policies and procedures. Background Information: During the year ended June 30, 2024, the Georgia Institute of Technology’s (“GIT” or the “Institute”) Department of Internal Audit completed audits of compliance with payroll and travel expense policies and procedures of two Schools within the Institute and identified noncompliance with those policies and procedures. Criteria: • Uniform Guidance 2 CFR § 200.302 Financial management • Uniform Guidance 2 CFR § 200.308 – Revision of budget and program plans • Uniform Guidance 2 CFR § 200.403 – Factors affecting allowability of costs • Uniform Guidance 2 CFR § 200.404 – Reasonable costs • Uniform Guidance 2 CFR § 200.405 – Allocable costs • Uniform Guidance 2 CFR § 200.430 – Compensation – personal services • Uniform Guidance 2 CFR § 200.475 – Travel costs • Uniform Guidance 2 CFR § 200.432 – Conferences • Title 41 CFR § 301-11.12 • Title 41 CFR § 301-11.200 Subpart C – Reduced per Diem Condition: • Noncompliance with travel policies • Noncompliance with payroll expense policies and procedures Cause: • Lack of sufficient controls for proper review and approval of travel authorizations and expensed transactions associated with sponsored award expenses • Lack of sufficient controls to ensure time and effort is properly charged to sponsored awards • Lack of consistency enforcing payroll expense policies for sponsored award management Effect: Payroll and travel expenditures may not be in compliance with federal or grant award provisions. Recommendation: • Complete and approve spend authorizations before travel to validate the necessity and reasonableness of expenses. • Include detailed justifications in spend authorizations for the travel purpose and award benefit. • Require sufficient justification for payroll expenses charged to sponsored awards, particularly for significant variances in effort. • Update internal control policies to enhance oversight and verification of time and effort reporting. This should include clear guidelines on the documentation required to support the work performed and the consequences of non-compliance. Views of Responsible Officials: Management agrees with the finding. See management’s corrective action plan.
Georgia Tech management agrees that internal audit reports demonstrated departmental deficiencies in knowledge of policies and procedures that needed to be addressed. Upon disclosure of Internal Audit’s recommendations, the departments and central offices immediately responded with additional training, proactive compliance reviews, and re-enforcement of existing policies and procedures via Institute wide communications and enhanced reviews of support. New system controls regarding spend authorizations were put in place, with Georgia Tech’s Internal Audit department continuing to test these controls through the month of February. Central and departmental units within Georgia Tech will continue to work together to further enhance guidance and training to faculty and staff and to identify and test controls in our systems that will mitigate these issues.
FAC accepted this audit on March 27, 2024 — management decision was due September 27, 2024.
Our examination of reporting requirements associated with CNC revealed that the GaDOE failed to submit subaward data to the FSRS. Therefore, all first-tier subawards of $30,000 or more, and the associated subaward data, was not reflected on the USASpending.gov website as required. Cause: The GaDOE had established procedures in place to comply with the FFATA reporting requirements for federal awards, but the GaDOE ceased FFATA reporting when it was removed from the Office of Management and Budget (OMB) Compliance Supplement in anticipation of the transition to the proposed new federal reporting model. When FFATA reporting reappeared on the OMB Compliance Supplement, the GaDOE reinstated FFATA reporting procedures for all federal programs and hired a new staff member in June 2022 to solely assist with bringing all FFATA reporting up to date for all federal programs. However, reporting for CNC proved to be challenging due to the continuously changing award amounts based on the number of claims each month. The GaDOE submitted a request to the USDA to report FFATA information on an annual basis, but that request was denied. Therefore, the GaDOE is currently formulating a method that will allow for compliance with CNC FFATA monthly reporting requirements in a more efficient manner. Effect: The deficiencies noted in the FFATA reporting process resulted in noncompliance with federal regulations. Without effective controls in place to ensure compliance with federal reporting requirements, the transparency objective associated with the FFATA requirements was not achieved as the general public was unable to review expenditure data associated with the State of Georgia’s Child Nutrition Cluster program. Recommendation: We recommend that the GaDOE: • Finalize processes and procedures associated with the CNC FFATA reporting requirements that are currently being formulated; • Incorporate additional oversight, training, and/or staff to aid in the identification of subawards to be reported and the reporting of appropriate data elements, as applicable, in a timely manner; and • Maintain documentation of subaward agreements and the determination of whether each subaward should be entered into the FSRS in compliance with the FFATA reporting requirements. Views of Responsible Officials: We concur with this finding.
Show full finding ▾Hide full finding ▴2023-012 Improve Controls over Transparency Act Reporting Compliance Requirement: Reporting Internal Control Impact: Material Weakness Compliance Impact: Material Noncompliance Federal Awarding Agency: U.S. Department of Agriculture Pass-Through Entity: None AL Numbers and Titles: 10.553 – School Breakfast Program 10.555 – Nutritional School Lunch Program 10.556 – Special Milk Program for Children 10.582 – Fresh Fruit and Vegetable Program Federal Award Numbers: 225GA324N1099 (Year: 2022), 225GA324N1199 (Year: 2022), 225GA324L1603 (Year: 2022), 235GA324N1099 (Year: 2023), 235GA324N1199 (Year: 2023), 235GA324L1603 (Year: 2023) Questioned Costs: None Identified Description: The Georgia Department of Education should improve internal controls to ensure that subaward information associated with the Federal Funding Accountability and Transparency Act is reported appropriately and timely. Background Information: The Child Nutrition Cluster (CNC) is comprised of various programs that are intended to assist states in administering and overseeing food service program operators that provide healthful, nutritious meals to eligible children in public and non-profit private schools, residential child care institutions, and summer programs. This Cluster of programs also fosters healthy eating habits in children by providing fresh fruits and fresh vegetables to children attending elementary and schools and encourages the domestic consumption of nutritious agricultural commodities. Funds associated with CNC are provided to the Georgia Department of Education (GaDOE) for allocation to eligible subrecipients. Because the GaDOE subgrants program funds to various entities, the GaDOE must comply with the Federal Funding Accountability and Transparency Act of 2006 (FFATA). The FFATA requirements were signed into law on September 26, 2006 in an effort to give the American public access to information on how their tax dollars are being spent. Criteria: As a recipient of federal awards, the GaDOE is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls. Under the FFATA (Public Law 109-282), as codified in Title 2 CFR Part 170, Reporting Subaward and Executive Compensation Information, recipients of grants or cooperative agreements, including GaDOE, who make first-tier subawards of $30,000 or more are required to register in the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Subaward data, such as the subaward date, subawardee Data Universal Numbering System number, amount of subaward, subaward obligation/action date, date of report submission, and subaward number, are submitted through the FSRS and accessible to the general public through the USASpending.gov website. Condition: Our examination of reporting requirements associated with CNC revealed that the GaDOE failed to submit subaward data to the FSRS. Therefore, all first-tier subawards of $30,000 or more, and the associated subaward data, was not reflected on the USASpending.gov website as required. Cause: The GaDOE had established procedures in place to comply with the FFATA reporting requirements for federal awards, but the GaDOE ceased FFATA reporting when it was removed from the Office of Management and Budget (OMB) Compliance Supplement in anticipation of the transition to the proposed new federal reporting model. When FFATA reporting reappeared on the OMB Compliance Supplement, the GaDOE reinstated FFATA reporting procedures for all federal programs and hired a new staff member in June 2022 to solely assist with bringing all FFATA reporting up to date for all federal programs. However, reporting for CNC proved to be challenging due to the continuously changing award amounts based on the number of claims each month. The GaDOE submitted a request to the USDA to report FFATA information on an annual basis, but that request was denied. Therefore, the GaDOE is currently formulating a method that will allow for compliance with CNC FFATA monthly reporting requirements in a more efficient manner. Effect: The deficiencies noted in the FFATA reporting process resulted in noncompliance with federal regulations. Without effective controls in place to ensure compliance with federal reporting requirements, the transparency objective associated with the FFATA requirements was not achieved as the general public was unable to review expenditure data associated with the State of Georgia’s Child Nutrition Cluster program. Recommendation: We recommend that the GaDOE: • Finalize processes and procedures associated with the CNC FFATA reporting requirements that are currently being formulated; • Incorporate additional oversight, training, and/or staff to aid in the identification of subawards to be reported and the reporting of appropriate data elements, as applicable, in a timely manner; and • Maintain documentation of subaward agreements and the determination of whether each subaward should be entered into the FSRS in compliance with the FFATA reporting requirements. Views of Responsible Officials: We concur with this finding.
We will continuously monitor the compliance supplements for updates in order to meet all requirements. We have added additional staff to complete FFATA reporting to ensure the reports are submitted timely and accurately moving forward.
All subrecipients associated with the Food Distribution Cluster were selected for testing. Upon performing testing over subrecipient monitoring, auditors noted the following deficiencies: • Auditors reviewed documentation to determine if appropriate monitoring was conducted over CSFP subrecipients in accordance with the DHS internal policy and the Uniform Guidance; however, this testing revealed that proper monitoring activities were not conducted for one of the two CSFP subrecipients tested. • Auditors also reviewed documentation to determine if appropriate monitoring was conducted over TEFAP subrecipients in accordance with the DHS internal policy and the Uniform Guidance; however, this testing revealed that proper monitoring activities were not conducted for any of the seven TEFAP subrecipients tested and 13 of the required 20 TEFAP sub-distributing subrecipients. • As a result of not completing the required subrecipient monitoring reviews, the DHS also failed to review the subrecipients’ eligibility determinations for individual beneficiaries. Cause: Through discussion with management, high staff turnover, including the lack of a TEFAP and CSFP Coordinator, caused delays in conducting the required monitoring reviews. Effect: The subrecipient monitoring deficiencies resulted in noncompliance with federal regulations. Without effective subrecipient monitoring controls in place to ensure compliance with all applicable federal requirements, there is an increased risk of federal donated foods being distributed to ineligible individuals, subrecipients not properly administering federal programs in accordance with federal statutes, regulations, and the terms and conditions of the subawards, and untimely detection and correction of noncompliance. Recommendation: We recommend that the DHS: • Follow established policies and procedures for monitoring of subrecipients to ensure proper accountability and compliance program requirements and ensure individual eligibility determinations are being reviewed; • Develop an annual monitoring schedule for reviews of TEFAP and CSFP subrecipients to ensure compliance with monitoring of the required number of Eligible Recipient Agencies (ERAs); and • Maintain a tracking log that includes a listing of all TEFAP and CSFP subrecipients, date the monitoring review was performed, who completed the monitoring review, and if there were any deficiencies noted during the review. Views of Responsible Officials: The Georgia Department of Human Services (DHS) concurs with the finding.
Show full finding ▾Hide full finding ▴2023-013 Improve Controls over Subrecipient Monitoring Compliance Requirement: Subrecipient Monitoring Internal Control Impact: Material Weakness Compliance Impact: Material Noncompliance Federal Awarding Agency: U.S. Department of Agriculture Pass-Through Entity: None AL Numbers and Titles: 10.565 – Commodity Supplemental Food Program 10.568 – Emergency Food Assistance Program (Administrative Costs) 10.568 – COVID-19 – Emergency Food Assistance Program (Administrative Costs) 10.569 – Emergency Food Assistance Program (Food Commodities) Federal Award Numbers: 235GA802Y8005 (Year: 2023), 225GA802Y8005 (Year: 2022), 235GA820Y8105 (Year: 2023), 225GA413Q2204 (Year: 2022), 225GA820Y8105 (Year: 2022), 215GA820Y8105 (Year: 2021), 195GA820Y8105 (Year: 2019), 225GA823P1103 (Year: 2022) Questioned Costs: None Identified Description: The Department of Human Services should improve internal controls to ensure that required subrecipient monitoring activities are performed appropriately. Background Information: The Food Distribution Cluster is comprised of the Commodity Supplemental Food Program (CSFP) and the Emergency Food Assistance Program (TEFAP) and is intended to strengthen the nutrition safety net through the provisions of the U.S. Department of Agriculture (USDA)-donated foods (USDA Foods) to low-income persons. CSFP provides a package of USDA Foods to low-income elderly people at least 60 years of age. CSFP food packages are not intended to provide a complete diet but rather provide the nutrients that are typically lacking in the diets of the target population. TEFAP provides USDA Foods to low-income households for home consumption or for use in prepared meals at emergency feeding sites for low-income persons. USDA Foods associated with the Food Distribution Cluster programs are provided to the Department of Human Services (DHS) for allocation to eligible subrecipients. These subrecipients are responsible for the determination of individual eligibility and who receives benefits. Because the DHS subgrants donated foods to various entities, the DHS must perform certain monitoring activities related to these subrecipients. These monitoring activities include a review of individual eligibility determinations completed by subrecipients to ensure categorical and income eligibility requirements are met before distributing food items. Criteria: As a recipient of federal awards, the DHS is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls. Provisions included in the Uniform Guidance, Section 200.332 establish requirements for pass-through entities and state in part that “All pass-through entities must… (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward; and that subaward performance goals are achieved…” Additionally, pursuant to Title 7 CFR Section 247.34(a), under the CSFP, “the State agency must establish a management review system to ensure that local agencies, subdistributing agencies, and other agencies conducting program activities meet program requirements and objectives. As part of the system, the State agency must perform an on-site review of all local agencies, and of all storage facilities utilized by local agencies, at least once every two years. As part of the on-site review, the State agency must evaluate all aspects of program administration, including certification procedures, nutrition education, civil rights compliance, food storage practices, inventory controls, and financial management systems. In addition to conducting on-site reviews, the State agency must evaluate program administration on an ongoing basis by reviewing financial reports, audit reports, food orders, inventory reports, and other relevant information.” Furthermore, pursuant to Title 7 CFR Section 251.10(e), under the TEFAP, “(1) Each State agency must monitor the operation of the program to ensure that it is being administered in accordance with Federal and State requirements… (2)… the State agency monitoring system must include: (i) An annual review of at least 25 percent of all eligible recipient agencies which have signed an agreement with the State agency… provided that each such agency must be reviewed no less frequently than once every four years; and (ii) An annual review of one-tenth or 20, whichever is fewer, of all eligible recipient agencies which receive TEFAP commodities and/or administrative funds pursuant to an agreement with another eligible recipient agency. Reviews must be conducted, to the maximum extent feasible, simultaneously with actual distribution of commodities and/or meal service, and eligibility determinations, if applicable. State agencies must develop a system for selecting eligible recipient agencies for review that ensures deficiencies in program administration are detected and resolved in an effective and efficient manner. (3) Each review must encompass, as applicable, eligibility determinations, food ordering procedures, storage and warehousing practices, inventory controls, approval of distribution sites, reporting and recordkeeping requirements, and civil rights. Condition: All subrecipients associated with the Food Distribution Cluster were selected for testing. Upon performing testing over subrecipient monitoring, auditors noted the following deficiencies: • Auditors reviewed documentation to determine if appropriate monitoring was conducted over CSFP subrecipients in accordance with the DHS internal policy and the Uniform Guidance; however, this testing revealed that proper monitoring activities were not conducted for one of the two CSFP subrecipients tested. • Auditors also reviewed documentation to determine if appropriate monitoring was conducted over TEFAP subrecipients in accordance with the DHS internal policy and the Uniform Guidance; however, this testing revealed that proper monitoring activities were not conducted for any of the seven TEFAP subrecipients tested and 13 of the required 20 TEFAP sub-distributing subrecipients. • As a result of not completing the required subrecipient monitoring reviews, the DHS also failed to review the subrecipients’ eligibility determinations for individual beneficiaries. Cause: Through discussion with management, high staff turnover, including the lack of a TEFAP and CSFP Coordinator, caused delays in conducting the required monitoring reviews. Effect: The subrecipient monitoring deficiencies resulted in noncompliance with federal regulations. Without effective subrecipient monitoring controls in place to ensure compliance with all applicable federal requirements, there is an increased risk of federal donated foods being distributed to ineligible individuals, subrecipients not properly administering federal programs in accordance with federal statutes, regulations, and the terms and conditions of the subawards, and untimely detection and correction of noncompliance. Recommendation: We recommend that the DHS: • Follow established policies and procedures for monitoring of subrecipients to ensure proper accountability and compliance program requirements and ensure individual eligibility determinations are being reviewed; • Develop an annual monitoring schedule for reviews of TEFAP and CSFP subrecipients to ensure compliance with monitoring of the required number of Eligible Recipient Agencies (ERAs); and • Maintain a tracking log that includes a listing of all TEFAP and CSFP subrecipients, date the monitoring review was performed, who completed the monitoring review, and if there were any deficiencies noted during the review. Views of Responsible Officials: The Georgia Department of Human Services (DHS) concurs with the finding.
Commodity Supplemental Food Program (CSFP) and The Emergency Food Assistance Program (TEFAP) have developed a tentative 2024 agency review schedule to ensure continued compliance with the annual USDA Food and Nutrition Services (FNS) requirements. The schedule was submitted to FNS as part of the state’s FFY 2022 Management Evaluation (ME) findings response. The State received notification from FNS on January 26, 2024, noting the successful completion and close-out of the FFY 2022 Management Evaluation and its findings.
All subrecipients associated with the Food Distribution Cluster were selected for testing. Upon performing testing over required annual physical inventories, auditors noted the following deficiencies: • Auditors reviewed documentation to determine if appropriate physical inventories were conducted at CSFP subrecipient locations in accordance with the DHS internal policy and federal regulations; however, this testing revealed that required physical inventories were not conducted for one out of the two CSFP subrecipients tested. • Auditors reviewed documentation to determine if appropriate physical inventories were conducted at TEFAP subrecipient locations in accordance with the DHS internal policy and federal regulations; however, this testing revealed that required physical inventories were not conducted for three out of the seven TEFAP subrecipients tested. Cause: Through discussion with management, high staff turnover, including the lack of a TEFAP and CSFP Coordinator, caused delays in conducting the required physical inventories. Effect: The physical inventory deficiencies resulted in noncompliance with federal regulations. Without effective inventory controls in place to ensure compliance with all applicable federal requirements, there is an increased risk of federal donated foods being misused, misplaced, or misappropriated. Recommendation: We recommend that the DHS: • Follow established policies and procedures to ensure that an appropriate accounting was maintained for USDA Foods, an annual physical inventory was taken, and the physical inventory was reconciled with inventory records; and • Maintain a tracking log that includes a listing of all TEFAP and CSFP subrecipients, date the inventory review was performed, who completed the inventory review, and if there were any deficiencies or discrepancies noted during the review. Views of Responsible Officials: The Georgia Department of Human Services (DHS) concurs with the finding.
Show full finding ▾Hide full finding ▴2023-014 Improve Controls over Physical Inventory of Food Items Compliance Requirement: Special Tests and Provisions Internal Control Impact: Significant Deficiency Compliance Impact: Nonmaterial Noncompliance Federal Awarding Agency: U.S. Department of Agriculture Pass-Through Entity: None AL Numbers and Titles: 10.565 – Commodity Supplemental Food Program 10.568 – Emergency Food Assistance Program (Administrative Costs) 10.568 – COVID-19 – Emergency Food Assistance Program (Administrative Costs) 10.569 – Emergency Food Assistance Program (Food Commodities) Federal Award Numbers: 235GA802Y8005 (Year: 2023), 225GA802Y8005 (Year: 2022), 235GA820Y8105 (Year: 2023), 225GA413Q2204 (Year: 2022), 225GA820Y8105 (Year: 2022), 215GA820Y8105 (Year: 2021), 195GA820Y8105 (Year: 2019), 225GA823P1103 (Year: 2022) Questioned Costs: None Identified Description: The Department of Human Services should improve internal controls to ensure that required annual physical inventories of donated foods are performed and reconciled to accounting records appropriately. Background Information: The Food Distribution Cluster is comprised of the Commodity Supplemental Food Program (CSFP) and the Emergency Food Assistance Program (TEFAP) and is intended to strengthen the nutrition safety net through the provisions of the U.S. Department of Agriculture (USDA)-donated foods (USDA Foods) to low-income persons. CSFP provides a package of USDA Foods to low-income elderly people at least 60 years of age. CSFP food packages are not intended to provide a complete diet but rather provide the nutrients that are typically lacking in the diets of the target population. TEFAP provides USDA Foods to low-income households for home consumption or for use in prepared meals at emergency feeding sites for low-income persons. USDA Foods associated with the Food Distribution Cluster programs are provided to the Department of Human Services (DHS) for allocation to eligible subrecipients. Because the DHS subgrants donated foods to various entities, the DHS is responsible for appropriate accounting for the USDA Foods and complying with inventory requirements related to these subrecipients. Criteria: As a recipient of federal awards, the DHS is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls. Pursuant to Title 7 CFR Section 250.19, “Distributing agencies, recipient agencies, processors, and other entities must maintain records of agreements and contracts, reports, audits, and claim actions, funds obtained as an incident of donated food distribution, and other records specifically required… [per] Departmental regulations, as applicable.” Additionally, pursuant to Title 7 CFR Section 250.12(b), “The distributing agency must ensure that donated foods at all storage facilities used by the distributing agency (or by a subdistributing agency) are stored in a manner that permits them to be distinguished from other foods, and must ensure that a separate inventory record of donated foods is maintained. The distributing agency’s system of inventory management must ensure that donated foods are distributed in a timely manner and in optimal condition. On an annual basis, the distributing agency must conduct a physical review of donated food inventories at all storage facilities used by the distributing agency (or by a subdistributing agency), and must reconcile physical and book inventories of donated foods...” Furthermore, pursuant to Title 7 CFR Section 247.28(b), under the CSFP, “A physical inventory of all USDA commodities must be conducted annually at each storage and distribution site where these commodities are stored. Results of the physical inventory must be reconciled with inventory records and maintained on file by the State or local agency.” Condition: All subrecipients associated with the Food Distribution Cluster were selected for testing. Upon performing testing over required annual physical inventories, auditors noted the following deficiencies: • Auditors reviewed documentation to determine if appropriate physical inventories were conducted at CSFP subrecipient locations in accordance with the DHS internal policy and federal regulations; however, this testing revealed that required physical inventories were not conducted for one out of the two CSFP subrecipients tested. • Auditors reviewed documentation to determine if appropriate physical inventories were conducted at TEFAP subrecipient locations in accordance with the DHS internal policy and federal regulations; however, this testing revealed that required physical inventories were not conducted for three out of the seven TEFAP subrecipients tested. Cause: Through discussion with management, high staff turnover, including the lack of a TEFAP and CSFP Coordinator, caused delays in conducting the required physical inventories. Effect: The physical inventory deficiencies resulted in noncompliance with federal regulations. Without effective inventory controls in place to ensure compliance with all applicable federal requirements, there is an increased risk of federal donated foods being misused, misplaced, or misappropriated. Recommendation: We recommend that the DHS: • Follow established policies and procedures to ensure that an appropriate accounting was maintained for USDA Foods, an annual physical inventory was taken, and the physical inventory was reconciled with inventory records; and • Maintain a tracking log that includes a listing of all TEFAP and CSFP subrecipients, date the inventory review was performed, who completed the inventory review, and if there were any deficiencies or discrepancies noted during the review. Views of Responsible Officials: The Georgia Department of Human Services (DHS) concurs with the finding.
Commodity Supplemental Food Program (CSFP) and The Emergency Food Assistance Program (TEFAP) have developed a tentative 2024 inventory schedule to ensure continued compliance with the annual USDA Food and Nutrition Services (FNS) requirements. The schedule was submitted to FNS as part of the state’s Management Evaluation (ME) findings response. The State received notification from FNS on January 26, 2024, noting the successful completion and close-out of the FFY 2022 Management Evaluation and its findings.
Upon performing procedures associated with the MCO annual audited financial report submissions specific to Medicaid, it was noted that the contracts between the DCH and the MCOs did not contain the necessary clause requiring each MCO to submit their audited GAAP-basis financial report to the DCH. Cause: Staff turnover within the DCH led to delays in updating contract clauses and procedures associated with ensuring that each MCO submits audited GAAP-basis financial reports to the DCH in accordance with Medicaid regulations. Effect: Failure to ensure that appropriate clauses are included in contracts with the MCOs and that the MCOs are aware that audited GAAP-basis financial statements are to be submitted to the DCH increases the likelihood that inappropriate uses of Medicaid and CHIP funds may occur and not be detected by management in a timely manner. Furthermore, noncompliance with federal regulations may result in the grantor penalizing the DCH for noncompliance by suspending or terminating the award or withholding future awards. Recommendation: The DCH should revise the current contracts with the MCOs to include a clause requiring the MCOs to submit on an annual basis, to the DCH, audited GAAP-basis financial reports specific to the Medicaid contract. Views of Responsible Officials: We concur with this finding.
Show full finding ▾Hide full finding ▴2023-015 Improve Controls over Managed Care Organization Financial Audits Compliance Requirement: Special Tests and Provisions Internal Control Impact: Significant Deficiency Compliance Impact: Nonmaterial Noncompliance Federal Awarding Agency: U.S. Department of Health and Human Services Pass-Through Entity: None AL Numbers and Titles: 93.767 – Children’s Health Insurance Program 93.778 - Medical Assistance Program (Medicaid: Title XIX) 93.778 – COVID -19 – Medical Assistance Program (Medicaid: Title XIX) Federal Award Number: 2205GA5MAP (Year 2022), 2305GA5MAP (Year 2023), 2205GA5021 (Year 2022), 2305GA5021 (Year 2023) Questioned Costs: None Identified Repeat of Prior Year Finding: 2022-012, 2021-028 Description: The Department of Community Health did not have adequate controls in place to ensure the required managed care financial audits are being conducted in accordance with compliance requirements. Background Information: The Department of Community Health (DCH) administers the State of Georgia’s Medicaid program that provides payments for medical assistance to low-income individuals. Medicaid is one of the State’s largest public assistance programs with federal and state funds totaling $17 billion for fiscal year 2023. The DCH is also responsible for administering the Children’s Health Insurance Program (CHIP) that provides child medical coverage to low-income families who exceed Medicaid income limits. The State may use managed care to deliver Medicaid and CHIP benefits and services. The DCH partners with private managed care organizations (MCO) that provide health services to members of Medicaid. Partnering with multiple organizations provides members with a choice of various health plans and allows them to choose the option that best fits their needs. As part of our fiscal year 2023 audit, we followed up on the DCH’s efforts to implement corrective action plans in response to the prior year findings in which we reported that the DCH did not have adequate controls in place to ensure the required managed care financial audits were being conducted and the results of the required periodic audits were posted on the State’s website. Although the DCH posted the required periodic audits on the State’s website, the DCH was unable to fully implement the corrective action plans related to updating the contracts prior to fiscal year-end. Criteria: As a recipient of federal awards, the DCH is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls. Pursuant to Title 42 CFR Section 438.3(m), the contract between the State and an MCO must require MCOs to submit audited financial reports specific to the Medicaid contract on an annual basis. The audit must be conducted in accordance with generally accepted accounting principles (GAAP) and generally accepted auditing standards. Additionally, pursuant to Title 42 CFR Section 438.602(e) and (g) and Title 42 CFR Section 457.1285, the DCH is required to 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 at least once every three years. Condition: Upon performing procedures associated with the MCO annual audited financial report submissions specific to Medicaid, it was noted that the contracts between the DCH and the MCOs did not contain the necessary clause requiring each MCO to submit their audited GAAP-basis financial report to the DCH. Cause: Staff turnover within the DCH led to delays in updating contract clauses and procedures associated with ensuring that each MCO submits audited GAAP-basis financial reports to the DCH in accordance with Medicaid regulations. Effect: Failure to ensure that appropriate clauses are included in contracts with the MCOs and that the MCOs are aware that audited GAAP-basis financial statements are to be submitted to the DCH increases the likelihood that inappropriate uses of Medicaid and CHIP funds may occur and not be detected by management in a timely manner. Furthermore, noncompliance with federal regulations may result in the grantor penalizing the DCH for noncompliance by suspending or terminating the award or withholding future awards. Recommendation: The DCH should revise the current contracts with the MCOs to include a clause requiring the MCOs to submit on an annual basis, to the DCH, audited GAAP-basis financial reports specific to the Medicaid contract. Views of Responsible Officials: We concur with this finding.
DCH revised it contracts with its CMOs to include the following language: 8.6.2 The Contractor shall submit to DCH audited financial reports specific to this Contract on an annual basis. The audit must be conducted in accordance with generally accepted accounting principles and generally accepted auditing standards. The above language was added to the DCH contract in June 2022.
2022-012
Our audit of the Medicaid program revealed deficiencies in the capitation payments paid to MCOs for Managed Care members. For a population of 55 million capitation payments paid to MCOs for Managed Care members, auditors utilized data analytics to compare the approved payment rates that should have been used to the actual rates used during the fiscal year under review and identified all capitation overpayments and underpayments. Based upon this review, we identified 1.7 million underpayments totaling $6,351,416 during the fiscal year under review. Cause: In August 2021, the Centers for Medicare and Medicaid Services (CMS) approved the rates that should have been used to calculate capitation payments during the period under review. The DCH actuary, then, updated these rates to account for risk adjustments. However, these rates were not accurately implemented in the Georgia Medicaid Management Information System (GAMMIS) resulting in improper payments to MCOs. Effect: Without effective controls in place, the DCH increases its risk of providing improper payments to MCOs and not detecting improper payments. The improper payments resulted in noncompliance with federal regulations. In addition, grant provisions allow the grantor to penalize DCH for noncompliance by suspending or terminating the award or withholding future awards. This may prevent eligible individuals from receiving benefits in the future. Recommendation: The DCH management should dedicate the necessary resources to enter accurate rates within GAMMIS each year to ensure improper capitation payments are not made to MCOs for Managed Care members. Views of Responsible Officials: We concur with this finding.
Show full finding ▾Hide full finding ▴2023-016 Improve Controls over Medicaid Capitation Payment Rates Compliance Requirement: Activities Allowed or Unallowed Allowable Costs/Cost Principles Internal Control Impact: Significant Deficiency Compliance Impact: Nonmaterial Noncompliance Federal Awarding Agency: U.S. Department of Health and Human Services Pass-Through Entity: None AL Numbers and Titles: 93.778 - Medical Assistance Program (Medicaid: Title XIX) 93.778 – COVID -19 – Medical Assistance Program (Medicaid: Title XIX) Federal Award Number: 2205GA5MAP (Year: 2022), 2305GA5MAP (Year: 2023) Questioned Costs: None Identified Repeat of Prior Year Finding: 2022-017 Description: The Department of Community Health made Medicaid capitation payments for Medicaid Managed Care recipients using the improper payment rates. Background Information: The Department of Community Health (DCH) administers the State of Georgia’s Medicaid program that provides payments for medical assistance to low-income individuals. Medicaid is one of the State’s largest public assistance programs with federal and state funds totaling $17 billion for fiscal year 2023. The DCH, the State’s Medicaid agency, administers Georgia’s managed-care program. The program is a partnership between the DCH and private care management organizations (MCOs). The State pays a monthly fixed rate per person (capitation rate) without regard to the actual medical services utilized to cover the costs of Medicaid claims. Managed care is a prepaid, comprehensive system of medical and health care delivery, including preventive, primary, specialty and ancillary health care services. The program is designed to reduce the cost of providing health benefits, improve the quality of care and deliver health care to clients. Capitation payments for the year totaled $6 billion (federal and state). As part of our fiscal year 2023 audit, we followed up on the DCH’s efforts to implement a corrective action plan in response to the prior year finding in which we reported that the DCH made Medicaid capitation payments for Medicaid Managed Care recipients using the improper payment rates. While corrective action plans associated with overpayments were implemented during the period under review, the DCH was unable to fully implement their corrective action plan and correct all rates prior to fiscal year-end. Criteria: As a recipient of federal awards, the DCH is required to establish and maintain effective internal controls over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) Section 200.303 – Internal Controls. The Uniform Guidance, Section 200.53 – Improper Payment states, “(a) Improper payment means any payment that should not have been made or that was made in an incorrect amount (including overpayments and underpayments) under statutory, contractual, administrative, or other legally applicable requirements; and (b) Improper payment includes any payment to an ineligible party, any payment for an ineligible good or service, any duplicate payment, any payment for a good or service not received (except for such payments where authorized by law), any payment that does not account for credit for applicable discounts, and any payment where insufficient or lack of documentation prevents a reviewer from discerning whether a payment was proper.” Condition: Our audit of the Medicaid program revealed deficiencies in the capitation payments paid to MCOs for Managed Care members. For a population of 55 million capitation payments paid to MCOs for Managed Care members, auditors utilized data analytics to compare the approved payment rates that should have been used to the actual rates used during the fiscal year under review and identified all capitation overpayments and underpayments. Based upon this review, we identified 1.7 million underpayments totaling $6,351,416 during the fiscal year under review. Cause: In August 2021, the Centers for Medicare and Medicaid Services (CMS) approved the rates that should have been used to calculate capitation payments during the period under review. The DCH actuary, then, updated these rates to account for risk adjustments. However, these rates were not accurately implemented in the Georgia Medicaid Management Information System (GAMMIS) resulting in improper payments to MCOs. Effect: Without effective controls in place, the DCH increases its risk of providing improper payments to MCOs and not detecting improper payments. The improper payments resulted in noncompliance with federal regulations. In addition, grant provisions allow the grantor to penalize DCH for noncompliance by suspending or terminating the award or withholding future awards. This may prevent eligible individuals from receiving benefits in the future. Recommendation: The DCH management should dedicate the necessary resources to enter accurate rates within GAMMIS each year to ensure improper capitation payments are not made to MCOs for Managed Care members. Views of Responsible Officials: We concur with this finding.
The Department acknowledges that some of the capitation rates in Georgia Medicaid Management Information System (GAMMIS) were inaccurate. The Department has completed the review of all capitation rates in GAMMIS from July 1, 2021. The Department will implement the following procedures to ensure capitation rates are accurate: (1) correct all inaccurate capitation rates in GAMMIS, (2) test rates in GAMMIS for accuracy prior to production and (3) re-process Per Member Per Month (PMPM) payments to correct inaccurate payments.
2022-017
Our audit of the Medicaid program revealed deficiencies in the capitation payments paid to MCOs for Managed Care members with Medicare insurance coverage. We obtained Medicare coverage information from the DCH for all Medicaid-eligible members. Using data analytics, we identified a total of 60 members who had Medicare coverage during the same month for which a monthly managed care capitation payment was made on their behalf. We tested all of these payments to determine if the DCH made monthly managed care premium payments for the members during the same time period the member’s Medicare coverage was effective. We found that the DCH made improper payments to MCOs for 59 out of the 60 members tested and these funds were not recouped. Additionally, we noted that for 59 out of 60 members tested, a retroactive Medicare effective date was issued, which was during the time period that managed care payments were made to MCOs. The DCH did discontinue paying the MCO after it received notification from Medicare of the member’s eligibility; however, they did not recoup the payments made to the MCOs for the retroactive period of Medicare coverage. Questioned Costs: Known questioned costs of $42,411 were identified for the capitation payments to MCOs for Managed Care members that were paid during the same time the Managed Care member was enrolled in Medicare. The Federal and State share of known questioned costs is approximately $30,824 and $11,587, respectively. Cause: The DCH completed modifications in GAMMIS to recoup capitation payments for Medicare eligible recipients; however, additional modifications are required and were not made due to the burden of the public health emergency. Effect: Without effective controls in place, the DCH increases its risk of providing and not detecting improper payments to MCOs. The improper capitation payments resulted in noncompliance with federal regulations and questioned costs. Improper payments could occur for an ineligible recipient that are unallowable and cannot be claimed for federal reimbursement. In addition, grant provisions allow the grantor to penalize the DCH for noncompliance by suspending or terminating the award or withholding future awards. Recommendation: The DCH management should continue to dedicate the necessary resources and execute their plan to ensure that modifications to retroactively recoup capitation payments from its MCOs upon receipt of notice that a member is eligible for Medicare are implemented appropriately within GAMMIS. The DCH should review Medicare effective dates for Managed Care members to determine whether potentially unallowable capitation payments have been identified. Additionally, the DCH should investigate and recover funds for all improper payments. The DCH should consult with the grantor to discuss whether the questioned costs identified in the audit should be repaid. Views of Responsible Officials: We concur with this finding.
Show full finding ▾Hide full finding ▴2023-017 Improve Controls over Medicaid Capitation Payments for Medicare Members Compliance Requirement: Activities Allowed or Unallowed Allowable Costs/Cost Principles Internal Control Impact: Significant Deficiency Compliance Impact: Nonmaterial Noncompliance Federal Awarding Agency: U.S. Department of Health and Human Services Pass-Through Entity: None AL Numbers and Titles: 93.778 - Medical Assistance Program (Medicaid: Title XIX) 93.778 – COVID -19 – Medical Assistance Program (Medicaid: Title XIX) Federal Award Number: 2205GA5MAP (Year 2022), 2305GA5MAP (Year 2023) Questioned Costs: $42,411 Repeat of Prior Year Findings: 2022-015, 2021-030, 2020-026, 2019-023 Description: The Department of Community Health made improper capitation payments for Medicaid Managed Care members with Medicare insurance coverage. Background Information: The Department of Community Health (DCH) administers the State of Georgia’s Medicaid program that provides payments for medical assistance to low-income individuals. Medicaid is one of the State’s largest public assistance programs with federal and state funds totaling $17 billion for fiscal year 2023. The DCH, the State’s Medicaid agency, administers Georgia’s managed-care program. The program is a partnership between the DCH and private managed care organizations (MCOs). The State pays a monthly fixed rate per person (capitation rate) without regard to the actual medical services utilized to cover the costs of Medicaid claims. Managed care is a prepaid, comprehensive system of medical and health care delivery, including preventive, primary, specialty and ancillary health care services. The program is designed to reduce the cost of providing health benefits, improve the quality of care and deliver health care to clients. Capitation payments for the year totaled $6 billion (federal and state). As part of our fiscal year 2023 audit, we followed up on the DCH’s efforts to implement a corrective action plan in response to the prior year findings in which we reported that the DCH made improper capitation payments for Medicaid Managed Care members with Medicare insurance coverage. However, the DCH was unable to fully implement their corrective action plan and apply modifications to the Georgia Medicaid Management Information System (GAMMIS) prior to fiscal year-end. Criteria: As a recipient of federal awards, the DCH is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) Section 200.303 – Internal Controls. The Uniform Guidance, Section 200.53 – Improper Payment states, “(a) Improper payment means any payment that should not have been made or that was made in an incorrect amount (including overpayments and underpayments) under statutory, contractual, administrative, or other legally applicable requirements; and (b) Improper payment includes any payment to an ineligible party, any payment for an ineligible good or service, any duplicate payment, any payment for a good or service not received (except for such payments where authorized by law), any payment that does not account for credit for applicable discounts, and any payment where insufficient or lack of documentation prevents a reviewer from discerning whether a payment was proper.” Additionally, U.S. Code Title 42, Chapter 7 – Social Security, Subchapter XIX – Grants to States for Medical Assistance Programs, Section 1396u-2 – Provisions relating to managed care, states “a state may not require… the enrollment in a managed care entity of an individual who is a qualified Medicare beneficiary…” Furthermore, according to the DCH’s state plan, Medicare recipients should not be enrolled in managed care, and any monthly premium payments made for Medicare recipients are unallowable. Condition: Our audit of the Medicaid program revealed deficiencies in the capitation payments paid to MCOs for Managed Care members with Medicare insurance coverage. We obtained Medicare coverage information from the DCH for all Medicaid-eligible members. Using data analytics, we identified a total of 60 members who had Medicare coverage during the same month for which a monthly managed care capitation payment was made on their behalf. We tested all of these payments to determine if the DCH made monthly managed care premium payments for the members during the same time period the member’s Medicare coverage was effective. We found that the DCH made improper payments to MCOs for 59 out of the 60 members tested and these funds were not recouped. Additionally, we noted that for 59 out of 60 members tested, a retroactive Medicare effective date was issued, which was during the time period that managed care payments were made to MCOs. The DCH did discontinue paying the MCO after it received notification from Medicare of the member’s eligibility; however, they did not recoup the payments made to the MCOs for the retroactive period of Medicare coverage. Questioned Costs: Known questioned costs of $42,411 were identified for the capitation payments to MCOs for Managed Care members that were paid during the same time the Managed Care member was enrolled in Medicare. The Federal and State share of known questioned costs is approximately $30,824 and $11,587, respectively. Cause: The DCH completed modifications in GAMMIS to recoup capitation payments for Medicare eligible recipients; however, additional modifications are required and were not made due to the burden of the public health emergency. Effect: Without effective controls in place, the DCH increases its risk of providing and not detecting improper payments to MCOs. The improper capitation payments resulted in noncompliance with federal regulations and questioned costs. Improper payments could occur for an ineligible recipient that are unallowable and cannot be claimed for federal reimbursement. In addition, grant provisions allow the grantor to penalize the DCH for noncompliance by suspending or terminating the award or withholding future awards. Recommendation: The DCH management should continue to dedicate the necessary resources and execute their plan to ensure that modifications to retroactively recoup capitation payments from its MCOs upon receipt of notice that a member is eligible for Medicare are implemented appropriately within GAMMIS. The DCH should review Medicare effective dates for Managed Care members to determine whether potentially unallowable capitation payments have been identified. Additionally, the DCH should investigate and recover funds for all improper payments. The DCH should consult with the grantor to discuss whether the questioned costs identified in the audit should be repaid. Views of Responsible Officials: We concur with this finding.
DCH has implemented the programming changes in Georgia Medicaid Management Information System (GAMMIS) to recoup capitation payments dating back to April 1, 2023 for members who were deemed retroactively eligible for Medicare. For any current Managed Care Organization (MCO) member that gets retroactive Medicare coverage, that member’s MCO capitation payments are recouped back to the day before the effective date of the Medicare benefit or back to 4/1/23 whichever is later. A monthly report entitled MGD-4218-M captures the recoupment activity.
2022-015
See Financial Finding at 2023-003. Cause: See Financial Finding at 2023-003. Effect: See Financial Finding at 2023-003. Recommendation: See Financial Finding at 2023-003. Views of Responsible Officials: DCH agrees with the finding.
Show full finding ▾Hide full finding ▴2023-018 Continue to Strengthen Application Risk Management Program Compliance Requirement: Special Tests and Provisions Internal Control Impact: Significant Deficiency Compliance Impact: Nonmaterial Noncompliance Federal Awarding Agency: U.S. Department of Health and Human Services Pass-Through Entity: None AL Numbers and Titles: 93.778 - Medical Assistance Program (Medicaid: Title XIX) 93.778 – COVID -19 – Medical Assistance Program (Medicaid: Title XIX) Federal Award Number: 2205GA5MAP (Year 2022), 2205GA5ADM (Year: 2022), 2305GA5MAP (Year: 2023), 2305GA5ADM (Year: 2023) Questioned Costs: None Identified Repeat of Prior Year Findings: 2022-018, 2021-031, 2020-028, 2019-024, 2018-026, 2017-037, 2016-044 Description: The Department of Community Health should continue to strengthen controls over its application risk management program. Background Information: See Financial Finding at 2023-003. Criteria: See Financial Finding at 2023-003. Condition: See Financial Finding at 2023-003. Cause: See Financial Finding at 2023-003. Effect: See Financial Finding at 2023-003. Recommendation: See Financial Finding at 2023-003. Views of Responsible Officials: DCH agrees with the finding.
DCH completed most of the action items in the Corrective Action Plan (CAP) during fiscal year 2023 and has continued towards completion during fiscal year 2024. All identified security vulnerabilities have been addressed, which have significantly enhanced DCH’s overall cybersecurity posture. Key achievements include enhanced staffing (CISO, Cybersecurity Engineer, Senior Cybersecurity Analyst, and ten cybersecurity interns), and the introduction of 20 organization-wide security policies aligned with National Institute of Standards and Technology (NIST) Federal Computer Security Standards. The closeout of the remaining CAP remediation tasks is set to be completed by the end of February 2024.
2022-018
Upon completing procedures to ensure that the DCH complied with NCCI requirements, auditors reviewed the confidentiality agreement in place between the DCH and Gainwell Technologies (Gainwell), the contracted party that the DCH utilized to perform duties, such as processing Medicaid claims, implementing NCCI edit files, and performing other pertinent activities related to the management of the State’s Medicaid program. It was noted that the confidentiality agreement in place between the DCH and Gainwell did not contain any of the seven required elements reflected in the NCCI Technical Guidance Manual for Medicaid Services. Cause: The DCH has experienced turnover over the past few fiscal years and was unable to make the appropriate modifications to the confidentiality agreement in place between the DCH and Gainwell to ensure that all required elements pursuant to the Medicaid NCCI Technical Guidance Manual were included within the agreement prior to fiscal year-end. Effect: The deficiency in internal controls over confidentiality agreements with contracted parties resulted in noncompliance with federal regulations. Additionally, failure to include appropriate elements in confidentiality agreements may lead to comprises associated with Medicaid beneficiaries’ personal information. Furthermore, noncompliance with federal regulations may result in the grantor penalizing the DCH for noncompliance by suspending or terminating the award or withholding future awards. Recommendation: The DCH should revise its confidentiality agreement with Gainwell to minimize the risk to the confidentiality, integrity and availability of the Medicaid NCCI files and data. The confidentiality agreement should include at a minimum the elements required pursuant to Section 7.1.3 of the NCCI Technical Guidance Manual for Medicaid Services. Views of Responsible Officials: We concur with this finding.
Show full finding ▾Hide full finding ▴2023-019 Strengthen Controls over NCCI Program Requirements Compliance Requirement: Special Tests and Provisions Internal Control Impact: Significant Deficiency Compliance Impact: Nonmaterial Noncompliance Federal Awarding Agency: U.S. Department of Health and Human Services Pass-Through Entity: None AL Numbers and Titles: 93.778 - Medical Assistance Program (Medicaid: Title XIX) 93.778 – COVID -19 – Medical Assistance Program (Medicaid: Title XIX) Federal Award Number: 2205GA5MAP (Year 2022), 2305GA5MAP (Year 2023) Questioned Costs: None Identified Repeat of Prior Year Findings: 2022-019 Description: The Department of Community Health does not have adequate controls in place to ensure the confidentiality agreements with contracted parties contain all required elements. Background Information: The Department of Community Health (DCH) administers the State of Georgia’s Medicaid program that provides payments for medical assistance to low-income individuals. Medicaid is one of the State’s largest public assistance programs with federal and state funds totaling $17 billion for fiscal year 2023. State Medicaid Agencies, including the DCH, are required to incorporate National Correct Coding Initiative (NCCI) methodologies into the state Medicaid programs pursuant to the requirements in Section 6507 of the Affordable Care Act. The purpose of the NCCI Program is to promote correct coding, prevent coding errors, prevent code manipulation, reduce improper payments and reduce the paid claims improper payment rate. As part of our fiscal year 2023 audit, we followed up on the DCH’s efforts to implement a corrective action plan in response to the prior year findings in which we reported that the DCH did not have adequate controls in place to ensure the confidentiality agreements with contracted parties contain all required elements. While the DCH drafted a new confidentiality agreement during the period under review, the DCH was unable to fully implement their corrective action plan and execute this agreement prior to fiscal year-end. Criteria: As a recipient of federal awards, the DCH is required to establish and maintain effective internal controls over federal awards that provide reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls. In implementing NCCI methodologies, the DCH must follow additional requirements reflected within the NCCI Technical Guidance Manual for Medicaid Services. Specifically, Section 7.1.3 – Confidentiality Agreements Requirements for Contracted Parties of the NCCI Technical Guidance Manual for Medicaid Services requires the DCH to include specific elements in confidentiality agreements with contracted parties. Condition: Upon completing procedures to ensure that the DCH complied with NCCI requirements, auditors reviewed the confidentiality agreement in place between the DCH and Gainwell Technologies (Gainwell), the contracted party that the DCH utilized to perform duties, such as processing Medicaid claims, implementing NCCI edit files, and performing other pertinent activities related to the management of the State’s Medicaid program. It was noted that the confidentiality agreement in place between the DCH and Gainwell did not contain any of the seven required elements reflected in the NCCI Technical Guidance Manual for Medicaid Services. Cause: The DCH has experienced turnover over the past few fiscal years and was unable to make the appropriate modifications to the confidentiality agreement in place between the DCH and Gainwell to ensure that all required elements pursuant to the Medicaid NCCI Technical Guidance Manual were included within the agreement prior to fiscal year-end. Effect: The deficiency in internal controls over confidentiality agreements with contracted parties resulted in noncompliance with federal regulations. Additionally, failure to include appropriate elements in confidentiality agreements may lead to comprises associated with Medicaid beneficiaries’ personal information. Furthermore, noncompliance with federal regulations may result in the grantor penalizing the DCH for noncompliance by suspending or terminating the award or withholding future awards. Recommendation: The DCH should revise its confidentiality agreement with Gainwell to minimize the risk to the confidentiality, integrity and availability of the Medicaid NCCI files and data. The confidentiality agreement should include at a minimum the elements required pursuant to Section 7.1.3 of the NCCI Technical Guidance Manual for Medicaid Services. Views of Responsible Officials: We concur with this finding.
In February 2024, DCH and a third party executed a contract amendment which incorporates the required provisions per section 7.1.3 of the NCCI Technical Guidance Manual.
2022-019
Our examination of reporting requirements associated with the Aging Cluster, LIHWAP, LIHEAP, and SSBG programs revealed that the DHS failed to submit subaward data to the FSRS. Therefore, all first-tier subawards of $30,000 or more, and the associated subaward data, was not reflected on the USASpending.gov website as required. Cause: Through discussion with management, it was noted that high staff turnover caused delays reporting information by the required deadlines. Additionally, the reporting procedures in place did not clearly identify the roles and responsibilities of personnel involved in the FFATA reporting process related to these programs, and therefore, subaward information was not reported through the FSRS appropriately. Furthermore, the DHS has insufficient procedures for monitoring the status of reporting of applicable subawards in the FSRS as required by the FFATA. Effect: The deficiencies noted in the FFATA reporting process resulted in noncompliance with federal regulations. Without effective controls in place to ensure compliance with federal reporting requirements, the transparency objective associated with the FFATA requirements was not achieved as the general public was unable to review expenditure data associated with the State of Georgia’s Aging Cluster, LIHWAP, LIHEAP, and SSBG programs. Recommendation: We recommend that the DHS: • Follow established processes and procedures associated with the FFATA reporting requirements; • Clearly define roles and responsibilities for personnel involved in the reporting process to ensure that all programs are reported appropriately; and • Incorporate additional oversight, training, and/or staff to aid in the identification of subawards to be reported and the reporting of appropriate data elements, as applicable, in a timely manner. Views of Responsible Officials: The Georgia Department of Human Services (DHS) concurs with the finding.
Show full finding ▾Hide full finding ▴2023-020 Improve Controls over Transparency Act Reporting Compliance Requirement: Reporting Internal Control Impact: Material Weakness Compliance Impact: Material Noncompliance Federal Awarding Agency: U.S. Department of Health and Human Services Pass-Through Entity: None AL Numbers and Titles: 93.044 – Special Programs for the Aging, Title III, Part B, Grants for Supportive Services and Senior Centers 93.044 – COVID-19 – Special Programs for the Aging, Title III, Part B, Grants for Supportive Services and Senior Centers 93.045 – Special Programs for the Aging, Title III, Part C, Nutrition Services 93.045 – COVID-19 – Special Programs for the Aging, Title III, Part C, Nutrition Services 93.053 – Nutrition Services Incentive Program 93.499 – COVID-19 – Low-Income Household Water Assistance Program 93.568 – Low-Income Home Energy Assistance Program 93.568 – COVID-19 – Low-Income Home Energy Assistance Program 93.667 – Social Services Block Grant Federal Award Numbers: 2301GAOANS (Year: 2023), 2301GAOAHD (Year: 2023), 2301GAOACM (Year: 2023), 2301GAOASS (Year: 2023), 2201GASTPH (Year: 2022), 2201GAOANS (Year: 2022), 2201GAOAHD (Year: 2022), 2201GAOACM (Year: 2022), 2201GAOASS (Year: 2022), 2101GAHDC6 (Year: 2021), 2101GACMC6 (Year: 2021), 2101GAHDC5 (Year: 2021), 2101GASSC6 (Year: 2021), 2101GAVAC5 (Year: 2021), 2101GAOANS (Year: 2021), 2101GAOAHD (Year: 2021), 2101GAOACM (Year: 2021), 2101GAOASS (Year: 2021), 2001GAHDC3 (Year: 2020), 2001GACMC2 (Year: 2020), 2001GAHDC2 (Year: 2020), 2001GASSC3 (Year: 2020), 2001GAOAHD (Year: 2020), 2001GAOACM (Year: 2020), 2001GAOASS (Year: 2020), 2101GALWC6 (Year: 2021), 2101GALWC5 (Year: 2021), 2301GALIEI (Year: 2023), 2301GALIEA (Year: 2023), 2201GALIEI (Year: 2022), 2201GALIEA (Year: 2022), 2101GAE5C6 (Year: 2021), 2101GALIEA (Year: 2021), 1901GALIEA (Year: 2019), 2301GASOSR (Year: 2023), 2201GASOSR (Year: 2022), 2101GASOSR (Year: 2021) Questioned Costs: None Identified Repeat of Prior Year Finding: 2022-022 Description: The Georgia Department of Human Services should improve internal controls to ensure that subaward information associated with the Federal Funding Accountability and Transparency Act is reported appropriately and timely. Background Information: The Aging Cluster is comprised of various programs that are intended to assist states and area agencies on aging in facilitating the development and implementation of a comprehensive, coordinated system for providing long-term in home and community-based settings, in a manner responsive to the needs and preferences of older individuals and their family caregivers; providing nutrition services to reduce hunger and food insecurity, promote socialization of older individuals, and promote the health and well-being of older individuals by helping them gain access to nutrition and other disease prevention and health promotion services to delay the onset of adverse health conditions resulting from poor nutritional health or sedentary behavior; and providing resource incentives to encourage and reward effective and efficient performance in the delivery of nutritious meals to older individuals. The Low-Income Household Water Assistance Program (LIHWAP) was established as part of the federal government’s response to the COVID-19 pandemic. The program is designed to assist low-income households pay for drinking water and wastewater services. The Department of Human Services (DHS) administers LIHWAP for the State of Georgia. Funds are issued by the DHS on behalf of eligible households to owners or operators of public water systems or treatment works to reduce delinquencies of and rates charged to such households for those services. The Low-Income Home Energy Assistance Program (LIHEAP) is a federal program that makes awards available to states, territories, and Native American tribes for the purpose of assisting low-income households meet the costs of home energy, increase their energy self-sufficiency, and reduce their vulnerability resulting from energy needs. Through LIHEAP, states provide federally funded assistance to meet the costs associated with home energy bills and low-cost weatherization and provide energy crisis support. The Social Services Block Grant (SSBG) is a flexible funding source that allows states and territories to tailor social service programming to their population’s needs. Through the SSBG, states provide essential social services that help achieve a myriad of goals to reduce dependency and promote self-sufficiency; protect children and adults from neglect, abuse, and exploitation; and help individuals who are unable to take care of themselves to stay in their homes or to find the best institutional arrangements. Funds associated with the Aging Cluster, LIHWAP, LIHEAP, and SSBG programs are provided to the DHS for allocation to eligible subrecipients. Because the DHS subgrants program funds to various entities, the DHS must comply with the Federal Funding Accountability and Transparency Act of 2006 (FFATA). The FFATA requirements were signed into law on September 26, 2006 in an effort to give the American public access to information on how their tax dollars are being spent. This information, including information associated with the use of the Aging Cluster, LIHWAP, LIHEAP, and SSBG program funds, is accessible via the USASpending.gov website. As part of our fiscal year 2023 audit, we followed up on efforts to implement a corrective action plan in response to the prior year findings in which we reported that the DHS failed to submit subaward data for the LIHWAP and SSBG programs to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). However, the DHS was unable to fully implement their corrective action plans prior to fiscal year-end. Criteria: As a recipient of federal awards, the DHS is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls. Under the FFATA (Public Law 109-282), as codified in Title 2 CFR Part 170, Reporting Subaward and Executive Compensation Information, recipients of grants or cooperative agreements, including the DHS, who make first-tier subawards of $30,000 or more are required to register in the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Subaward data, such as the subaward date, sub awardee Data Universal Numbering System number, amount of subaward, subaward obligation/action date, date of report submission, and subaward number, are submitted through the FSRS and accessible to the general public through the USASpending.gov website. Condition: Our examination of reporting requirements associated with the Aging Cluster, LIHWAP, LIHEAP, and SSBG programs revealed that the DHS failed to submit subaward data to the FSRS. Therefore, all first-tier subawards of $30,000 or more, and the associated subaward data, was not reflected on the USASpending.gov website as required. Cause: Through discussion with management, it was noted that high staff turnover caused delays reporting information by the required deadlines. Additionally, the reporting procedures in place did not clearly identify the roles and responsibilities of personnel involved in the FFATA reporting process related to these programs, and therefore, subaward information was not reported through the FSRS appropriately. Furthermore, the DHS has insufficient procedures for monitoring the status of reporting of applicable subawards in the FSRS as required by the FFATA. Effect: The deficiencies noted in the FFATA reporting process resulted in noncompliance with federal regulations. Without effective controls in place to ensure compliance with federal reporting requirements, the transparency objective associated with the FFATA requirements was not achieved as the general public was unable to review expenditure data associated with the State of Georgia’s Aging Cluster, LIHWAP, LIHEAP, and SSBG programs. Recommendation: We recommend that the DHS: • Follow established processes and procedures associated with the FFATA reporting requirements; • Clearly define roles and responsibilities for personnel involved in the reporting process to ensure that all programs are reported appropriately; and • Incorporate additional oversight, training, and/or staff to aid in the identification of subawards to be reported and the reporting of appropriate data elements, as applicable, in a timely manner. Views of Responsible Officials: The Georgia Department of Human Services (DHS) concurs with the finding.
The Corrective Action Plan is as follows. The Georgia Department of Human Services (DHS) is redesigning its Contract Development and Procurement processes. With the new design, the accountability for Federal Funding Accountability and Transparency Act (FFATA) reporting will be with a new Office of Procurement Services (OPS). The OPS resources dedicated to FFATA will be trained on all reporting requirements by DHS. The expected implementation of the new processes by December 2024.
2022-022
Our audit of the MHBG program included a review of adjustments with performance period ending dates during the audit period to ensure that the amounts were obligated and liquidated within the appropriate time period. Two adjustments were identified as the population, and both were selected for testing. It was noted that both of these transactions were not liquidated within 90 days of the end of the period of performance as required. Additionally, these adjustments were not identified by the DBHDD and reclassified to an appropriate, subsequent award number as is reflected within the DBHDD’s internal policy. Questioned Costs: Known questioned costs of $1,996,195.46 related to the MHBG program were identified for expenditures that were paid outside of the allowable liquidation period. These known questioned costs related to expenditures were not tested as part of a sample, and therefore, should not be projected to a population to determine likely questioned costs. Cause: While the DBHDD had established procedures in place to comply with the period of performance requirements for federal awards, human error and a lack of appropriate oversight contributed to the errors identified by auditors. Also, the DBHDD policy governing period of performance does not address the correction of errors in a timely manner as the policy only recommends that corrections be completed during the close-out process for the grant award. Effect: The deficiencies noted in the period of performance process resulted in noncompliance with federal regulations. Without effective controls in place to ensure compliance with federal period of performance requirements, the DBHDD is at a higher risk of making improper payments and performing inaccurate financial reporting. Recommendation: We recommend that the DBHDD: • Update policy, processes, and procedures associated with period of performance requirements to recommend corrections be made in a timely manner. • Follow currently established grant close-out processes and procedures associated with period of performance requirements. • Incorporate additional oversight, training, and/or staff to aid in the identification of the period of performance to ensure costs are associated with the correct fund source. Views of Responsible Officials: DBHDD concurs with the audit finding.
Show full finding ▾Hide full finding ▴2023-021 Improve Controls over Period of Performance Compliance Requirement: Period of Performance Internal Control Impact: Material Weakness Compliance Impact: Material Noncompliance Federal Awarding Agency: U.S. Department of Health and Human Services Pass-Through Entity: None AL Number and Title: 93.958 – Block Grants for Community Mental Health Federal Award Number: B09SM083833 (Year: 2021) Questioned Costs: $1,996,195.46 Repeat of Prior Year Finding: 2022-024 Description: The Georgia Department of Behavioral Health and Developmental Disabilities should improve internal controls to ensure that program costs are obligated within the period of performance and liquidated within the allowed time period. Background Information: The Community Mental Health Services Block Grant (MHBG) program was created to provide funds to states and territories to enable them to carry out their respective plans for providing comprehensive community-based mental health services for adults with serious mental illness and children with serious emotional disturbances. MHBG program funds are allocated to individual states based upon a formula. This funding may be distributed to cities, counties, or service providers within each state to carry out activities associated with the state plan. Funds associated with the MHBG program are administered by the Department of Behavioral Health and Developmental Disabilities (DBHDD). The DBHDD is responsible for becoming familiar with the performance period during which recipients must obligate and liquidate costs for this program. These periods typically align with the federal fiscal year of October 1 through September 30, and payments for costs incurred before a grant award’s beginning date or after the liquidation period are not allowed without the grantor’s prior approval. Criteria: As a recipient of federal awards, the DBHDD is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls. Provisions included in the Uniform Guidance, Section 200.403 – Factors Affecting Allowability of Costs state that “costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles, (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items, (c) Be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the non-Federal entity… (g) Be adequately documented, (h) Cost must be incurred during the approved budget period…” Additionally, provisions included in the Uniform Guidance, Section 200.77 state, “Period of performance means the time during which the non-Federal entity may incur new obligations to carry out the work authorized under the Federal award.” Further, the DBHDD’s policies 17-202 – Federal Fund Source and Parent Project Code Assignments and 17-203 – Federal Financial Report Preparation, Reconciliation, and Submission prescribe actions that must be taken by staff to ensure that costs are obligated, incurred, and liquidated within the appropriate period as specified in each grant award’s terms and conditions. Condition: Our audit of the MHBG program included a review of adjustments with performance period ending dates during the audit period to ensure that the amounts were obligated and liquidated within the appropriate time period. Two adjustments were identified as the population, and both were selected for testing. It was noted that both of these transactions were not liquidated within 90 days of the end of the period of performance as required. Additionally, these adjustments were not identified by the DBHDD and reclassified to an appropriate, subsequent award number as is reflected within the DBHDD’s internal policy. Questioned Costs: Known questioned costs of $1,996,195.46 related to the MHBG program were identified for expenditures that were paid outside of the allowable liquidation period. These known questioned costs related to expenditures were not tested as part of a sample, and therefore, should not be projected to a population to determine likely questioned costs. Cause: While the DBHDD had established procedures in place to comply with the period of performance requirements for federal awards, human error and a lack of appropriate oversight contributed to the errors identified by auditors. Also, the DBHDD policy governing period of performance does not address the correction of errors in a timely manner as the policy only recommends that corrections be completed during the close-out process for the grant award. Effect: The deficiencies noted in the period of performance process resulted in noncompliance with federal regulations. Without effective controls in place to ensure compliance with federal period of performance requirements, the DBHDD is at a higher risk of making improper payments and performing inaccurate financial reporting. Recommendation: We recommend that the DBHDD: • Update policy, processes, and procedures associated with period of performance requirements to recommend corrections be made in a timely manner. • Follow currently established grant close-out processes and procedures associated with period of performance requirements. • Incorporate additional oversight, training, and/or staff to aid in the identification of the period of performance to ensure costs are associated with the correct fund source. Views of Responsible Officials: DBHDD concurs with the audit finding.
The Department has instituted additional internal controls to ensure that expenditures are liquidated within 90 days of the end of the period of performance as required. This includes a monthly reconciliation of all federal sources performed by the Grants Manager and reviewed by the respective Budget Manager and Finance Director to address any identified issues before the liquidation date. As a redundancy measure, the Budget Manager reviews AP contract activity associated with federal fund sources via the Provider Utilization Report to monitor the liquidation rate in correlation with the liquidation date to ensure all expenditures are captured within the period of performance. Post-liquidation date journal activity is mainly aligned with transactional code cleanup, not necessarily new expense posting outside the period of performance. As such, it doesn’t include or constitute changes to previously submitted federal reporting. To mitigate transactional errors, the Budget Manager, in coordination with the Grants Manager, thoroughly reviews the coding of procurement requests that utilize federal funds for the appropriateness of use and accuracy. This includes deactivating federal fund sources in the statewide accounting system to prevent transactions posting outside of the period of performance. These additional internal controls related to the period of performance were implemented in July 2023. The Office of Internal Audit will perform a review of the updated processes to ensure they are effective in correcting the above findings no later than March 31, 2024.
2022-024
Our audit of the SABG program included a review of expenditures with performance period beginning dates during the audit period to ensure that costs were not incurred before the allowable time period. Six expenditures were identified as the population and were all selected for testing. It was noted that three expenditures reviewed were incurred before the period of performance. In addition, our audit of the SABG program included a review of adjustments with a performance period ending date during the audit period. One adjustment was identified as the population and tested to ensure that the amounts were obligated and liquidated within the appropriate time period. It was noted that this transaction was not posted within 90 days of the end of the period of performance as required. Additionally, this expenditure was not identified by the DBHDD and reclassified to an appropriate, subsequent award number as is reflected within the DBHDD’s internal policy. Questioned Costs: Known questioned costs of $221,131.74 related to the SABG program were identified for expenditures that were incurred before the period of performance or paid outside of the allowable liquidation period. These known questioned costs related to expenditures were not tested as part of a sample, and therefore, should not be projected to a population to determine likely questioned costs. Cause: While the DBHDD had established procedures in place to comply with the period of performance requirements for federal awards, human error and a lack of appropriate oversight contributed to the errors identified by auditors. Also, the DBHDD policy governing period of performance does not address the correction of errors in a timely manner as the policy only recommends that corrections be completed during the close-out process for the grant award. Effect: The deficiencies noted in the period of performance process resulted in noncompliance with federal regulations. Without effective controls in place to ensure compliance with federal period of performance requirements, the DBHDD is at a higher risk of making improper payments and performing inaccurate financial reporting. Recommendation: We recommend that the DBHDD: • Update policy, processes, and procedures associated with period of performance requirements to recommend corrections be made in a timely manner. • Follow currently established grant close-out processes and procedures associated with period of performance requirements. • Incorporate additional oversight, training, and/or staff to aid in the identification of the period of performance to ensure costs are associated with the correct fund source. Views of Responsible Officials: DBHDD concurs with the audit finding.
Show full finding ▾Hide full finding ▴2023-022 Improve Controls over Period of Performance Compliance Requirement: Period of Performance Internal Control Impact: Significant Deficiency Compliance Impact: Nonmaterial Noncompliance Federal Awarding Agency: U.S. Department of Health and Human Services Pass-Through Entity: None AL Number and Title: 93.959 – Block Grants for Prevention and Treatment of Substance Abuse Federal Award Numbers: B08TI085799 (Year: 2023), 1B08TI083442-01 (Year: 2021) Questioned Costs: $221,131.74 Description: The Georgia Department of Behavioral Health and Developmental Disabilities should improve internal controls to ensure that program costs are obligated within the period of performance and liquidated within the allowed time period. Background Information: The objective of the Substance Abuse Prevention and Treatment Block Grant (SABG) program is to provide funds to states, territories, and one Indian tribe for the purpose of planning, carrying out, and evaluating activities to prevent and treat Substance Abuse (SA) and other related activities as authorized by the statute. Funds associated with the SABG program are administered by the Department of Behavioral Health and Developmental Disabilities (DBHDD). The DBHDD is responsible for becoming familiar with the performance period during which recipients must obligate and liquidate costs for this program. These periods typically align with the federal fiscal year of October 1 through September 30, and payments for costs incurred before a grant award’s beginning date or after the liquidation period are not allowed without the grantor’s prior approval. Criteria: As a recipient of federal awards, the DBHDD is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls. Provisions included in the Uniform Guidance, Section 200.403 – Factors Affecting Allowability of Costs state that “costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles, (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items, (c) Be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the non-Federal entity… (g) Be adequately documented, (h) Cost must be incurred during the approved budget period…” Additionally, provisions included in the Uniform Guidance, Section 200.77 state, “Period of performance means the time during which the non-Federal entity may incur new obligations to carry out the work authorized under the Federal award.” Further, the DBHDD’s policies 17-202 – Federal Fund Source and Parent Project Code Assignments and 17-203 – Federal Financial Report Preparation, Reconciliation, and Submission prescribe actions that must be taken by staff to ensure that costs are obligated, incurred, and liquidated within the appropriate period as specified in each grant award’s terms and conditions. Condition: Our audit of the SABG program included a review of expenditures with performance period beginning dates during the audit period to ensure that costs were not incurred before the allowable time period. Six expenditures were identified as the population and were all selected for testing. It was noted that three expenditures reviewed were incurred before the period of performance. In addition, our audit of the SABG program included a review of adjustments with a performance period ending date during the audit period. One adjustment was identified as the population and tested to ensure that the amounts were obligated and liquidated within the appropriate time period. It was noted that this transaction was not posted within 90 days of the end of the period of performance as required. Additionally, this expenditure was not identified by the DBHDD and reclassified to an appropriate, subsequent award number as is reflected within the DBHDD’s internal policy. Questioned Costs: Known questioned costs of $221,131.74 related to the SABG program were identified for expenditures that were incurred before the period of performance or paid outside of the allowable liquidation period. These known questioned costs related to expenditures were not tested as part of a sample, and therefore, should not be projected to a population to determine likely questioned costs. Cause: While the DBHDD had established procedures in place to comply with the period of performance requirements for federal awards, human error and a lack of appropriate oversight contributed to the errors identified by auditors. Also, the DBHDD policy governing period of performance does not address the correction of errors in a timely manner as the policy only recommends that corrections be completed during the close-out process for the grant award. Effect: The deficiencies noted in the period of performance process resulted in noncompliance with federal regulations. Without effective controls in place to ensure compliance with federal period of performance requirements, the DBHDD is at a higher risk of making improper payments and performing inaccurate financial reporting. Recommendation: We recommend that the DBHDD: • Update policy, processes, and procedures associated with period of performance requirements to recommend corrections be made in a timely manner. • Follow currently established grant close-out processes and procedures associated with period of performance requirements. • Incorporate additional oversight, training, and/or staff to aid in the identification of the period of performance to ensure costs are associated with the correct fund source. Views of Responsible Officials: DBHDD concurs with the audit finding.
The Department has instituted additional internal controls to ensure that expenditures are liquidated within 90 days of the end of the period of performance as required. This includes a monthly reconciliation of all federal sources performed by the Grants Manager and reviewed by the respective Budget Manager and Finance Director to address any identified issues before the liquidation date. As a redundancy measure, the Budget Manager reviews AP contract activity associated with federal fund sources via the Provider Utilization Report to monitor the liquidation rate in correlation with the liquidation date to ensure all expenditures are captured within the period of performance. Post-liquidation date journal activity is mainly aligned with transactional code cleanup, not necessarily new expense posting outside the period of performance. As such, it doesn’t include or constitute changes to previously submitted federal reporting. To mitigate transactional errors, the Budget Manager, in coordination with the Grants Manager, thoroughly reviews the coding of procurement requests that utilize federal funds for the appropriateness of use and accuracy. This includes deactivating federal fund sources in the statewide accounting system to prevent transactions posting outside of the period of performance. These additional internal controls related to the period of performance were implemented in July 2023. The Office of Internal Audit will perform a review of the updated processes to ensure they are effective in correcting the above findings no later than March 31, 2024.
Our audit of the MHBG and SABG programs revealed there was no evidence of review and approval over the FFR and FFATA reports. Additionally, upon performing testing over FFATA reporting, auditors noted the following deficiencies: • A sample of eight first-tier subawards of $30,000 or more associated with the MHBG program was randomly selected for testing using a non-statistical sampling method. Auditors examined documentation to determine if the subrecipient’s information was properly reported on the USASpending.gov website. Testing revealed that one subaward was not reported totaling $562,372.54, four subaward amounts were overstated by $3,639,860.00, and all eight subawards were missing key elements and were not reported timely. • A sample of twenty-two subawards of $30,000 or more associated with the SABG program was randomly selected for testing using a non-statistical sampling method. Auditors examined documentation to determine if the subrecipient’s information was properly reported on the USASpending.gov website. Testing revealed that nine subawards were not reported totaling $3,870,970.00, two subaward amounts were overstated by $321,000.00, and all 22 subawards were missing key elements and were not reported timely. Cause: Formal internal control processes have not been established for the FFATA reporting requirement due in part to a lack of sufficient staffing at the agency. As a result, noncompliance occurred with respect to FFATA reporting. Additionally, control processes have not been documented for the FFR reports. Effect: The deficiencies noted in the FFATA reporting process resulted in noncompliance with federal regulations. Without effective controls in place to ensure compliance with federal reporting requirements, the transparency objective associated with the FFATA requirements was not achieved as the general public was unable to review accurate expenditure data associated with the State of Georgia’s MHBG and SABG programs. Furthermore, though it does not appear that inappropriate information was transmitted on the FFR reports, this could occur if appropriate controls are not documented and functioning properly. Recommendation: We recommend that the DBHDD: • Establish and document processes and procedures associated with the FFR and FFATA reporting requirements; • Incorporate additional oversight, training, and/or staff to aid in the identification of subawards to be reported and the reporting of appropriate data elements, as applicable, in a timely manner; and • Review, update, and maintain documentation of subaward agreements and the determination of whether each subaward should be entered into the FSRS in compliance with the FFATA reporting requirements. Views of Responsible Officials: DBHDD concurs with the audit finding.
Show full finding ▾Hide full finding ▴2023-023 Improve Controls over Reporting Compliance Requirement: Reporting Internal Control Impact: Material Weakness Compliance Impact: Material Noncompliance Federal Awarding Agency: U.S. Department of Health and Human Services Pass-Through Entity: None AL Numbers and Titles: 93.958 – Block Grants for Community Mental Health Services 93.958 – COVID-19 – Block Grants for Community Mental Health Services 93.959 – Block Grants for Prevention and Treatment of Substance Abuse 93.959 – COVID-19 – Block Grants for Prevention and Treatment of Substance Abuse Federal Award Numbers: B09SM083833 (Year: 2021), B09SM086001 (Year: 2022), B09SM087352 (Year: 2023), 1B09SM084001-01 (Year: 2021), 1B09SM085388-01 (Year: 2021), 1B09SM085916-01 (Year: 2021), 1B08TI083934-01 (Year: 2022), B08TI084623 (Year: 2022), 1B08TI083442-01 (Year: 2021), B08TI084637 (Year: 2022), B08TI085799 (Year: 2023), 1B08TI083530-01 (Year: 2021) Questioned Costs: None Identified Repeat of Prior Year Finding: 2022-025 Description: The Georgia Department of Behavioral Health and Developmental Disabilities should improve internal controls over required financial and Federal Funding Accountability and Transparency Act reporting to ensure that information is reported appropriately and timely. Background Information: The Block Grant for Community Mental Health Services (MHBG) was created to provide funds to states and territories to enable them to carry out their respective plans for providing comprehensive community-based mental health services for adults with serious mental illness and children with serious emotional disturbances. MHBG program funds are allocated to individual states based upon a formula. This funding may be distributed to cities, counties, or service providers within each state to carry out activities associated with the state plan. The objective of the Substance Abuse Prevention and Treatment Block Grant (SABG) program is to provide funds to states, territories, and one Indian tribe for the purpose of planning, carrying out, and evaluating activities to prevent and treat Substance Abuse (SA) and other related activities as authorized by the statute. The Georgia Department of Behavioral Health and Developmental Disabilities (DBHDD) was designated as the custodian of the MHBG and SABG funds for the State of Georgia. In that capacity, the DBHDD was required to report details associated with the expenditures to the Substance Abuse and Mental Health Services Administration (SAMHSA). This expenditure information should be reflected on the SF-425 Federal Financial Report (FFR) and is required to be submitted not later than ninety (90) days after the end of the award obligation and expenditure period (i.e., the project period). Funds associated with the MHBG and SABG programs are provided to the DBHDD for allocation to eligible entities, including local health agencies, community-based organizations, and other public or private entities, through competitive subgrants. Because DBHDD subgrants MHBG and SABG program funds to various entities, the DBHDD must comply with the Federal Funding Accountability and Transparency Act of 2006 (FFATA). The FFATA requirements were signed into law on September 26, 2006 in an effort to give the American public access to information on how their tax dollars are being spent. This information, including information associated with the use of MHBG and SABG program funds, is accessible via the USASpending.gov website. Criteria: As a recipient of federal awards, the DBHDD is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls. Under the FFATA (Public Law 109-282), as codified in Title 2 CFR Part 170, Reporting Subaward and Executive Compensation Information, recipients of grants or cooperative agreements, including DBHDD, who make first-tier subawards of $30,000 or more are required to register in the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Subaward data, such as the subaward date, subawardee Data Universal Numbering System number, amount of subaward, subaward obligation/action date, date of report submission, and subaward number, are submitted through the FSRS and accessible to the general public through the USASpending.gov website. Condition: Our audit of the MHBG and SABG programs revealed there was no evidence of review and approval over the FFR and FFATA reports. Additionally, upon performing testing over FFATA reporting, auditors noted the following deficiencies: • A sample of eight first-tier subawards of $30,000 or more associated with the MHBG program was randomly selected for testing using a non-statistical sampling method. Auditors examined documentation to determine if the subrecipient’s information was properly reported on the USASpending.gov website. Testing revealed that one subaward was not reported totaling $562,372.54, four subaward amounts were overstated by $3,639,860.00, and all eight subawards were missing key elements and were not reported timely. • A sample of twenty-two subawards of $30,000 or more associated with the SABG program was randomly selected for testing using a non-statistical sampling method. Auditors examined documentation to determine if the subrecipient’s information was properly reported on the USASpending.gov website. Testing revealed that nine subawards were not reported totaling $3,870,970.00, two subaward amounts were overstated by $321,000.00, and all 22 subawards were missing key elements and were not reported timely. Cause: Formal internal control processes have not been established for the FFATA reporting requirement due in part to a lack of sufficient staffing at the agency. As a result, noncompliance occurred with respect to FFATA reporting. Additionally, control processes have not been documented for the FFR reports. Effect: The deficiencies noted in the FFATA reporting process resulted in noncompliance with federal regulations. Without effective controls in place to ensure compliance with federal reporting requirements, the transparency objective associated with the FFATA requirements was not achieved as the general public was unable to review accurate expenditure data associated with the State of Georgia’s MHBG and SABG programs. Furthermore, though it does not appear that inappropriate information was transmitted on the FFR reports, this could occur if appropriate controls are not documented and functioning properly. Recommendation: We recommend that the DBHDD: • Establish and document processes and procedures associated with the FFR and FFATA reporting requirements; • Incorporate additional oversight, training, and/or staff to aid in the identification of subawards to be reported and the reporting of appropriate data elements, as applicable, in a timely manner; and • Review, update, and maintain documentation of subaward agreements and the determination of whether each subaward should be entered into the FSRS in compliance with the FFATA reporting requirements. Views of Responsible Officials: DBHDD concurs with the audit finding.
The Department will continue refining the capabilities of the Contract Tracking System (CTS) Database, utilized for regulatory reporting, to contain all of the necessary reporting data elements required for timely and accurate FFATA reporting. This includes configuring the database to allow for fund source splits to ensure contract awards are not duplicated and capturing the FSRS reporting date. Additional internal controls will be implemented, including a reconciliation of the CTS Database every quarter by the Grants Manager. The long-term goal is to migrate this legacy system to a new platform that incorporates validation to eliminate or reduce errors. DBHDD will update the internal controls related to Transparency Act Reporting and SF-425 Federal Financial Reports (FFR) for Mental Health Services Block Grant (MHBG) and Substance Abuse Prevention and Treatment Block Grant (SABG) no later than March 31, 2024. The Office of Internal Audit will perform a review of the updated processes to ensure they are effective in correcting the above findings no later than April 30, 2024.
2022-025
Our audit of the CVA program revealed there was no evidence of internal controls over the FFR, PMT, and FFATA reporting requirements. Additionally, a sample of four grants associated with the CVA program were randomly selected for testing using a non-statistical sampling method. This testing revealed that the cumulative expenses reported on the third quarter submission of the FFR for the FY2021 grant were overstated by $916,176.95. Subsequent submissions reflected the correct cumulative total. Cause: Though formal internal controls processes have been documented for the FFR reports, the controls were not implemented due in part to a lack of sufficient staffing at the agency. Additionally, control processes have not been documented for the PMT and FFATA reporting requirements. Effect: The deficiencies noted in the FFR reporting process resulted in noncompliance with federal regulations as required by the USDOJ. Overstated expenditures could impact the decision-making process at the federal level due to the FFR being used for general management of awards made under federal financial assistance programs. Furthermore, though it does not appear that inappropriate information was transmitted on the PMT or FFATA reports, this could occur if appropriate controls are not documented and functioning properly. Recommendation: The CJCC should review their current FFR control policy and make updates if needed. The CJCC should, then, implement and maintain documentation of the control noted in their policy. Additionally, the CJCC should design and implement controls over their PMT and FFATA reporting and ensure evidence of each control is maintained on-file. Views of Responsible Officials: CJCC concurs with the finding. The reports which contained errors were the result of insufficient staffing and capacity during the audit period, allowing insufficient time and capacity for review. CJCC is compelled to reinforce however that no errors were noted in the PMT and FFATA reports, and that errors in FFR reports were submitted for correction, based upon the guidance of the US Department of Justice Office of Justice Programs. In regard to materiality, CJCC notes that these awards are appropriated as part of a multi-billion dollar program, on a formula basis that does not account for performance or quarterly spend. As such, temporary misstatements do not have any significant impact on federal reporting. It is additionally important to note, the federal systems in which these reports are submitted do not facilitate secondary reviewers or control processes without account sharing, which is expressly forbidden.
Show full finding ▾Hide full finding ▴2023-024 Improve Controls over Reporting Compliance Requirement: Reporting Internal Control Impact: Material Weakness Compliance Impact: Nonmaterial Noncompliance Federal Awarding Agency: U.S. Department of Justice Pass-Through Entity: None AL Number and Title: 16.575 – Crime Victim Assistance Federal Award Numbers: 2018-V2-GX-0066 (Year: 2018), 2019-V2-GX-0019 (Year: 2019), 2020-V2-GX-0014 (Year: 2020), 15POVC-21-GG-00619-ASSI (Year: 2021), 15POVC-22-GG-00691-ASSI (Year: 2022) Questioned Costs: None Identified Description: The Criminal Justice Coordinating Council, an attached agency of the Georgia Bureau of Investigation, should improve internal controls over required financial, performance, and Federal Funding Accountability and Transparency Act reporting to ensure that information is reported appropriately. Background Information: The Crime Victim Assistance (CVA) Program, created under the 1984 Victims of Crime Act, provides federal funding to support victim assistance and compensation programs, to provide training for diverse professionals who work with victims, to develop projects to enhance victims’ rights and services, and to undertake public education and awareness activities on behalf of crime victims. The Georgia Criminal Justice Coordinating Council (CJCC) was designated as the custodian of the CVA funds for the State of Georgia. In that capacity, the CJCC was required to report details associated with CVA expenditures to the U.S. Department of Justice (USDOJ). This expenditure information is submitted through the JustGrants portal and is reflected on the quarterly SF-425 Federal Financial Report (FFR). In addition, the CJCC was required to report information relevant to the performance and activities of the CVA program to the USDOJ on the quarterly Performance Management Tool (PMT). Lastly, Funds associated with the Crime Victim Assistance program are provided to the CJCC for allocation to eligible subrecipients. Because the CJCC subgrants program funds to various entities, the CJCC must comply with the Federal Funding Accountability and Transparency Act of 2006 (FFATA). The FFATA requirements were signed into law on September 26, 2006 in an effort to give the American public access to information on how their tax dollars are being spent. Criteria: As a recipient of federal awards, the CJCC is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls. In addition, the CJCC is required to report cumulative expenditures on a quarterly basis in accordance with the USDOJ Grants Financial Guide and provisions included in the Uniform Guidance, Section 200.328 – Financial Reporting, which state, in part, that “the non-Federal entity’s financial management systems must… be sufficient to permit the preparation of reports required by general and program-specific terms and conditions.” In addition, provisions included in the Uniform Guidance, Section 200.302(b)(2) state, in part, that the non-Federal entity’s financial management systems must provide for “accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements.” Condition: Our audit of the CVA program revealed there was no evidence of internal controls over the FFR, PMT, and FFATA reporting requirements. Additionally, a sample of four grants associated with the CVA program were randomly selected for testing using a non-statistical sampling method. This testing revealed that the cumulative expenses reported on the third quarter submission of the FFR for the FY2021 grant were overstated by $916,176.95. Subsequent submissions reflected the correct cumulative total. Cause: Though formal internal controls processes have been documented for the FFR reports, the controls were not implemented due in part to a lack of sufficient staffing at the agency. Additionally, control processes have not been documented for the PMT and FFATA reporting requirements. Effect: The deficiencies noted in the FFR reporting process resulted in noncompliance with federal regulations as required by the USDOJ. Overstated expenditures could impact the decision-making process at the federal level due to the FFR being used for general management of awards made under federal financial assistance programs. Furthermore, though it does not appear that inappropriate information was transmitted on the PMT or FFATA reports, this could occur if appropriate controls are not documented and functioning properly. Recommendation: The CJCC should review their current FFR control policy and make updates if needed. The CJCC should, then, implement and maintain documentation of the control noted in their policy. Additionally, the CJCC should design and implement controls over their PMT and FFATA reporting and ensure evidence of each control is maintained on-file. Views of Responsible Officials: CJCC concurs with the finding. The reports which contained errors were the result of insufficient staffing and capacity during the audit period, allowing insufficient time and capacity for review. CJCC is compelled to reinforce however that no errors were noted in the PMT and FFATA reports, and that errors in FFR reports were submitted for correction, based upon the guidance of the US Department of Justice Office of Justice Programs. In regard to materiality, CJCC notes that these awards are appropriated as part of a multi-billion dollar program, on a formula basis that does not account for performance or quarterly spend. As such, temporary misstatements do not have any significant impact on federal reporting. It is additionally important to note, the federal systems in which these reports are submitted do not facilitate secondary reviewers or control processes without account sharing, which is expressly forbidden.
The following corrective actions are being taken by Criminal Justice Coordinating Council (CJCC), effective for all federal reporting for the performance and financial period ending March 31, 2024: Federal Financial Report (FFR) Processes are updated as follows: • Federal Financial Report responsibilities are distributed on a per grant basis to the members of the CJCC Budget Team. • Because the US DOJ Just Grants system does not allow for review or secondary viewers in the financial reporting items the FFRs are to be printed digitally by the completing analysts/director. • FFR’s will be reviewed with written certification of review by a budget team member that was not responsible for primary submission of the report for each grant. • Any corrections will be made within the period of correction for the report to prevent a misstated report from becoming a permanent record. Prepared Federal Funding Accountability and Transparency Act (FFATA) and Performance Measures Tool (PMT) reports processes are updated as follows: • All PMTs and FFATA data will be routed for review through the Victims Assistance Division – Director of Operations for certification of completeness and accuracy.
Our audit of the Employment Services Cluster revealed deficiencies related to manual journal entries (MJE) booked to re-rate program expenditures. Auditors identified a population of 70 MJE’s and selected a total of 11 items for testing. Of those 11 MJE’s one item was an individually selected item (ISI) and an additional 10 were randomly selected using a non-statistical sampling method. Auditors found that the one ISI and two of the randomly selected MJEs were for unallowable expenditures given they were charged to the program well after the authority to carry out program activities was transferred to TCSG. Additionally, the one ISI and seven randomly selected MJEs did not have adequate documentation to support the allowability of costs being charged to the program. Questioned Costs: Upon testing a sample of $603,291 of MJE’s, known questioned costs of $383,294 were identified. Using the total population amount of $2,635,054, we project likely questioned costs to be approximately $1,674,153. In addition, known questioned costs identified for the ISI tested totaled $837,344; therefore, the known questioned costs identified for MJE’s throughout the sample and ISI tested totaled $1,220,638. Cause: The Employment Services Cluster moved to TCSG in January 2023, which had already been a delay in transfer to TCSG as it should have been as of July 1, 2022. Based on the actual transfer of the program in January 2023 DOL completed final ETA-9130 reports for the grants transferring to TCSG, which were to be submitted by February 14, 2023. The reports submitted to the U.S. Department of Labor’s Employment and Training Administration by the DOL included expenditures (the three MJE’s noted in the condition section above) that were not incurred until after the programs and program staff had moved to the TCSG and after the actual reports were submitted. Additionally, the existing internal control system in place did not provide adequate documentation to be maintained or provided for the eight additional MJEs identified as unsupported in our testing. Effect: The inclusion of unallowable costs in program expenditures and not maintaining adequate documentation of manual journal entries resulted in noncompliance with federal regulations and the Uniform Guidance. In addition, without effective controls, the DOL increases its risk of charging unallowable costs to federal programs. This may prevent the DOL from effectively administering federal programs in the future. Furthermore, the U.S. Department of Labor may require repayment of costs that are determined to be unallowable, and the State of Georgia could be responsible for such repayment. Recommendation: The DOL should ensure that all current and future business practices follow the established policies and procedures of the Uniform Guidance, the U.S. Department of Labor, and the State of Georgia. Where vulnerable, the DOL should modify its policies and procedures to ensure that costs being charged via manual journal entries are allowable and adequately documented, including original invoices for costs being moved to other federal programs. Furthermore, management should develop and implement a monitoring process to ensure that controls are operating appropriately. Views of Responsible Officials: We concur with this finding.
Show full finding ▾Hide full finding ▴2023-025 Improve Controls over Manual Journal Entries Compliance Requirement: Activities Allowed or Unallowed Allowable Costs/Cost Principles Internal Control Impact: Significant Deficiency Compliance Impact: Nonmaterial Noncompliance Federal Awarding Agency: U.S. Department of Labor Pass-Through Entity: None AL Numbers and Titles: 17.207 – Employment Service/Wagner-Peyser Funded Activities 17.801 – Jobs for Veterans State Grant Federal Award Numbers: ES387252255A13 (Year: 2022), ES367492155A13 (Year: 2021), ES353382055A13 (Year: 2020), ES333881955A13 (Year: 2019), DV35790SG1 (Year: 2020), DV37869SG2 (Year: 2021) Questioned Costs: $1,220,638 Description: The Georgia Department of Labor should improve internal controls over manual journal entries for the Employment Services Cluster. Background Information: The Georgia Department of Labor (DOL) is responsible for the administration and monitoring of Georgia's Employment Services Cluster programs, including carrying out the Employment Services/Wagner-Peyser (ES) funded activities, as well as the Jobs for Veterans State Grant (JVSG) funded activities. The main purpose of the ES program is to improve the functioning of the nation’s labor markets by bringing together individuals seeking employment and employers seeking workers. The main purpose of the JVSG program is to provide career services to meet the employment needs of eligible veterans, to conduct outreach to employers in the area to assist veterans in gaining employment, and to facilitate employment, training, and placement services furnished to veterans. Operation of the Employment Services Cluster programs transferred to the Technical College System of Georgia (TCSG) in January 2023. Criteria: As a recipient of federal awards, the DOL is required to establish and maintain effective internal controls over federal awards that provide reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls. Provisions included in the Uniform Guidance, Section 200.402 state, that “the total cost of a federal award is the sum of the allowable direct and allocable indirect costs less any applicable credits.” In addition, provisions included in the Uniform Guidance, Section 200.403(g) state, in part, that costs must “be adequately documented.” Condition: Our audit of the Employment Services Cluster revealed deficiencies related to manual journal entries (MJE) booked to re-rate program expenditures. Auditors identified a population of 70 MJE’s and selected a total of 11 items for testing. Of those 11 MJE’s one item was an individually selected item (ISI) and an additional 10 were randomly selected using a non-statistical sampling method. Auditors found that the one ISI and two of the randomly selected MJEs were for unallowable expenditures given they were charged to the program well after the authority to carry out program activities was transferred to TCSG. Additionally, the one ISI and seven randomly selected MJEs did not have adequate documentation to support the allowability of costs being charged to the program. Questioned Costs: Upon testing a sample of $603,291 of MJE’s, known questioned costs of $383,294 were identified. Using the total population amount of $2,635,054, we project likely questioned costs to be approximately $1,674,153. In addition, known questioned costs identified for the ISI tested totaled $837,344; therefore, the known questioned costs identified for MJE’s throughout the sample and ISI tested totaled $1,220,638. Cause: The Employment Services Cluster moved to TCSG in January 2023, which had already been a delay in transfer to TCSG as it should have been as of July 1, 2022. Based on the actual transfer of the program in January 2023 DOL completed final ETA-9130 reports for the grants transferring to TCSG, which were to be submitted by February 14, 2023. The reports submitted to the U.S. Department of Labor’s Employment and Training Administration by the DOL included expenditures (the three MJE’s noted in the condition section above) that were not incurred until after the programs and program staff had moved to the TCSG and after the actual reports were submitted. Additionally, the existing internal control system in place did not provide adequate documentation to be maintained or provided for the eight additional MJEs identified as unsupported in our testing. Effect: The inclusion of unallowable costs in program expenditures and not maintaining adequate documentation of manual journal entries resulted in noncompliance with federal regulations and the Uniform Guidance. In addition, without effective controls, the DOL increases its risk of charging unallowable costs to federal programs. This may prevent the DOL from effectively administering federal programs in the future. Furthermore, the U.S. Department of Labor may require repayment of costs that are determined to be unallowable, and the State of Georgia could be responsible for such repayment. Recommendation: The DOL should ensure that all current and future business practices follow the established policies and procedures of the Uniform Guidance, the U.S. Department of Labor, and the State of Georgia. Where vulnerable, the DOL should modify its policies and procedures to ensure that costs being charged via manual journal entries are allowable and adequately documented, including original invoices for costs being moved to other federal programs. Furthermore, management should develop and implement a monitoring process to ensure that controls are operating appropriately. Views of Responsible Officials: We concur with this finding.
We concur with this finding. Although the Wagner-Peyser Program transitioned to TCSG in December of 2022, related activities also continued at GDOL. Staff at the career centers continued to serve Georgia taxpayers in need of employment services rather than turning them away. As a result, staff continued to charge the Wagner-Peyser grant, and there were Wagner Peyser grant funds still remaining at GDOL. Journal vouchers were entered to allocate indirect costs to the Wagner-Peyser grant pursuant to GDOL's federally approved cost allocation plan. Journal vouchers were also used to correct other expenditures that should have been charged directly to Wagner Peyser. GDOL will ensure that all journal vouchers are properly supported by documentation, either attached directly to the journal voucher or the journal voucher will reference the supporting documentation which can be retrieved either electronically or manually.
Unemployment Insurance - The ETA-9130 reports for the quarters ending September 2022 and June 2023 were reviewed to ensure that program and administrative expenditures were reported in a timely and accurate manner. For six of the 40 reports tested, the amounts reported did not agree with the amounts reflected in the accounting records. Four reports have more expenditures on their general ledger than obligated funds, one report was incorrectly entered in the reporting system, and one report could not be traced to the accounting records. Employment Service/Wagner-Peyser Funded Activities - The ETA-9130 reports for the quarters ending September 2022 and December 2022 were reviewed. For two of the 11 reports tested, the amounts reported did not agree with the amounts reflected in the accounting records. In both instances, the DOL reported more expenditures than what was reflected in their accounting records. Variances identified on each report are as follows: Cause: Unemployment Insurance - Separate ETA-9130 reports must be completed for each program and each fund source (subaccount) awarded to the DOL. While the DOL utilizes one general ledger report to prepare some ETA-9130 reports, the DOL uses multiple general ledger reports to prepare other ETA-9130 reports. In the instances of over obligated grant awards, the reporting system does not allow the preparer to enter more expenditures than funds authorized. Employment Service/Wagner-Peyser Funded Activities – The program moved to the Technical College System of Georgia (TCSG) in January 2023, and the final ETA-9130 reports for the grants transferring to the TCSG were to be submitted by February 14, 2023. The reports submitted to the ETA by the DOL included expenditures that were not incurred until after the program and program staff had moved to the TCSG, who assumed operation of grant activities. According to a communication between the DOL and U.S. Department of Labor, the expenditure amount to be reported on the final ETA-9130 report for quarter ending December 31, 2022, was to agree to draw down amount in the Payment Management System (PMS). However, the DOL drew down funds for expenditures that had yet to be incurred and reported that amount on the final ETA-9130 report. Effect: The submitting of inaccurate ETA-9130 reports resulted in noncompliance with federal regulations and the Uniform Guidance for both programs as noted above. Additionally, submitting incorrect reports diminishes the U.S. Department of Labor’s ability to effectively monitor the UI program. Recommendation: We recommend that the DOL review existing policies and procedures to ensure that it has established and is maintaining internal controls related to compliance with federal laws, regulations, and program compliance reports. This review should specifically address requirements for preparing the ETA-9130 reports. The DOL should ensure that personnel responsible for the ETA-9130 reports are appropriately trained and are familiar with these compliance requirements. In addition, we recommend that the DOL create queries and general ledger reports that only report the expenditures charged to each individual program as reflected on the grant award. Furthermore, spreadsheets and tools should be developed to balance report totals and identify errors before entering amounts into the federal reporting website. Views of Responsible Officials: GDOL concurs with this finding: Regarding the pandemic Grants noted that were all under #UI34710-20-55-A-13: • The UI Regular Grant typically provides the amount of available grant funds in advance based on 1.) and estimated number of claims to be processed int eh current year (based on the average of two years prior activity) and 2.) the average processing times (based pm the average of two years prior processing times). • In contrast, many of the pandemic grants are based on actual claims activity with monies being awarded “after the fact” with no consideration given to the aforementioned criteria as no prior- year basis exists. • GDOL experienced delays in some pandemic allocations due to delays in programing and the submission of the new reports for pandemic activities (FRUC, PEUC and PUA). All late reports have ben submitted and we are reconciling grants as deemed appropriate. • With reimbursement based on pandemic claims activity, there was no clear mechanism for GDOL to be able to “forecast” the amount of time and effort needed to process the cyclical and unpredictable number of pandemic claims. As such, best efforts were made to estimate in this regard. • The 3073 FPUC grant is the only grant for which we have been reimbursed at 100%. However, due to the most recent implementation of stop/gain loss, we are no longer being reimbursed at the full amount. Regarding the Employment Service/ Wagner-Peyser Funded Grants noted, the program period of performance was July 1, 2022 thru September 30, 2025. GDOL received instructions from USDOL on January 19, 2023 requesting a final ETA-9130 report be submitted by February 15th for grants that were being transferred to TCSG and offered technical assistance in completing the reports. The National office was designated to de-obligate the funds remaining and issue new grant numbers to obligate these funds at TCSG; however, several things occurred that caused the process to be delayed: • The required action was to check box 6 as yes (for the final 9130 reports) and 10g (Federal Share of Unliquidated Obligation) had to be zero although there were Unliquidated Obligations in the system. • Although the Wagner Peyer program was transferred to TCSG in January 2023, eligible costs continued. • The need for expenditure reconciliations was discussed with USDOL Regional Office and anticipated funds were drawn in lieu of billing TCSG. • Associated eligible costs were reconciled to the Wagner Peyser Ledger via manual journal entries in lieu of billing TCSG. • In addition, USDOL implemented a new GrantSolutions to replace its legacy grant processing system, E-Grants. USDOL replaced its legacy E-Grants Grantee Reporting System (GRS) by transitioning to PMS for grant recipients submission of the quarterly ETA-9130 financial reports on February 6,2023. • Although training was taken for this process, the overall reconciliation process was delated all reconciling items were resolved by the 9/30/23 reporting period.
Show full finding ▾Hide full finding ▴2023-026 Improve Controls over Financial Reporting Compliance Requirement: Reporting Internal Control Impact: Significant Deficiency Compliance Impact: Nonmaterial Noncompliance Federal Awarding Agency: U.S. Department of Labor Pass-Through Entity: None AL Numbers and Titles: 17.207 – Employment Service/Wagner-Peyser Funded Activities 17.225 – Unemployment Insurance 17.225 – COVID-19 – Unemployment Insurance Federal Award Numbers: UI347102055A13 (Year:2020), UI370592155A13 (Year:2021), UI322182255A13 (Year:2022), ES353382055A13 (Year:2020), ES367492155A13 (Year:2021) Questioned Costs: None Identified Repeat of Prior Year Finding: 2021-037 Description: The Georgia Department of Labor submitted inaccurate financial reports for the Unemployment Insurance and Employment Service/Wagner-Peyser Funded Activities Programs to the U.S. Department of Labor. Background Information: The Unemployment Insurance (UI) program, created by the Social Security Act (Pub. L. No. 74-271), provides Unemployment Compensation (UC) benefits to workers who are unemployed through no fault of their own and are seeking reemployment. To receive benefits, claimants must be able to work, available for work, and actively seeking work. On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law. The CARES Act was designed to mitigate the economic effects of the COVID-19 pandemic in a variety of ways, including providing additional UI provisions. Title II, Subtitle A of the CARES Act, authorizes the following temporary UI programs: • Federal Pandemic Unemployment Compensation (FPUC) – The FPUC program provides eligible individuals with $600 per week in addition to the weekly benefit amount they receive from certain other UC programs. • Pandemic Emergency Unemployment Compensation (PEUC) – The PEUC program provides up to 13 weeks of benefits to individuals who have exhausted all rights to regular compensation under State law or Federal law with respect to a benefit year that ended on or after July 1, 2019, have no rights to regular compensation with respect to a week under any other State or Federal UC law, are not receiving compensation with respect to such week under the UC law of Canada, and are able to work, available to work, and actively seeking work. • Pandemic Unemployment Assistance (PUA) – The PUA program provides up to 39 weeks of benefits to those individuals who are not eligible for regular UC or extended benefits under State or Federal law or PEUC, including those who have exhausted all rights to such benefits. In addition, the State Extended Benefits (SEB) program, which is an extension of UC benefits, becomes available for payment when the State’s 13-week insured unemployment rate (IUR) exceeds 5% and pays claimants up to an additional 13 weeks of compensation. Under the SEB program, the State is required to provide 50% of the amounts paid to the majority of eligible SEB claimants, which are those not covered by Federal law or special provisions of State law. However, under the CARES Act, the U.S. Department of Labor will reimburse the State at 100% of eligible costs for the SEB program. The State of Georgia became eligible to pay SEB May 10, 2020. However, the first payable weekending date (WED) was on July 4, 2020, as the first payable WED of PEUC was April 4, 2020. Further, the last payable WED for SEB was February 6, 2021. Additionally, The Georgia Department of Labor (DOL) is responsible for the administration and monitoring of Georgia's Employment Services Cluster programs, including carrying out the Employment Services/Wagner-Peyser (ES) funded activities. The main purpose of the ES program is to improve the functioning of the nation’s labor markets by bringing together individuals seeking employment and employers seeking workers. The DOL is responsible for reporting expenditures related to these programs to the U.S. Department of Labor’s Employment and Training Administration (ETA). Every grant awarded by the ETA requires accurate quarterly and annual reporting as a part of sound financial and management responsibilities. This reporting supports the ETA’s ability to measure fund utilization for performance accountability and assess compliance with statutory expenditure requirements. This information also helps measure successful outcomes for participants, ensure sound service delivery and reporting practices, and determine whether the federal funds achieved maximum benefit. The ETA-9130, Financial Status Report is used to report program and administrative expenditures. The DOL is required to submit quarterly financial reports for each UI and ESC program that they operate within 45 days after the end of reporting quarter. Financial data is required to be reported cumulatively from grant inception through the end of each reporting period. Criteria: As a recipient of federal awards, the DOL is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls. Provisions included in the Uniform Guidance, Section 200.302(a) state, in part, that “the non-Federal entity’s financial management systems must… be sufficient to permit the preparation of reports required by general and program-specific terms and conditions.” In addition, provisions included in the Uniform Guidance, Section 200.302(b)(2) state, in part, that the non-Federal entity’s financial management systems must provide for “accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements.” Condition: Unemployment Insurance - The ETA-9130 reports for the quarters ending September 2022 and June 2023 were reviewed to ensure that program and administrative expenditures were reported in a timely and accurate manner. For six of the 40 reports tested, the amounts reported did not agree with the amounts reflected in the accounting records. Four reports have more expenditures on their general ledger than obligated funds, one report was incorrectly entered in the reporting system, and one report could not be traced to the accounting records. Employment Service/Wagner-Peyser Funded Activities - The ETA-9130 reports for the quarters ending September 2022 and December 2022 were reviewed. For two of the 11 reports tested, the amounts reported did not agree with the amounts reflected in the accounting records. In both instances, the DOL reported more expenditures than what was reflected in their accounting records. Variances identified on each report are as follows: Cause: Unemployment Insurance - Separate ETA-9130 reports must be completed for each program and each fund source (subaccount) awarded to the DOL. While the DOL utilizes one general ledger report to prepare some ETA-9130 reports, the DOL uses multiple general ledger reports to prepare other ETA-9130 reports. In the instances of over obligated grant awards, the reporting system does not allow the preparer to enter more expenditures than funds authorized. Employment Service/Wagner-Peyser Funded Activities – The program moved to the Technical College System of Georgia (TCSG) in January 2023, and the final ETA-9130 reports for the grants transferring to the TCSG were to be submitted by February 14, 2023. The reports submitted to the ETA by the DOL included expenditures that were not incurred until after the program and program staff had moved to the TCSG, who assumed operation of grant activities. According to a communication between the DOL and U.S. Department of Labor, the expenditure amount to be reported on the final ETA-9130 report for quarter ending December 31, 2022, was to agree to draw down amount in the Payment Management System (PMS). However, the DOL drew down funds for expenditures that had yet to be incurred and reported that amount on the final ETA-9130 report. Effect: The submitting of inaccurate ETA-9130 reports resulted in noncompliance with federal regulations and the Uniform Guidance for both programs as noted above. Additionally, submitting incorrect reports diminishes the U.S. Department of Labor’s ability to effectively monitor the UI program. Recommendation: We recommend that the DOL review existing policies and procedures to ensure that it has established and is maintaining internal controls related to compliance with federal laws, regulations, and program compliance reports. This review should specifically address requirements for preparing the ETA-9130 reports. The DOL should ensure that personnel responsible for the ETA-9130 reports are appropriately trained and are familiar with these compliance requirements. In addition, we recommend that the DOL create queries and general ledger reports that only report the expenditures charged to each individual program as reflected on the grant award. Furthermore, spreadsheets and tools should be developed to balance report totals and identify errors before entering amounts into the federal reporting website. Views of Responsible Officials: GDOL concurs with this finding: Regarding the pandemic Grants noted that were all under #UI34710-20-55-A-13: • The UI Regular Grant typically provides the amount of available grant funds in advance based on 1.) and estimated number of claims to be processed int eh current year (based on the average of two years prior activity) and 2.) the average processing times (based pm the average of two years prior processing times). • In contrast, many of the pandemic grants are based on actual claims activity with monies being awarded “after the fact” with no consideration given to the aforementioned criteria as no prior- year basis exists. • GDOL experienced delays in some pandemic allocations due to delays in programing and the submission of the new reports for pandemic activities (FRUC, PEUC and PUA). All late reports have ben submitted and we are reconciling grants as deemed appropriate. • With reimbursement based on pandemic claims activity, there was no clear mechanism for GDOL to be able to “forecast” the amount of time and effort needed to process the cyclical and unpredictable number of pandemic claims. As such, best efforts were made to estimate in this regard. • The 3073 FPUC grant is the only grant for which we have been reimbursed at 100%. However, due to the most recent implementation of stop/gain loss, we are no longer being reimbursed at the full amount. Regarding the Employment Service/ Wagner-Peyser Funded Grants noted, the program period of performance was July 1, 2022 thru September 30, 2025. GDOL received instructions from USDOL on January 19, 2023 requesting a final ETA-9130 report be submitted by February 15th for grants that were being transferred to TCSG and offered technical assistance in completing the reports. The National office was designated to de-obligate the funds remaining and issue new grant numbers to obligate these funds at TCSG; however, several things occurred that caused the process to be delayed: • The required action was to check box 6 as yes (for the final 9130 reports) and 10g (Federal Share of Unliquidated Obligation) had to be zero although there were Unliquidated Obligations in the system. • Although the Wagner Peyer program was transferred to TCSG in January 2023, eligible costs continued. • The need for expenditure reconciliations was discussed with USDOL Regional Office and anticipated funds were drawn in lieu of billing TCSG. • Associated eligible costs were reconciled to the Wagner Peyser Ledger via manual journal entries in lieu of billing TCSG. • In addition, USDOL implemented a new GrantSolutions to replace its legacy grant processing system, E-Grants. USDOL replaced its legacy E-Grants Grantee Reporting System (GRS) by transitioning to PMS for grant recipients submission of the quarterly ETA-9130 financial reports on February 6,2023. • Although training was taken for this process, the overall reconciliation process was delated all reconciling items were resolved by the 9/30/23 reporting period.
GDOL concurs with this finding: Regarding the pandemic Grants noted that were all under #UI34710-20-55-A-13: • The unemployment insurance (UI) Regular Grant typically provides the amount of available grant funds in advance based on 1.) and estimated number of claims to be processed in the current year (based on the average of two years prior activity) and 2.) the average processing times (based on the average of two years prior processing times). • In contrast, many of the pandemic grants are based on actual claims activity with monies being awarded “after the fact” with no consideration given to the aforementioned criteria as no prior- year basis exists. • GDOL experienced delays in some pandemic allocations due to delays in programing and the submission of the new reports for pandemic activities (Federal Pandemic Unemployment Compensation (FPUC), Pandemic Emergency Unemployment Compensation (PEUC) and Pandemic Unemployment Assistance (PUA)). All late reports have been submitted and we are reconciling grants as deemed appropriate. • With reimbursement based on pandemic claims activity, there was no clear mechanism for GDOL to be able to “forecast” the amount of time and effort needed to process the cyclical and unpredictable number of pandemic claims. As such, best efforts were made to estimate in this regard. • The 3073 FPUC grant is the only grant for which we have been reimbursed at 100%. However, due to the most recent implementation of stop/gain loss, we are no longer being reimbursed at the full amount. • Regarding the Employment Service/ Wagner-Peyser Funded Grants noted, the program period of performance was July 1, 2022 thru September 30, 2025. GDOL received instructions from USDOL on January 19, 2023 requesting a final ETA-9130 report be submitted by February 15th for grants that were being transferred to TCSG and offered technical assistance in completing the reports. The National office was designated to de-obligate the funds remaining and issue new grant numbers to obligate these funds at TCSG; however, several things occurred that caused the process to be delayed: o The required action was to check box 6 as yes (for the final 9130 reports) and 10g (Federal Share of Unliquidated Obligation) had to be zero although there were Unliquidated Obligations in the system. o Although the Wagner Peyer program was transferred to TCSG in January 2023, eligible costs continued. o The need for expenditure reconciliations was discussed with USDOL Regional Office and anticipated funds were drawn in lieu of billing TCSG. o Associated eligible costs were reconciled to the Wagner Peyser Ledger via manual journal entries in lieu of billing TCSG. o In addition, USDOL implemented a new GrantSolutions to replace its legacy grant processing system, E-Grants. USDOL replaced its legacy E-Grants Grantee Reporting System (GRS) by transitioning to PMS for grant recipients submission of the quarterly ETA-9130 financial reports on February 6,2023. o Although training was taken for this process, the overall reconciliation process was delayed, all reconciling items were resolved by the 9/30/23 reporting period.
Our audit of the UI program revealed deficiencies in the expenditure review process. A total of 47 out of 5,863 expenditure transactions were randomly selected for testing using a non-statistical sampling method. Auditors found that six expenditure transactions related to utility bills did not reflect evidence of management review and approval. During testing, we noted that the six transactions found to be exceptions were all prior to the date that DOL had indicated that they had addressed this issue as noted in the prior year finding corrective action plan. No further exceptions were noted after the prior year finding corrective action plan was designed and implemented. Cause: Due to the impact of COVID-19, the DOL had numerous personnel changes and closed regional offices to prevent the spread of the virus. The DOL had utility bill invoices redirected to the Financial Services Department at the main office location rather than the regional offices to prevent payment delays and incurring any penalties for late payment. The DOL also made a change in the processing of these bills, which resulted in the DOL’s failure to follow their internal control policy and the initiation of payments without appropriate review and approval. Effect: The DOL is not in compliance with the Uniform Guidance. In addition, without effective controls, the DOL increases its risk of charging unallowable costs to the UI program. This may prevent the DOL from effectively administering the UI program in the future. Furthermore, the U.S. Department of Labor may require repayment of costs that are determined to be unallowable, and the State of Georgia could be responsible for such repayment. Recommendation: The DOL should ensure that all current and future business practices follow the established policies and procedures of the Uniform Guidance, the U.S. Department of Labor, and the State of Georgia. Where vulnerable, the DOL should modify its policies and procedures to ensure that expenditures reflect appropriate evidence of review and approval. Furthermore, management should develop and implement a monitoring process to ensure that controls are operating appropriately. It should be noted that based on testing it appears that the corrective action plan that was submitted for the prior year finding was effective in dealing with this issue as no additional exceptions were identified in our testing of items that were recorded after the date of the corrective action being put into place. Views of Responsible Officials: We concur with this finding: As noted by DOAA in finding 2023-027, the corrective action, although implemented for the last quarter of F/Y 2023, was effective in dealing with this issue as no additional exceptions were identified in the tests performed by DOAA after the date of the corrective action being put into place. GDOL will continue to ensure that all current and future business practices follow the established policies and procedures of the Uniform Guidance, the U.S. Department of Labor, and the State of Georgia. When necessary, GDOL will modify its policies and procedures to ensure that expenditures reflect appropriate evidence of review and approval.
Show full finding ▾Hide full finding ▴2023-027 Improve Controls over Administrative Expenditures Compliance Requirement: Activities Allowed or Unallowed Allowable Costs/Cost Principles Internal Control Impact: Significant Deficiency Compliance Impact: Nonmaterial Noncompliance Federal Awarding Agency: U.S. Department of Labor Pass-Through Entity: None AL Numbers and Titles: 17.225 – Unemployment Insurance 17.225 – COVID-19 – Unemployment Insurance Federal Award Numbers: UI372182255A13 (Year: 2022), UI393172355A13 (Year: 2023) Questioned Costs: None Identified Repeat of Prior Year Finding: 2022-027 Description: The Georgia Department of Labor did not have a review and approval process in place for certain program expenditures. Background Information: The Unemployment Insurance (UI) program, created by the Social Security Act (Pub. L. No. 74-271), provides Unemployment Compensation (UC) benefits to workers who are unemployed through no fault of their own and are seeking reemployment. Grants of funds for the administration of State UC laws and public employment service programs are made to States under the Social Security Act, the Wagner-Peyser Act, and the Appropriations Acts. These administrative grant funds are received and managed by the Georgia Department of Labor (DOL) for the State of Georgia. Criteria: As a recipient of federal awards, the DOL is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls. Additionally, provisions included in Title 20 CFR Section 601.6 provide that administrative grant funds should be used in “amounts necessary for the proper and efficient administration of the State unemployment compensation law and employment service program.” Condition: Our audit of the UI program revealed deficiencies in the expenditure review process. A total of 47 out of 5,863 expenditure transactions were randomly selected for testing using a non-statistical sampling method. Auditors found that six expenditure transactions related to utility bills did not reflect evidence of management review and approval. During testing, we noted that the six transactions found to be exceptions were all prior to the date that DOL had indicated that they had addressed this issue as noted in the prior year finding corrective action plan. No further exceptions were noted after the prior year finding corrective action plan was designed and implemented. Cause: Due to the impact of COVID-19, the DOL had numerous personnel changes and closed regional offices to prevent the spread of the virus. The DOL had utility bill invoices redirected to the Financial Services Department at the main office location rather than the regional offices to prevent payment delays and incurring any penalties for late payment. The DOL also made a change in the processing of these bills, which resulted in the DOL’s failure to follow their internal control policy and the initiation of payments without appropriate review and approval. Effect: The DOL is not in compliance with the Uniform Guidance. In addition, without effective controls, the DOL increases its risk of charging unallowable costs to the UI program. This may prevent the DOL from effectively administering the UI program in the future. Furthermore, the U.S. Department of Labor may require repayment of costs that are determined to be unallowable, and the State of Georgia could be responsible for such repayment. Recommendation: The DOL should ensure that all current and future business practices follow the established policies and procedures of the Uniform Guidance, the U.S. Department of Labor, and the State of Georgia. Where vulnerable, the DOL should modify its policies and procedures to ensure that expenditures reflect appropriate evidence of review and approval. Furthermore, management should develop and implement a monitoring process to ensure that controls are operating appropriately. It should be noted that based on testing it appears that the corrective action plan that was submitted for the prior year finding was effective in dealing with this issue as no additional exceptions were identified in our testing of items that were recorded after the date of the corrective action being put into place. Views of Responsible Officials: We concur with this finding: As noted by DOAA in finding 2023-027, the corrective action, although implemented for the last quarter of F/Y 2023, was effective in dealing with this issue as no additional exceptions were identified in the tests performed by DOAA after the date of the corrective action being put into place. GDOL will continue to ensure that all current and future business practices follow the established policies and procedures of the Uniform Guidance, the U.S. Department of Labor, and the State of Georgia. When necessary, GDOL will modify its policies and procedures to ensure that expenditures reflect appropriate evidence of review and approval.
As noted by Georgia Department of Audits & Accounts (DOAA) in this finding, the corrective action, although implemented for the last quarter of F/Y 2023, was effective in dealing with this issue as no additional exceptions were identified in the tests performed by DOAA after the date of the corrective action being put into place. GDOL will continue to ensure that all current and future business practices follow the established policies and procedures of the Uniform Guidance, the U.S. Department of Labor, and the State of Georgia. When necessary, GDOL will modify its policies and procedures to ensure that expenditures reflect appropriate evidence of review and approval.
2022-027
Our audit of the Unemployment Compensation Fund (UCF) included a review of benefit payments related to regular UC, SEB, and CARES Act UI programs. A sample of 60 UI benefit payment transactions processed by the DOL was randomly selected for testing using a non-statistical sampling method. In addition, 12 individually significant UI benefit payment transactions were selected for testing. The following deficiencies were identified for improper payments totaling $310,939: • Claimants did not self-certify for benefits in eighteen instances. • Fraudulent employer-filed claims were filed for thirteen claimants. • Proof of employment or self-employment or a valid offer to begin employment and proof of wages was not submitted by five PUA claimants. One of these claimants was not eligible to claim benefits in Georgia. Questioned Costs: Upon testing a sample of $15,331 in UI program payments, known questioned costs of $1,784 were identified. Using the population of UI payments sampled, which totaled $319,332,841, we project likely questioned costs to be approximately $90,884,173. In addition, known questioned costs were also identified as noted below: • $1,893 for improper payments associated with individually significant benefit payments tested; and • $206,783 for improper FPUC and PEUC payment amounts associated with the sample of benefit payments selected for testing. Upon testing a sample of $3,374 in UI COVID related program payments, known questioned costs of $2,295 were identified. Using the population of UI payments sampled, which totaled $57,392,113, we project likely questioned costs to be approximately $30,157,208. In addition, known questioned costs were also identified as noted below: • $658 for improper payments associated with individually significant benefit payments tested; • $97,526 for improper FPUC, PUA, and UI payment amounts associated with the sample of benefit payments selected for testing. Cause: The DOL management implemented a flawed employer-filed claim process that did not allow for the monitoring of the employees’ ability to work and wage verification requirements. The employer-filed claim process also did not allow for claimants to self-certify for weeks benefits were claimed. In addition, the DOL must manually review proof of employment or self-employment or a valid offer to begin employment and proof of wages for all PUA claims. This is a very time-consuming process and the DOL does not have the resources to review the volume of PUA claims in a timely manner. Effect: Without effective controls, the DOL increases its risk of providing benefits to ineligible claimants and not detecting improper payments. The deficiencies in eligibility determinations also resulted in noncompliance with federal regulations and questioned costs. While funds for benefit payments are not provided to states through grant awards, states are awarded funds to administer these programs. Grant provisions allow the grantor to penalize the DOL for noncompliance by suspending or terminating the award or withholding future awards. This may prevent eligible individuals from receiving benefits in the future. Recommendation: The DOL management should develop and implement internal controls over eligibility and claims processing to ensure procedures are consistently enforced and operate effectively. Management should also provide training on procedures for processing unemployment claims for programs created by the CARES Act. Strong monitoring controls should be implemented, as well, to ensure that the DOL achieves its objectives in complying with the eligibility requirements for the various UC programs. Specifically, the DOL should develop a process for claimants to self-certify for benefits when a claim is submitted by an employer on the claimant’s behalf. Additionally, the DOL management should develop analytical procedures and queries to identify duplicate payments and payments that are more than the claimant’s weekly benefit amount. Also, analytical procedures and queries to identify payments that have been made to claimants without identify verification and non-monetary and monetary determinations should be developed. Furthermore, the DOL management should develop IT controls to stop the release of payment until identity and eligibility requirements are substantiated and verified. The DOL management should also develop and implement procedures to stop or reduce payments when individuals do not provide required documentation. Views of Responsible Officials: GDOL acknowledges this is a repeated finding from previous years, therefore the Department concurs with this finding and offers the following response preceded by the auditor’s findings: Auditor’s Findings: The Georgia Department of Labor did not have effective internal controls in place to ensure unemployment benefit payments were made correctly and only to eligible claimants. 1) Claimants did not self-certify for benefits in eighteen instances GDOL Response: Employer Filed Partial Claims (EFC) are submitted by employers on behalf of the claimant. The employer is responsible for attesting to the employment status and weekly earnings of the claimant for the EFC submitted. An affidavit certifying that the employer has obtained earnings from other employment as well as other requirements must be completed before EFCs can be entered or uploaded. Claimants for which EFCs are submitted are considered to be still attached to the employer and are exempt from the requirement to register for employment services per Georgia Employment Security Law Rule 300-2-4-.02. Such individuals are not required to be nor certify on a weekly basis to be able, available and actively seeking work. We recognize the state auditor's recommendations to add the self-certification. However, the current unemployment system is obsolete, having been put into production in 1982. This finding will persist until our new modernized UI system is implemented in 2026. 2) Fraudulent employer-filed claims were filed for thirteen claimants GDOL Response: When we identify employer fraud schemes, we follow the guidance issued by the United States Department of Labor (USDOL) and collaborate with the United States Department of Labor Office of Inspector General (OIG) to investigate these cases. Additionally, we have taken the following measures to safeguard the system against fictitious employers: Effective December 6, 2021, the Employer Filed Partial Claims (EFC) process was revised to require individuals (employees) to complete an EFC profile to include a real-time identity verification before payments can be made. Employers are responsible for submitting the request for the payment to certify to the individual’s employment status, but the individuals must certify their identity and personal information for the claim to be processed. Employees are notified when a claim is filed on their behalf and provided instructions for their portion of completing the EFC process. The MyUI Customer Portal dashboard provides all the EFC correspondence sent to the individual as well as the status of the profile setup and identify verification. Before the implementation of the EFC profile requirement, GDOL utilized the Social Security Administration (SSA) crossmatch and Systematic Alien Verification for Entitlement (SAVE) verification processes to verify the identity of claimants where employers submit claims on their behalf. Effective June 29, 2023, GDOL implemented additional employer filed claims safeguards and security measures to reflect amended Georgia Employment Security Rule 300-2-4-.09. Employers must now meet the following conditions to submit Employer Filed Partial Claims on behalf of their employees: • Employer accounts must have been registered with GDOL for more than 5 years. • Employers must be current on all quarterly tax and wage reports. • Employers must be current on all quarterly contribution taxes, assessments, penalties, and interest. • The week ending date on employer filed claims cannot be older than 30 days. The amended Georgia Employment Security Rule also clarifies that part-time employees are not eligible for Employer Filed Partial Claims. BPC and Integrity merit staff continue to establish pseudo claims when fraud is confirmed to relieve victims of liability and the fraudster is unknown. Otherwise, the payments are moved to the fraudsters claim account, if identified. GDOL has procured a vendor to build and implement a modernized UI system. We are also pursuing data analytics tools to expedite the identification and detection of fraudulent activities. These tools will also be incorporated into the modernized solution. 3) Proof of employment or self-employment or a valid offer to begin employment and proof of wages was not submitted by five PUA claimants. One of these claimants was not eligible to claim benefits in Georgia. GDOL Response: The claimants who established PUA entitlement with a weekly benefit amount greater than the minimum or later determined to not be eligible were based on wages entered by the claimant and/or wages reported by the employer. CARES Act only required proof of wages to be submitted. If claimants did not submit proof, federal requirements only allowed for payment of the minimum weekly benefit amount and no disqualification of benefits. Claims established at a higher weekly benefit amount had to be reduced to the minimum amount if no proof was provided. To date, no proof has been provided by the claimants cited. The claims were reduced as appropriate. An overpayment has been established on all five claims identified for the difference in weekly benefit amount for weeks paid over the minimum amount under CARES and for the entire amount for weeks paid under CAA/ARPA. GDOL’s current UI Information Technology (IT) system was developed in 1982 using mainframe “legacy’ technology. Due to the system’s age and other limitations, many automated processes and corrections cannot be fixed and/or easily implemented. As such, many processes must be handled manually by staff. This includes reviewing all the PUA proof documents submitted to determine the validity and eligibility for each PUA claim. Based on the volume of workload and staff limitations, GDOL has been unable to quickly complete this manual review to correct the finding. It is anticipated this manual review will continue throughout the FY24 audit review period. Summary: GDOL’s limited technology resources will hinder our ability to update our current system to satisfy the state audit’s recommendation. Therefore, we acknowledge that this finding will persist until a system-wide resolution is implemented in the new modernized UI system. The new solution will include a self-certification and dual certification process for employer filed claims and include controls over eligibility determinations for current and future UI programs. GDOL greatly appreciates the feedback and recommendations and will consider this information in our endeavors to modernize our UI system and business processes.
Show full finding ▾Hide full finding ▴2023-028 Improve Controls over Eligibility Determinations Compliance Requirement: Eligibility Internal Control Impact: Material Weakness Compliance Impact: Material Noncompliance Federal Awarding Agency: U.S. Department of Labor Pass-Through Entity: None AL Numbers and Titles: 17.225 – Unemployment Insurance 17.225 – COVID-19 – Unemployment Insurance Federal Award Numbers: UI340532055A13 (Year:2020), UI347102055A13 (Year:2020), UI356432155A13 (Year:2021), UI359392160A13 (Year:2021), UI370592155A13 (Year:2021), UI372182255A13 (Year:2022), UI379762260A13 (Year:2022), UI393172355A13 (Year:2023) Questioned Costs: $310,939 Repeat of Prior Year Finding: 2022-028, 2021-035 Description: The Georgia Department of Labor did not have effective internal controls in place to ensure unemployment benefit payments were made correctly and only to eligible claimants. Background Information: The Unemployment Insurance (UI) program, created by the Social Security Act (Pub. L. No. 74-271), provides Unemployment Compensation (UC) benefits to workers who are unemployed through no fault of their own and are seeking reemployment. To receive benefits, claimants must be able to work, available for work, and actively seeking work. On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law. The CARES Act was designed to mitigate the economic effects of the COVID-19 pandemic in a variety of ways, including providing additional UI provisions. Title II, Subtitle A of the CARES Act, authorizes the following temporary UI programs: • Federal Pandemic Unemployment Compensation (FPUC) – The FPUC program provides eligible individuals with $600 per week in addition to the weekly benefit amount they receive from certain other UC programs. • Pandemic Emergency Unemployment Compensation (PEUC) – The PEUC program provides up to 13 weeks of benefits to individuals who have exhausted all rights to regular compensation under State law or Federal law with respect to a benefit year that ended on or after July 1, 2019, have no rights to regular compensation with respect to a week under any other State or Federal UC law, are not receiving compensation with respect to such week under the UC law of Canada, and are able to work, available to work, and actively seeking work. • Pandemic Unemployment Assistance (PUA) – The PUA program provides up to 39 weeks of benefits to those individuals who are not eligible for regular UC or extended benefits under State or Federal law or PEUC, including those who have exhausted all rights to such benefits. In addition, the State Extended Benefits (SEB) program, which is an extension of UC benefits, becomes available for payment when the State’s 13-week insured unemployment rate (IUR) exceeds 5% and pays claimants up to an additional 13 weeks of compensation. Under the SEB program, the State is required to provide 50% of the amounts paid to the majority of eligible SEB claimants, which are those not covered by Federal law or special provisions of State law. However, under the CARES Act, the U.S. Department of Labor will reimburse the State at 100% of eligible costs for the SEB program. The State of Georgia became eligible to pay SEB May 10, 2020. However, the first payable weekending date (WED) was on July 4, 2020, as the first payable WED of PEUC was April 4, 2020. Further, the last payable WED for SEB was February 6, 2021. Criteria: As a recipient of federal awards, the Georgia Department of Labor (DOL) is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls. The Uniform Guidance, Section 200.53 - Improper Payments states: “(a) Improper payment means any payment that should not have been made or that was made in an incorrect amount (including overpayments and underpayments) under statutory, contractual, administrative, or other legally applicable requirements; and (b) Improper payment includes any payment to an ineligible party, any payment for an ineligible good or service, any duplicate payment, any payment for a good or service not received (except for such payments where authorized by law), any payment that does not account for credit for applicable discounts, and any payment where insufficient or lack of documentation prevents a reviewer from discerning whether a payment was proper.” Additionally, provisions included in Title 20 CFR Section 604.3(a) states, “A State may pay UC only to an individual who is able to work and available for work for the week for which UC is claimed.” Furthermore, Title II, Subtitle A of the CARES Act provides specific eligibility guidance for the FPUC, PEUC, and PUA programs. Condition: Our audit of the Unemployment Compensation Fund (UCF) included a review of benefit payments related to regular UC, SEB, and CARES Act UI programs. A sample of 60 UI benefit payment transactions processed by the DOL was randomly selected for testing using a non-statistical sampling method. In addition, 12 individually significant UI benefit payment transactions were selected for testing. The following deficiencies were identified for improper payments totaling $310,939: • Claimants did not self-certify for benefits in eighteen instances. • Fraudulent employer-filed claims were filed for thirteen claimants. • Proof of employment or self-employment or a valid offer to begin employment and proof of wages was not submitted by five PUA claimants. One of these claimants was not eligible to claim benefits in Georgia. Questioned Costs: Upon testing a sample of $15,331 in UI program payments, known questioned costs of $1,784 were identified. Using the population of UI payments sampled, which totaled $319,332,841, we project likely questioned costs to be approximately $90,884,173. In addition, known questioned costs were also identified as noted below: • $1,893 for improper payments associated with individually significant benefit payments tested; and • $206,783 for improper FPUC and PEUC payment amounts associated with the sample of benefit payments selected for testing. Upon testing a sample of $3,374 in UI COVID related program payments, known questioned costs of $2,295 were identified. Using the population of UI payments sampled, which totaled $57,392,113, we project likely questioned costs to be approximately $30,157,208. In addition, known questioned costs were also identified as noted below: • $658 for improper payments associated with individually significant benefit payments tested; • $97,526 for improper FPUC, PUA, and UI payment amounts associated with the sample of benefit payments selected for testing. Cause: The DOL management implemented a flawed employer-filed claim process that did not allow for the monitoring of the employees’ ability to work and wage verification requirements. The employer-filed claim process also did not allow for claimants to self-certify for weeks benefits were claimed. In addition, the DOL must manually review proof of employment or self-employment or a valid offer to begin employment and proof of wages for all PUA claims. This is a very time-consuming process and the DOL does not have the resources to review the volume of PUA claims in a timely manner. Effect: Without effective controls, the DOL increases its risk of providing benefits to ineligible claimants and not detecting improper payments. The deficiencies in eligibility determinations also resulted in noncompliance with federal regulations and questioned costs. While funds for benefit payments are not provided to states through grant awards, states are awarded funds to administer these programs. Grant provisions allow the grantor to penalize the DOL for noncompliance by suspending or terminating the award or withholding future awards. This may prevent eligible individuals from receiving benefits in the future. Recommendation: The DOL management should develop and implement internal controls over eligibility and claims processing to ensure procedures are consistently enforced and operate effectively. Management should also provide training on procedures for processing unemployment claims for programs created by the CARES Act. Strong monitoring controls should be implemented, as well, to ensure that the DOL achieves its objectives in complying with the eligibility requirements for the various UC programs. Specifically, the DOL should develop a process for claimants to self-certify for benefits when a claim is submitted by an employer on the claimant’s behalf. Additionally, the DOL management should develop analytical procedures and queries to identify duplicate payments and payments that are more than the claimant’s weekly benefit amount. Also, analytical procedures and queries to identify payments that have been made to claimants without identify verification and non-monetary and monetary determinations should be developed. Furthermore, the DOL management should develop IT controls to stop the release of payment until identity and eligibility requirements are substantiated and verified. The DOL management should also develop and implement procedures to stop or reduce payments when individuals do not provide required documentation. Views of Responsible Officials: GDOL acknowledges this is a repeated finding from previous years, therefore the Department concurs with this finding and offers the following response preceded by the auditor’s findings: Auditor’s Findings: The Georgia Department of Labor did not have effective internal controls in place to ensure unemployment benefit payments were made correctly and only to eligible claimants. 1) Claimants did not self-certify for benefits in eighteen instances GDOL Response: Employer Filed Partial Claims (EFC) are submitted by employers on behalf of the claimant. The employer is responsible for attesting to the employment status and weekly earnings of the claimant for the EFC submitted. An affidavit certifying that the employer has obtained earnings from other employment as well as other requirements must be completed before EFCs can be entered or uploaded. Claimants for which EFCs are submitted are considered to be still attached to the employer and are exempt from the requirement to register for employment services per Georgia Employment Security Law Rule 300-2-4-.02. Such individuals are not required to be nor certify on a weekly basis to be able, available and actively seeking work. We recognize the state auditor's recommendations to add the self-certification. However, the current unemployment system is obsolete, having been put into production in 1982. This finding will persist until our new modernized UI system is implemented in 2026. 2) Fraudulent employer-filed claims were filed for thirteen claimants GDOL Response: When we identify employer fraud schemes, we follow the guidance issued by the United States Department of Labor (USDOL) and collaborate with the United States Department of Labor Office of Inspector General (OIG) to investigate these cases. Additionally, we have taken the following measures to safeguard the system against fictitious employers: Effective December 6, 2021, the Employer Filed Partial Claims (EFC) process was revised to require individuals (employees) to complete an EFC profile to include a real-time identity verification before payments can be made. Employers are responsible for submitting the request for the payment to certify to the individual’s employment status, but the individuals must certify their identity and personal information for the claim to be processed. Employees are notified when a claim is filed on their behalf and provided instructions for their portion of completing the EFC process. The MyUI Customer Portal dashboard provides all the EFC correspondence sent to the individual as well as the status of the profile setup and identify verification. Before the implementation of the EFC profile requirement, GDOL utilized the Social Security Administration (SSA) crossmatch and Systematic Alien Verification for Entitlement (SAVE) verification processes to verify the identity of claimants where employers submit claims on their behalf. Effective June 29, 2023, GDOL implemented additional employer filed claims safeguards and security measures to reflect amended Georgia Employment Security Rule 300-2-4-.09. Employers must now meet the following conditions to submit Employer Filed Partial Claims on behalf of their employees: • Employer accounts must have been registered with GDOL for more than 5 years. • Employers must be current on all quarterly tax and wage reports. • Employers must be current on all quarterly contribution taxes, assessments, penalties, and interest. • The week ending date on employer filed claims cannot be older than 30 days. The amended Georgia Employment Security Rule also clarifies that part-time employees are not eligible for Employer Filed Partial Claims. BPC and Integrity merit staff continue to establish pseudo claims when fraud is confirmed to relieve victims of liability and the fraudster is unknown. Otherwise, the payments are moved to the fraudsters claim account, if identified. GDOL has procured a vendor to build and implement a modernized UI system. We are also pursuing data analytics tools to expedite the identification and detection of fraudulent activities. These tools will also be incorporated into the modernized solution. 3) Proof of employment or self-employment or a valid offer to begin employment and proof of wages was not submitted by five PUA claimants. One of these claimants was not eligible to claim benefits in Georgia. GDOL Response: The claimants who established PUA entitlement with a weekly benefit amount greater than the minimum or later determined to not be eligible were based on wages entered by the claimant and/or wages reported by the employer. CARES Act only required proof of wages to be submitted. If claimants did not submit proof, federal requirements only allowed for payment of the minimum weekly benefit amount and no disqualification of benefits. Claims established at a higher weekly benefit amount had to be reduced to the minimum amount if no proof was provided. To date, no proof has been provided by the claimants cited. The claims were reduced as appropriate. An overpayment has been established on all five claims identified for the difference in weekly benefit amount for weeks paid over the minimum amount under CARES and for the entire amount for weeks paid under CAA/ARPA. GDOL’s current UI Information Technology (IT) system was developed in 1982 using mainframe “legacy’ technology. Due to the system’s age and other limitations, many automated processes and corrections cannot be fixed and/or easily implemented. As such, many processes must be handled manually by staff. This includes reviewing all the PUA proof documents submitted to determine the validity and eligibility for each PUA claim. Based on the volume of workload and staff limitations, GDOL has been unable to quickly complete this manual review to correct the finding. It is anticipated this manual review will continue throughout the FY24 audit review period. Summary: GDOL’s limited technology resources will hinder our ability to update our current system to satisfy the state audit’s recommendation. Therefore, we acknowledge that this finding will persist until a system-wide resolution is implemented in the new modernized UI system. The new solution will include a self-certification and dual certification process for employer filed claims and include controls over eligibility determinations for current and future UI programs. GDOL greatly appreciates the feedback and recommendations and will consider this information in our endeavors to modernize our UI system and business processes.
GDOL acknowledges this is a repeated finding from previous years, therefore the Department concurs with this finding and offers the following response preceded by the auditor’s findings: Auditor’s Findings: The Georgia Department of Labor did not have effective internal controls in place to ensure unemployment benefit payments were made correctly and only to eligible claimants. 1) Claimants did not self-certify for benefits in eighteen instances GDOL Response: Employer Filed Partial Claims (EFC) are submitted by employers on behalf of the claimant. The employer is responsible for attesting to the employment status and weekly earnings of the claimant for the EFC submitted. An affidavit certifying that the employer has obtained earnings from other employment as well as other requirements must be completed before EFCs can be entered or uploaded. Claimants for which EFCs are submitted are considered to be still attached to the employer and are exempt from the requirement to register for employment services per Georgia Employment Security Law Rule 300-2-4-.02. Such individuals are not required to be nor certify on a weekly basis to be able, available and actively seeking work. We recognize the state auditor's recommendations to add the self-certification. However, the current unemployment system is obsolete, having been put into production in 1982. This finding will persist until our new modernized unemployment insurance (UI) system is implemented in 2026. 2) Fraudulent employer-filed claims were filed for thirteen claimants GDOL Response: When we identify employer fraud schemes, we follow the guidance issued by the United States Department of Labor (USDOL) and collaborate with the United States Department of Labor Office of Inspector General (OIG) to investigate these cases. Additionally, we have taken the following measures to safeguard the system against fictitious employers: • Effective December 6, 2021, the Employer Filed Partial Claims (EFC) process was revised to require individuals (employees) to complete an EFC profile to include a real-time identity verification before payments can be made. Employers are responsible for submitting the request for the payment to certify to the individual’s employment status, but the individuals must certify their identity and personal information for the claim to be processed. Employees are notified when a claim is filed on their behalf and provided instructions for their portion of completing the EFC process. The MyUI Customer Portal dashboard provides all the EFC correspondence sent to the individual as well as the status of the profile setup and identify verification. • Before the implementation of the EFC profile requirement, GDOL utilized the Social Security Administration (SSA) crossmatch and Systematic Alien Verification for Entitlement (SAVE) verification processes to verify the identity of claimants where employers submit claims on their behalf. • Effective June 29, 2023, GDOL implemented additional employer filed claims safeguards and security measures to reflect amended Georgia Employment Security Rule 300-2-4-.09. Employers must now meet the following conditions to submit Employer Filed Partial Claims on behalf of their employees: o Employer accounts must have been registered with GDOL for more than 5 years. o Employers must be current on all quarterly tax and wage reports. o Employers must be current on all quarterly contribution taxes, assessments, penalties, and interest. o The week ending date on employer filed claims cannot be older than 30 days. The amended Georgia Employment Security Rule also clarifies that part-time employees are not eligible for Employer Filed Partial Claims. BPC and Integrity merit staff continue to establish pseudo claims when fraud is confirmed to relieve victims of liability and the fraudster is unknown. Otherwise, the payments are moved to the fraudsters claim account, if identified. GDOL has procured a vendor to build and implement a modernized UI system. We are also pursuing data analytics tools to expedite the identification and detection of fraudulent activities. These tools will also be incorporated into the modernized solution. 3) Proof of employment or self-employment or a valid offer to begin employment and proof of wages was not submitted by five Pandemic Unemployment Assistance (PUA) claimants. One of these claimants was not eligible to claim benefits in Georgia. GDOL Response: The claimants who established PUA entitlement with a weekly benefit amount greater than the minimum or later determined to not be eligible were based on wages entered by the claimant and/or wages reported by the employer. The Coronavirus Aid, Relief, and Economic Security (CARES) Act only required proof of wages to be submitted. If claimants did not submit proof, federal requirements only allowed for payment of the minimum weekly benefit amount and no disqualification of benefits. Claims established at a higher weekly benefit amount had to be reduced to the minimum amount if no proof was provided. To date, no proof has been provided by the claimants cited. The claims were reduced as appropriate. An overpayment has been established on all five claims identified for the difference in weekly benefit amount for weeks paid over the minimum amount under CARES and for the entire amount for weeks paid under Consolidated Appropriations Act (CAA)/American Rescue Plan Act (ARPA). GDOL’s current UI Information Technology (IT) system was developed in 1982 using mainframe “legacy’ technology. Due to the system’s age and other limitations, many automated processes and corrections cannot be fixed and/or easily implemented. As such, many processes must be handled manually by staff. This includes reviewing all the PUA proof documents submitted to determine the validity and eligibility for each PUA claim. Based on the volume of workload and staff limitations, GDOL has been unable to quickly complete this manual review to correct the finding. It is anticipated this manual review will continue throughout the FY24 audit review period. Summary: GDOL’s limited technology resources will hinder our ability to update our current system to satisfy the state audit’s recommendation. Therefore, we acknowledge that this finding will persist until a system-wide resolution is implemented in the new modernized UI system. The new solution will include a self-certification and dual certification process for employer filed claims and include controls over eligibility determinations for current and future UI programs. GDOL greatly appreciates the feedback and recommendations and will consider this information in our endeavors to modernize our UI system and business processes.
2022-028
Upon review of the procedures that the DOL established to process partial claims submitted by employers, deficiencies were noted. The DOL did not require employees to self-certify that they were able to work, available for work, and actively seeking work each week they received benefits. Furthermore, the claimant was unable to self-report additional wages and income the employee may have received from sources other than the employer that initially filed the claim. In addition, when completed procedures over eligibility requirements for a sample of claimants, auditors noted that Employer-Filed Claim Fraud Stops had been internally identified and applied by the DOL for thirteen claimants and nine employers. In these instances, the employer submitted a claim on behalf of the claimant for several weeks at one time and the claims were paid out for all weekending dates. After several days, the DOL flagged the associated claimant and employer to prevent subsequent payments from being released. Based upon this information, auditors, then reviewed the listing of benefit payments made during the fiscal year and determined $15,207,785 in benefits were paid out to 940 claimants by the nine employers initially identified as having Employer-Filed Claim Fraud Stops. It was noted that in one instance, a fraudulent employer submitted claims on 47 different days for 287 claimants for a total of $4,720,252. In one submission alone, on August 31, 2022, the fraudulent employer submitted 62 weekending dates going back to January 4, 2020 for 29 claimants totaling $138,738. In this case the GDOL did not identify the employer as fraudulent until November 7, 2022. While auditors were unable to determine the total dollar amount of improper payments associated with these deficiencies, a review of all benefit payment transactions occurring during the fiscal year under review indicated that the following dollar amounts of benefit payments were submitted and certified by 1,828 employers that were for 33,704 individual claimants: • Regular Unemployment Compensation (UC) - $38,201,885 • State Extended Benefits (SEB) - $7,947 • Reemployment Trade Adjustment Assistance (RTAA) - $5,712 • Federal Pandemic Unemployment Compensation (FPUC) - $12,557,907 • Pandemic Emergency Unemployment Compensation (PEUC) - $3,146,268 • Mixed Earner Unemployment Compensation (MEUC) - $200 Questioned Costs: Though likely questioned costs may exist, these amounts are unknown as sufficient data to analyze benefit payment transactions associated with these employer-filed claims was not available. The following Assistance Listing Numbers would be affected if questioned costs did exist: 17.225 and 17.225 – COVID-19. Cause: The DOL management implemented a flawed employer-filed claim process that did not allow for the monitoring of the employees’ ability to work and wage verification requirements. In addition, internal controls were not implemented to identify potential fraud schemes prior to the initial benefit payment being disbursed Effect: These deficiencies resulted in noncompliance with federal regulations and the Uniform Guidance. Due to lack of controls over employer-filed claims, specifically the inability for claimants to self-certify, it is likely that claimants were paid benefits that they were not eligible to receive. Because eligibility for UC benefits is based on claimants demonstrating that they meet certain eligibility requirements on a weekly basis, the suspension of the requirement for claimants to certify eligibility on a weekly basis did not allow the DOL to determine whether continuing claimants remained eligible for benefits. The State’s failure to administer its UI program in conformity and substantial compliance with federal law can result in loss of the State’s certification and loss of its administrative grant to operate the UC program and/or its employers’ tax credits under Federal Unemployment Tax Act (FUTA). Recommendation: We recommend that the DOL develop a process when an employer-filed claim is submitted that requires the employee to create an account with the DOL, verify information, and self-certify employment status for the week being claimed. We also recommend that the DOL develop controls to prevent the release of payments when identity and eligibility requirements have not been substantiated and verified. In addition, we recommend that the DOL develop analytical procedures and queries to identify improper payments linked to employer-filed claims. Views of Responsible Officials: GDOL acknowledges this is a repeated finding from previous years, therefore the Department concurs with this finding and offers the following response preceded by the auditor’s findings: Auditor’s Findings: The Department of Labor should improve internal controls over Employer Filed Unemployment Compensation claims. GDOL Response: GDOL submits the following information as an overview of the employer filed claims program and actions that have been taken and will continue to address the findings as well as incorporate additional safeguards and available technological system controls in the new system: The Employer Filed Partial Claims (EFC) program originated in the late 1960’s and was designed to allow employers with short-term, temporary periods of lack of work for their employees to retain their workforce when work resumes. This is a program that many large manufacturers in Georgia rely on when they have temporary plant shutdowns and have for decades. When GDOL has attempted in the past to limit this program, we have met strong resistance from Georgia’s manufacturers. This program optimizes our ability to process and pay mass numbers of claims more quickly, such as what occurred at the beginning of the pandemic. EFCs may be filed by an employer for any complete pay-period week during which an otherwise full-time employee works less than full-time, due to lack of work only, and earns an amount not exceeding his/her unemployment insurance weekly benefit amount. Such claims shall not be submitted or allowed for vacation days regardless of whether such vacation days were requested by the employee or established by the employer. Effective March 19, 2020, a temporary, Emergency Rule 300-2-4-05(1), containing Rule 300-2-4-.09(1) was signed which required employers to electronically submit EFCs on behalf of their employees whenever it is necessary to temporarily reduce work hours or there was no work available for a short period due to the pandemic. Employers were allowed to file such claims for full and part-time employees whose earnings had been reduced. In July 2020, the Rule was sunset and employers were no longer required to file EFCs. By electing to submit EFCs on behalf of the individuals, the employer is responsible for attesting by an affidavit to the employment status and weekly earnings of the individual for the EFC submitted. The affidavit certifies that the employer has obtained earnings from other employment as well as other requirements must be completed before EFCs can be entered or uploaded for their employees. Individuals for which EFCs are submitted are considered to be still attached to the employer and are exempt from the requirement to register for employment services per Georgia Employment Security Law Rules 300-2-4-.02. Such individuals are not required to be nor certify on a weekly basis to be actively seeking work. Effective December 6, 2021, the EFC process was revised to require individuals (employees) to complete an EFC profile to include a real-time identity verification before payments can be made. Employers are responsible for submitting the request for the payment to certify to the individual’s employment status, but the individuals must certify their identity and personal information for the claim to be processed. Employees are notified when a claim is filed on their behalf and provided instructions for their portion of completing the EFC process. The MyUI Customer Portal dashboard provides all the EFC correspondence sent to the individual as well as the status of the profile setup and identify verification. Before the implementation of the EFC profile requirement, GDOL utilized the Social Security Administration (SSA) crossmatch and Systematic Alien Verification for Entitlement (SAVE) verification processes to verify the identity of claimants where employers submit claims on their behalf. When we identify employer fraud schemes, we follow the guidance issued by the United States Department of Labor (USDOL) and collaborate with the United States Department of Labor Office of Inspector General (OIG) to investigate these cases. Effective June 29, 2023 GDOL implemented additional Employer Filed Claims safeguards and security measures to reflect amended Georgia Employment Security Rule 300-2-4-.09. Employers must now meet the following conditions to submit Employer-Filed Partial Claims on behalf of their employees: • Employer accounts must have been registered with GDOL for more than 5 years. • Employers must be current on all quarterly tax and wage reports. • Employers must be current on all quarterly contribution taxes, assessments, penalties, and interest. • The week ending date on employer filed claims cannot be older than 30 days. The amended Georgia Employment Security Rule also clarifies that part-time employees are not eligible for Employer Filed Partial Claims. Summary: This finding will persist until a system-wide resolution is implemented in the new modernized UI system. GDOL will include a self-certification and dual certification process for employer filed claims in the new solution.
Show full finding ▾Hide full finding ▴2023-029 Improve Controls over Employer-Filed Claims Compliance Requirement: Eligibility Internal Control Impact: Material Weakness Compliance Impact: Material Noncompliance Federal Awarding Agency: U.S. Department of Labor Pass-Through Entity: None AL Numbers and Titles: 17.225 – Unemployment Insurance 17.225 – COVID-19 – Unemployment Insurance Federal Award Numbers: UI340532055A13 (Year:2020), UI347102055A13 (Year:2020), UI356432155A13 (Year:2021), UI359392160A13 (Year:2021), UI370592155A13 (Year:2021), UI372182255A13 (Year:2022), UI379762260A13 (Year:2022), UI393172355A13 (Year:2023) Questioned Costs: Unknown Repeat of Prior Year Findings: 2022-032 Description: The Department of Labor should improve internal controls over employer-filed Unemployment Compensation claims. Background Information: The Unemployment Insurance (UI) program, created by the Social Security Act (Pub. L. No. 74-271), provides Unemployment Compensation (UC) benefits to workers who are unemployed through no fault of their own and are seeking reemployment. To receive benefits, claimants must be able to work, available for work, and actively seeking work. On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law. The CARES Act was designed to mitigate the economic effects of the COVID-19 pandemic in a variety of ways, including providing additional UI provisions. Additionally, in response to the COVID-19 public health emergency, the National Emergency declaration by the President on March 13, 2020, and the Public Health State of Emergency declared by Governor Brian Kemp on March 14, 2020, the former Georgia Department of Labor (DOL) Commissioner Mark Butler enacted Emergency Rule 300-2-4-0.5, containing Rule 300-2-4-.09(l) Partial Unemployment on March 16, 2020. The emergency rule allowed employers to file claims online on-behalf of their full-time and part-time employees with respect to any week during which an employee worked less than full-time due to a partial or total company shutdown caused by the COVID-19 public health emergency. To file on-behalf of the employee, the employer must download and submit the DOL template, which requires the employer to input all the necessary identity, demographic, work, and wage information to establish a claim. After the employer has submitted the file, the DOL benefit payment system will automatically process the claim. A monetary determination will be made based on the wages the DOL has on-file. The DOL, then sends the employee a Benefit Determination (Form DOL-411G), which reflects whether they met the wage requirements to establish a benefit year and a valid claim. If a valid claim is established, the determination lists the weekly benefit amount, maximum benefit amount, and maximum number of weeks. Criteria: As a recipient of federal awards, the DOL is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls. The Uniform Guidance, Section 200.53 - Improper Payments states, “(a) Improper payment means any payment that should not have been made or that was made in an incorrect amount (including overpayments and underpayments) under statutory, contractual, administrative, or other legally applicable requirements; and (b) Improper payment includes any payment to an ineligible party, any payment for an ineligible good or service, any duplicate payment, any payment for a good or service not received (except for such payments where authorized by law), any payment that does not account for credit for applicable discounts, and any payment where insufficient or lack of documentation prevents a reviewer from discerning whether a payment was proper.” Additionally, provisions included in Title 20 CFR Section 604.3(a) states, “A State may pay UC only to an individual who is able to work and available for work for the week for which UC is claimed.” Condition: Upon review of the procedures that the DOL established to process partial claims submitted by employers, deficiencies were noted. The DOL did not require employees to self-certify that they were able to work, available for work, and actively seeking work each week they received benefits. Furthermore, the claimant was unable to self-report additional wages and income the employee may have received from sources other than the employer that initially filed the claim. In addition, when completed procedures over eligibility requirements for a sample of claimants, auditors noted that Employer-Filed Claim Fraud Stops had been internally identified and applied by the DOL for thirteen claimants and nine employers. In these instances, the employer submitted a claim on behalf of the claimant for several weeks at one time and the claims were paid out for all weekending dates. After several days, the DOL flagged the associated claimant and employer to prevent subsequent payments from being released. Based upon this information, auditors, then reviewed the listing of benefit payments made during the fiscal year and determined $15,207,785 in benefits were paid out to 940 claimants by the nine employers initially identified as having Employer-Filed Claim Fraud Stops. It was noted that in one instance, a fraudulent employer submitted claims on 47 different days for 287 claimants for a total of $4,720,252. In one submission alone, on August 31, 2022, the fraudulent employer submitted 62 weekending dates going back to January 4, 2020 for 29 claimants totaling $138,738. In this case the GDOL did not identify the employer as fraudulent until November 7, 2022. While auditors were unable to determine the total dollar amount of improper payments associated with these deficiencies, a review of all benefit payment transactions occurring during the fiscal year under review indicated that the following dollar amounts of benefit payments were submitted and certified by 1,828 employers that were for 33,704 individual claimants: • Regular Unemployment Compensation (UC) - $38,201,885 • State Extended Benefits (SEB) - $7,947 • Reemployment Trade Adjustment Assistance (RTAA) - $5,712 • Federal Pandemic Unemployment Compensation (FPUC) - $12,557,907 • Pandemic Emergency Unemployment Compensation (PEUC) - $3,146,268 • Mixed Earner Unemployment Compensation (MEUC) - $200 Questioned Costs: Though likely questioned costs may exist, these amounts are unknown as sufficient data to analyze benefit payment transactions associated with these employer-filed claims was not available. The following Assistance Listing Numbers would be affected if questioned costs did exist: 17.225 and 17.225 – COVID-19. Cause: The DOL management implemented a flawed employer-filed claim process that did not allow for the monitoring of the employees’ ability to work and wage verification requirements. In addition, internal controls were not implemented to identify potential fraud schemes prior to the initial benefit payment being disbursed Effect: These deficiencies resulted in noncompliance with federal regulations and the Uniform Guidance. Due to lack of controls over employer-filed claims, specifically the inability for claimants to self-certify, it is likely that claimants were paid benefits that they were not eligible to receive. Because eligibility for UC benefits is based on claimants demonstrating that they meet certain eligibility requirements on a weekly basis, the suspension of the requirement for claimants to certify eligibility on a weekly basis did not allow the DOL to determine whether continuing claimants remained eligible for benefits. The State’s failure to administer its UI program in conformity and substantial compliance with federal law can result in loss of the State’s certification and loss of its administrative grant to operate the UC program and/or its employers’ tax credits under Federal Unemployment Tax Act (FUTA). Recommendation: We recommend that the DOL develop a process when an employer-filed claim is submitted that requires the employee to create an account with the DOL, verify information, and self-certify employment status for the week being claimed. We also recommend that the DOL develop controls to prevent the release of payments when identity and eligibility requirements have not been substantiated and verified. In addition, we recommend that the DOL develop analytical procedures and queries to identify improper payments linked to employer-filed claims. Views of Responsible Officials: GDOL acknowledges this is a repeated finding from previous years, therefore the Department concurs with this finding and offers the following response preceded by the auditor’s findings: Auditor’s Findings: The Department of Labor should improve internal controls over Employer Filed Unemployment Compensation claims. GDOL Response: GDOL submits the following information as an overview of the employer filed claims program and actions that have been taken and will continue to address the findings as well as incorporate additional safeguards and available technological system controls in the new system: The Employer Filed Partial Claims (EFC) program originated in the late 1960’s and was designed to allow employers with short-term, temporary periods of lack of work for their employees to retain their workforce when work resumes. This is a program that many large manufacturers in Georgia rely on when they have temporary plant shutdowns and have for decades. When GDOL has attempted in the past to limit this program, we have met strong resistance from Georgia’s manufacturers. This program optimizes our ability to process and pay mass numbers of claims more quickly, such as what occurred at the beginning of the pandemic. EFCs may be filed by an employer for any complete pay-period week during which an otherwise full-time employee works less than full-time, due to lack of work only, and earns an amount not exceeding his/her unemployment insurance weekly benefit amount. Such claims shall not be submitted or allowed for vacation days regardless of whether such vacation days were requested by the employee or established by the employer. Effective March 19, 2020, a temporary, Emergency Rule 300-2-4-05(1), containing Rule 300-2-4-.09(1) was signed which required employers to electronically submit EFCs on behalf of their employees whenever it is necessary to temporarily reduce work hours or there was no work available for a short period due to the pandemic. Employers were allowed to file such claims for full and part-time employees whose earnings had been reduced. In July 2020, the Rule was sunset and employers were no longer required to file EFCs. By electing to submit EFCs on behalf of the individuals, the employer is responsible for attesting by an affidavit to the employment status and weekly earnings of the individual for the EFC submitted. The affidavit certifies that the employer has obtained earnings from other employment as well as other requirements must be completed before EFCs can be entered or uploaded for their employees. Individuals for which EFCs are submitted are considered to be still attached to the employer and are exempt from the requirement to register for employment services per Georgia Employment Security Law Rules 300-2-4-.02. Such individuals are not required to be nor certify on a weekly basis to be actively seeking work. Effective December 6, 2021, the EFC process was revised to require individuals (employees) to complete an EFC profile to include a real-time identity verification before payments can be made. Employers are responsible for submitting the request for the payment to certify to the individual’s employment status, but the individuals must certify their identity and personal information for the claim to be processed. Employees are notified when a claim is filed on their behalf and provided instructions for their portion of completing the EFC process. The MyUI Customer Portal dashboard provides all the EFC correspondence sent to the individual as well as the status of the profile setup and identify verification. Before the implementation of the EFC profile requirement, GDOL utilized the Social Security Administration (SSA) crossmatch and Systematic Alien Verification for Entitlement (SAVE) verification processes to verify the identity of claimants where employers submit claims on their behalf. When we identify employer fraud schemes, we follow the guidance issued by the United States Department of Labor (USDOL) and collaborate with the United States Department of Labor Office of Inspector General (OIG) to investigate these cases. Effective June 29, 2023 GDOL implemented additional Employer Filed Claims safeguards and security measures to reflect amended Georgia Employment Security Rule 300-2-4-.09. Employers must now meet the following conditions to submit Employer-Filed Partial Claims on behalf of their employees: • Employer accounts must have been registered with GDOL for more than 5 years. • Employers must be current on all quarterly tax and wage reports. • Employers must be current on all quarterly contribution taxes, assessments, penalties, and interest. • The week ending date on employer filed claims cannot be older than 30 days. The amended Georgia Employment Security Rule also clarifies that part-time employees are not eligible for Employer Filed Partial Claims. Summary: This finding will persist until a system-wide resolution is implemented in the new modernized UI system. GDOL will include a self-certification and dual certification process for employer filed claims in the new solution.
GDOL acknowledges this is a repeated finding from previous years, therefore the Department concurs with this finding and offers the following response preceded by the auditor’s findings: Auditor’s Findings: The Department of Labor should improve internal controls over Employer Filed Unemployment Compensation claims. GDOL Response: GDOL submits the following information as an overview of the employer filed claims program and actions that have been taken and will continue to address the findings as well as incorporate additional safeguards and available technological system controls in the new system: The Employer Filed Partial Claims (EFC) program originated in the late 1960’s and was designed to allow employers with short-term, temporary periods of lack of work for their employees to retain their workforce when work resumes. This is a program that many large manufacturers in Georgia rely on when they have temporary plant shutdowns and have for decades. When GDOL has attempted in the past to limit this program, we have met strong resistance from Georgia’s manufacturers. This program optimizes our ability to process and pay mass numbers of claims more quickly, such as what occurred at the beginning of the pandemic. EFCs may be filed by an employer for any complete pay-period week during which an otherwise full-time employee works less than full-time, due to lack of work only, and earns an amount not exceeding his/her unemployment insurance weekly benefit amount. Such claims shall not be submitted or allowed for vacation days regardless of whether such vacation days were requested by the employee or established by the employer. Effective March 19, 2020, a temporary, Emergency Rule 300-2-4-05(1), containing Rule 300-2-4-.09(1) was signed which required employers to electronically submit EFCs on behalf of their employees whenever it is necessary to temporarily reduce work hours or there was no work available for a short period due to the pandemic. Employers were allowed to file such claims for full and part-time employees whose earnings had been reduced. In July 2020, the Rule was sunset and employers were no longer required to file EFCs. By electing to submit EFCs on behalf of the individuals, the employer is responsible for attesting by an affidavit to the employment status and weekly earnings of the individual for the EFC submitted. The affidavit certifies that the employer has obtained earnings from other employment as well as other requirements must be completed before EFCs can be entered or uploaded for their employees. Individuals for which EFCs are submitted are considered to be still attached to the employer and are exempt from the requirement to register for employment services per Georgia Employment Security Law Rules 300-2-4-.02. Such individuals are not required to be nor certify on a weekly basis to be actively seeking work. Effective December 6, 2021, the EFC process was revised to require individuals (employees) to complete an EFC profile to include a real-time identity verification before payments can be made. Employers are responsible for submitting the request for the payment to certify to the individual’s employment status, but the individuals must certify their identity and personal information for the claim to be processed. Employees are notified when a claim is filed on their behalf and provided instructions for their portion of completing the EFC process. The MyUI Customer Portal dashboard provides all the EFC correspondence sent to the individual as well as the status of the profile setup and identify verification. Before the implementation of the EFC profile requirement, GDOL utilized the Social Security Administration (SSA) crossmatch and Systematic Alien Verification for Entitlement (SAVE) verification processes to verify the identity of claimants where employers submit claims on their behalf. When we identify employer fraud schemes, we follow the guidance issued by the United States Department of Labor (USDOL) and collaborate with the United States Department of Labor Office of Inspector General (OIG) to investigate these cases. Effective June 29, 2023, GDOL implemented additional Employer Filed Claims safeguards and security measures to reflect amended Georgia Employment Security Rule 300-2-4-.09. Employers must now meet the following conditions to submit Employer-Filed Partial Claims on behalf of their employees: • Employer accounts must have been registered with GDOL for more than 5 years. • Employers must be current on all quarterly tax and wage reports. • Employers must be current on all quarterly contribution taxes, assessments, penalties, and interest. • The week ending date on employer filed claims cannot be older than 30 days. The amended Georgia Employment Security Rule also clarifies that part-time employees are not eligible for Employer Filed Partial Claims. Summary: This finding will persist until a system-wide resolution is implemented in the new modernized UI system. GDOL will include a self-certification and dual certification process for employer filed claims in the new solution.
2022-032
In an effort to assess risk and plan audit procedures, auditors obtained an understanding of the internal controls over the processes for identifying and recording overpayments. In performing these procedures, the DOL stated that crossmatches used to identify possible overpayments were a few quarters behind. Typically, the DOL runs crossmatches three to six months after a quarter’s benefits have been paid. However, the crossmatches for third quarter of 2022, which includes the months of July 2022 to September 2022, were not completed until May 19, 2023, and crossmatches for fourth quarter of 2023, which includes the months of October 2022 to December 2022, were not completed until July 14, 2023. It is also our understanding that after the DOL runs a wage crossmatch for a quarter, the quarter is not run again. In this case, if an employer does not report wages for its employee timely to the DOL, the wages would not be in the crossmatch performed. Based upon this information, auditors requested a complete population of overpayment cases and a reconciliation of the population to data to the financial statements to be provided by August 18, 2023. Auditors planned to select a sample of overpayment cases that the DOL had established during the fiscal year under review and verify that the DOL was properly identifying and processing overpayments. Although the DOL provided a population of overpayment cases on October 5, 2023, auditors could not summarize the data to match amounts reported on the financial statements. Furthermore, auditors inquired if overpayment data in the system of record was reconciled to the billing system and the DOL stated they did not perform such reconciliation. While auditors were unable to verify that the population of overpayment cases was complete and accurate, auditors chose to test the overpayment data to gain a better understanding, review controls and processes, and follow-up on the prior year finding. In doing so, no exceptions were noted, but auditors ultimately could not rely on the data provided by the DOL. Cause: The DOL did not have the ability to easily run transaction-level or claimant-level queries for overpayments in their systems. Furthermore, the DOL did not reconcile overpayment data to subsystems, federal reports, or accounting records and was not able to do so in a timely manner when requested by the Department of Audits and Accounts and the State Accounting Office. Effect: Due to the lack of controls, there is an increased risk that possible fraudulent claims and improper benefits paid during the fiscal year 2023 will not be identified and investigated until the latter half of fiscal year 2024. The deficiencies in the identification and recording of benefit overpayments resulted in noncompliance with federal and state regulations. Additionally, inaccurate reports were likely filed with the U.S. Department of Labor. Furthermore, the lack of accurate and complete data associated with benefit overpayments prevented auditors from testing compliance requirements associated with overpayments. These unknown factors, along with additional issues, are the basis for our adverse opinion on the UI program. Recommendation: The DOL management should develop and implement procedures to identify and record benefit overpayments in a timely and accurate manner. These procedures should allow for the tracking of information by fiscal year and periodic reconciliation of detail records to the general ledger and various required reports. We also recommend that the DOL reperform each quarterly crossmatch for one year to ensure wages submitted late by employers are included in the crossmatch to identify any exceptions that might be missed due to late submissions. Views of Responsible Officials: GDOL acknowledges this is a repeated finding from previous years, therefore the Department concurs with this finding and offers the following response preceded by the auditor’s findings: Auditor’s Findings: The Georgia Department of Labor did not maintain adequate controls over the identification, recording, and reporting of benefit overpayments associated with the Unemployment Insurance programs. GDOL Response: GDOL now freezes the overpayment data at the end of every month so we can conduct periodic reconciliation of the overpayment records. This will allow discrepancies to be identified faster and resolved before the deadline to submit the report for the specified period. GDOL consults with USDOL’s national 227 reporting specialists on an ongoing basis to work towards a reconciliation of previously submitted reports. Federal regulations require an actual person to review and establish fraudulent overpayments. Due to the volume of claims and the number of cross matches to be performed on all state and federal pandemic programs, it requires multiple GDOL staffing levels to manually review all cross matches, requiring increased levels of state and federal funding. The crossmatch process is conducted using Onpoint BARTS software which runs a systematic check against weeks in a quarter for which benefits are paid and wages are reported during the same quarter. Although the program may detect weeks paid and wages reported, this alone is not indicative of an overpayment. Therefore, the process involves verification correspondence being sent to both the claimant and the employer, as applicable, to verify the status of employment, the wages earned as well as the weeks in which an individual worked and earned the wages. Based on responses, an assessment is made to determine if an overpayment exists and subsequent actions are taken accordingly. We are prohibited from assuming a match is an overpayment. It is not an overpayment until we have completed a full investigation and provided due process to all parties. GDOL developed an aggressive plan to complete all crossmatches. We are running cross matches on all the state and federal programs. The Department has a significant number of pending and potential overpayment investigations that may result in either a non-fraud or fraud determination. We are utilizing non-overpayment staff to assist with overpayment investigations. Additionally, we are utilizing temporary agency staff to perform some clerical duties; however, federal regulations prohibit non-merit staff from adjudicating and releasing overpayment decisions. We are slated to run our last accelerated crossmatch in March 2024 and will resume our regular crossmatch schedule in June 2024. Additionally, GDOL has procured a vendor to build and implement a modernized UI system slated to be launched in 2026. We will continue to utilize available resources to investigate and establish overpayments in the legacy system as quickly as possible and will continue to do so within the program parameters in the new system. Summary: The current unemployment system is obsolete and cannot be remediated at this time. Therefore, we acknowledge that this finding will persist until a system-wide resolution is implemented in the new modernized UI system. GDOL greatly appreciates the feedback and recommendations and will consider this information in our endeavors to modernize our UI system and business processes.
Show full finding ▾Hide full finding ▴2023-030 Improve Controls over the Identification, Recording, and Reporting of Overpayments Compliance Requirement: Special Tests and Provisions Internal Control Impact: Material Weakness Compliance Impact: Material Noncompliance Federal Awarding Agency: U.S. Department of Labor Pass-Through Entity: None AL Numbers and Titles: 17.225 – Unemployment Insurance 17.225 – COVID-19 – Unemployment Insurance Federal Award Numbers: UI340532055A13 (Year:2020), UI347102055A13 (Year:2020), UI356432155A13 (Year:2021), UI359392160A13 (Year:2021), UI370592155A13 (Year:2021), UI372182255A13 (Year:2022), UI379762260A13 (Year:2022), UI393172355A13 (Year:2023), EUISSA2055A13 (Year:2020) Questioned Costs: None Identified Repeat of Prior Year Findings: 2022-029, 2021-038, 2020-038 Description: The Georgia Department of Labor did not maintain adequate controls over the identification, recording, and reporting of benefit overpayments associated with the Unemployment Insurance programs. Background Information: The Unemployment Insurance (UI) program, created by the Social Security Act (Pub. L. No. 74-271), provides Unemployment Compensation (UC) benefits to workers who are unemployed through no fault of their own and are seeking reemployment. To receive benefits, claimants must be able to work, available for work, and actively seeking work. On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law. The CARES Act was designed to mitigate the economic effects of the COVID-19 pandemic in a variety of ways, including providing additional UI provisions. Title II, Subtitle A of the CARES Act, authorizes the following temporary UI programs: • Federal Pandemic Unemployment Compensation (FPUC) – The FPUC program provides eligible individuals with $600 per week in addition to the weekly benefit amount they receive from certain other UC programs. • Pandemic Emergency Unemployment Compensation (PEUC) – The PEUC program provides up to 13 weeks of benefits to individuals who have exhausted all rights to regular compensation under State law or Federal law with respect to a benefit year that ended on or after July 1, 2019, have no rights to regular compensation with respect to a week under any other State or Federal UC law, are not receiving compensation with respect to such week under the UC law of Canada, and are able to work, available to work, and actively seeking work. • Pandemic Unemployment Assistance (PUA) – The PUA program provides up to 39 weeks of benefits to those individuals who are not eligible for regular UC or extended benefits under State or Federal law or PEUC, including those who have exhausted all rights to such benefits. In addition, the State Extended Benefits (SEB) program, which is an extension of UC benefits, becomes available for payment when the State’s 13-week insured unemployment rate (IUR) exceeds 5% and pays claimants up to an additional 13 weeks of compensation. Under the SEB program, the State is required to provide 50% of the amounts paid to the majority of eligible SEB claimants, which are those not covered by Federal law or special provisions of State law However, under the CARES Act, the U.S. Department of Labor will reimburse the State at 100% of eligible costs for the SEB program. The State of Georgia became eligible to pay SEB May 10, 2020. However, the first payable weekending date (WED) was on July 4, 2020, as the first payable WED of PEUC was April 4, 2020. Further, the last payable WED for SEB was February 6, 2021. Criteria: As a recipient of federal awards, the DOL is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls. Title 34, Chapter 8, Article 9 of the Official Code of Georgia Annotated (OCGA) §34-8-254 defines overpayments as the sum of benefits received by any person while any conditions for the receipt of benefits were not fulfilled or while the person was disqualified from receiving benefits. OCGA §34-8-254 assigns legal responsibility and authority for the collection of overpayments to the Commissioner of the DOL. Additionally, per the UI Report Handbook No. 401, the ETA 227 and ETA 902P reports are required to be submitted to the U.S. Department of Labor in a timely and accurate manner. The ETA 227 reports are due quarterly on the first day of the second month after the quarter of reference, and all applicable date on the ETA 227 reports should be traceable to the data regarding overpayments and recoveries in the state’s financial accounting system. The ETA 902P report is due on the 30th of the month following the month to which data relate and should contain monthly data on PUA activities. Condition: In an effort to assess risk and plan audit procedures, auditors obtained an understanding of the internal controls over the processes for identifying and recording overpayments. In performing these procedures, the DOL stated that crossmatches used to identify possible overpayments were a few quarters behind. Typically, the DOL runs crossmatches three to six months after a quarter’s benefits have been paid. However, the crossmatches for third quarter of 2022, which includes the months of July 2022 to September 2022, were not completed until May 19, 2023, and crossmatches for fourth quarter of 2023, which includes the months of October 2022 to December 2022, were not completed until July 14, 2023. It is also our understanding that after the DOL runs a wage crossmatch for a quarter, the quarter is not run again. In this case, if an employer does not report wages for its employee timely to the DOL, the wages would not be in the crossmatch performed. Based upon this information, auditors requested a complete population of overpayment cases and a reconciliation of the population to data to the financial statements to be provided by August 18, 2023. Auditors planned to select a sample of overpayment cases that the DOL had established during the fiscal year under review and verify that the DOL was properly identifying and processing overpayments. Although the DOL provided a population of overpayment cases on October 5, 2023, auditors could not summarize the data to match amounts reported on the financial statements. Furthermore, auditors inquired if overpayment data in the system of record was reconciled to the billing system and the DOL stated they did not perform such reconciliation. While auditors were unable to verify that the population of overpayment cases was complete and accurate, auditors chose to test the overpayment data to gain a better understanding, review controls and processes, and follow-up on the prior year finding. In doing so, no exceptions were noted, but auditors ultimately could not rely on the data provided by the DOL. Cause: The DOL did not have the ability to easily run transaction-level or claimant-level queries for overpayments in their systems. Furthermore, the DOL did not reconcile overpayment data to subsystems, federal reports, or accounting records and was not able to do so in a timely manner when requested by the Department of Audits and Accounts and the State Accounting Office. Effect: Due to the lack of controls, there is an increased risk that possible fraudulent claims and improper benefits paid during the fiscal year 2023 will not be identified and investigated until the latter half of fiscal year 2024. The deficiencies in the identification and recording of benefit overpayments resulted in noncompliance with federal and state regulations. Additionally, inaccurate reports were likely filed with the U.S. Department of Labor. Furthermore, the lack of accurate and complete data associated with benefit overpayments prevented auditors from testing compliance requirements associated with overpayments. These unknown factors, along with additional issues, are the basis for our adverse opinion on the UI program. Recommendation: The DOL management should develop and implement procedures to identify and record benefit overpayments in a timely and accurate manner. These procedures should allow for the tracking of information by fiscal year and periodic reconciliation of detail records to the general ledger and various required reports. We also recommend that the DOL reperform each quarterly crossmatch for one year to ensure wages submitted late by employers are included in the crossmatch to identify any exceptions that might be missed due to late submissions. Views of Responsible Officials: GDOL acknowledges this is a repeated finding from previous years, therefore the Department concurs with this finding and offers the following response preceded by the auditor’s findings: Auditor’s Findings: The Georgia Department of Labor did not maintain adequate controls over the identification, recording, and reporting of benefit overpayments associated with the Unemployment Insurance programs. GDOL Response: GDOL now freezes the overpayment data at the end of every month so we can conduct periodic reconciliation of the overpayment records. This will allow discrepancies to be identified faster and resolved before the deadline to submit the report for the specified period. GDOL consults with USDOL’s national 227 reporting specialists on an ongoing basis to work towards a reconciliation of previously submitted reports. Federal regulations require an actual person to review and establish fraudulent overpayments. Due to the volume of claims and the number of cross matches to be performed on all state and federal pandemic programs, it requires multiple GDOL staffing levels to manually review all cross matches, requiring increased levels of state and federal funding. The crossmatch process is conducted using Onpoint BARTS software which runs a systematic check against weeks in a quarter for which benefits are paid and wages are reported during the same quarter. Although the program may detect weeks paid and wages reported, this alone is not indicative of an overpayment. Therefore, the process involves verification correspondence being sent to both the claimant and the employer, as applicable, to verify the status of employment, the wages earned as well as the weeks in which an individual worked and earned the wages. Based on responses, an assessment is made to determine if an overpayment exists and subsequent actions are taken accordingly. We are prohibited from assuming a match is an overpayment. It is not an overpayment until we have completed a full investigation and provided due process to all parties. GDOL developed an aggressive plan to complete all crossmatches. We are running cross matches on all the state and federal programs. The Department has a significant number of pending and potential overpayment investigations that may result in either a non-fraud or fraud determination. We are utilizing non-overpayment staff to assist with overpayment investigations. Additionally, we are utilizing temporary agency staff to perform some clerical duties; however, federal regulations prohibit non-merit staff from adjudicating and releasing overpayment decisions. We are slated to run our last accelerated crossmatch in March 2024 and will resume our regular crossmatch schedule in June 2024. Additionally, GDOL has procured a vendor to build and implement a modernized UI system slated to be launched in 2026. We will continue to utilize available resources to investigate and establish overpayments in the legacy system as quickly as possible and will continue to do so within the program parameters in the new system. Summary: The current unemployment system is obsolete and cannot be remediated at this time. Therefore, we acknowledge that this finding will persist until a system-wide resolution is implemented in the new modernized UI system. GDOL greatly appreciates the feedback and recommendations and will consider this information in our endeavors to modernize our UI system and business processes.
GDOL acknowledges this is a repeated finding from previous years, therefore the Department concurs with this finding and offers the following response preceded by the auditor’s findings: Auditor’s Findings: The Georgia Department of Labor did not maintain adequate controls over the identification, recording, and reporting of benefit overpayments associated with the Unemployment Insurance programs. GDOL Response: GDOL now freezes the overpayment data at the end of every month so we can conduct periodic reconciliation of the overpayment records. This will allow discrepancies to be identified faster and resolved before the deadline to submit the report for the specified period. GDOL consults with USDOL’s national 227 reporting specialists on an ongoing basis to work towards a reconciliation of previously submitted reports. Federal regulations require an actual person to review and establish fraudulent overpayments. Due to the volume of claims and the number of cross matches to be performed on all state and federal pandemic programs, it requires multiple GDOL staffing levels to manually review all cross matches, requiring increased levels of state and federal funding. The crossmatch process is conducted using software which runs a systematic check against weeks in a quarter for which benefits are paid and wages are reported during the same quarter. Although the program may detect weeks paid and wages reported, this alone is not indicative of an overpayment. Therefore, the process involves verification correspondence being sent to both the claimant and the employer, as applicable, to verify the status of employment, the wages earned as well as the weeks in which an individual worked and earned the wages. Based on responses, an assessment is made to determine if an overpayment exists and subsequent actions are taken accordingly. We are prohibited from assuming a match is an overpayment. It is not an overpayment until we have completed a full investigation and provided due process to all parties. GDOL developed an aggressive plan to complete all crossmatches. We are running cross matches on all the state and federal programs. The Department has a significant number of pending and potential overpayment investigations that may result in either a non-fraud or fraud determination. We are utilizing non-overpayment staff to assist with overpayment investigations. Additionally, we are utilizing temporary agency staff to perform some clerical duties; however, federal regulations prohibit non-merit staff from adjudicating and releasing overpayment decisions. We are slated to run our last accelerated crossmatch in March 2024 and will resume our regular crossmatch schedule in June 2024. Additionally, GDOL has procured a vendor to build and implement a modernized unemployment insurance (UI) system slated to be launched in 2026. We will continue to utilize available resources to investigate and establish overpayments in the legacy system as quickly as possible and will continue to do so within the program parameters in the new system. Summary: The current unemployment system is obsolete and cannot be remediated at this time Therefore, we acknowledge that this finding will persist until a system-wide resolution is implemented in the new modernized UI system. GDOL greatly appreciates the feedback and recommendations and will consider this information in our endeavors to modernize our UI system and business processes.
2022-029
During our review, we examined certified payrolls for forty active projects. For each of these projects, we reviewed documentation maintained in the district offices, including the certified payrolls, for randomly selected weekly payroll periods during a month in fiscal year 2023. We found five instances in which the required payroll review form was not signed by the construction manager within 30 days of the work performed and three instances in which the required payroll review form was not signed by the construction manager. Cause: The DOT did not have sufficient oversight of the contractor payroll review process to ensure that the staff followed and documented established procedures. Effect: Inconsistent documentation of payroll reviews diminishes the DOT’s ability to administer and enforce the prevailing wage rate requirements, which increases the risk of noncompliance and workers not being paid the federally prescribed prevailing wage rates. Recommendation: We recommend the DOT monitor the performance of its established payroll review procedures to ensure that district offices comply with and properly document them throughout the year. Additionally, we recommend the DOT continue to provide training to staff who oversee DBA compliance and establish policies and procedures for documenting (i.e., maintaining evidence of) certified payroll reviews. Views of Responsible Officials: We concur with this finding.
Show full finding ▾Hide full finding ▴2023-031 Strengthen Controls over Review of Certified Payrolls Compliance Requirement: Special Tests and Provisions Internal Control Impact: Significant Deficiency Compliance Impact: None Federal Awarding Agency: U.S. Department of Transportation Pass-Through Entity: None AL Numbers and Titles: 20.205 – Highway Planning and Construction 20.205 - COVID-19 – Highway Planning and Construction Federal Award Numbers: Various – See Table 2023-031 Questioned Costs: None Identified Description: The Department of Transportation should strengthen internal controls to ensure that reviews of certified payrolls are consistently documented. Background Information: The Highway Planning and Construction Program provides funding to states to plan and develop an integrated, interconnected transportation system important to interstate commerce and travel by constructing and rehabilitating the National Highway System, including interstate highways and public roads. The Davis-Bacon Act (DBA) was enacted by Congress on March 3, 1931, to assure local workers a fair wage and to provide local contractors a fair opportunity to compete for local federal government contracts. In addition, the DBA requires contractors and subcontractors to pay federally prescribed prevailing wages to laborers and mechanics working on federally funded construction contracts in excess of $2,000.00. Contractors or subcontractors working on a construction project subject to the DBA are required to submit a copy of weekly payroll and a statement of compliance (i.e., certified payrolls) for each week in which contract work is performed. The Department of Transportation (DOT) is responsible for administering and enforcing the prevailing wage rate requirements in its covered contracts and has established policies and procedures in its Construction Manual for collection, inspection and verification of certified payrolls. The Construction Manual includes requirements for performing payroll reviews and withholding monthly payments for any labor standard violations. Criteria: As a recipient of federal awards, the DOT is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls. Condition: During our review, we examined certified payrolls for forty active projects. For each of these projects, we reviewed documentation maintained in the district offices, including the certified payrolls, for randomly selected weekly payroll periods during a month in fiscal year 2023. We found five instances in which the required payroll review form was not signed by the construction manager within 30 days of the work performed and three instances in which the required payroll review form was not signed by the construction manager. Cause: The DOT did not have sufficient oversight of the contractor payroll review process to ensure that the staff followed and documented established procedures. Effect: Inconsistent documentation of payroll reviews diminishes the DOT’s ability to administer and enforce the prevailing wage rate requirements, which increases the risk of noncompliance and workers not being paid the federally prescribed prevailing wage rates. Recommendation: We recommend the DOT monitor the performance of its established payroll review procedures to ensure that district offices comply with and properly document them throughout the year. Additionally, we recommend the DOT continue to provide training to staff who oversee DBA compliance and establish policies and procedures for documenting (i.e., maintaining evidence of) certified payroll reviews. Views of Responsible Officials: We concur with this finding.
Verbal direction was given initially in a meeting with the Contract Liaisons (construction auditors) and to the District Construction Managers to remind them that the Certified Payroll Review Form must be used. This will also be discussed at the District Construction Managers meeting in April and a memo is being distributed to the District Construction Managers and Contract Liaisons reminding everyone of the process. Contract Liaisons who audit the projects for contract compliance have been informed to make sure the Certified Payroll Review Form is being used. The use of the form and proper procedure for checking payrolls will be verified each time the project is audited. The Contract Liaisons have also been informed to let each of the construction managers know to use the form. Payroll review will also be incorporated into the Contract Liaison’s annual training so that the construction staff will be reminded of the process and to also inform and educate new employees of the process. The procedures to be followed are outlined in the Construction Manual. (excerpt below) The Construction Manager shall complete the Certified Payroll Review Form for ALL payrolls reviewed. The Form shall be complete with any observed issues documented in as much detail as possible and shall be signed and dated by the Construction Manager. The Construction Manager should compare the wage rates listed on the payrolls to the applicable wage rates listed in the Contract based on the job title of the Contractors/Subcontractors employee. The Construction Manager should place comments or check marks by each employee on the Contractor’s/Subcontractor’s payrolls as they are reviewed, and wages compared. Once a set of payrolls has been reviewed, the Construction Manager will print their name and current date in the top right-hand corner of the payroll and initial.
Our examination of compliance with Procurement and Suspension and Debarment regulations for the Cash Assistance program revealed that DHS did not follow the State’s competitive bidding process for the selection of the vendor, as the agency did not post the solicitation using the Georgia Procurement Registry as required. DHS was also unable to provide the required written notice and justification documentation to support the need to deviate from the competitive bidding process. Cause: Through discussion with DHS management, the sensitive nature of the Cash Assistance program required prompt action and disbursal of funds to eligible individuals, which the competitive bidding process would delay. Due to the tight project timetable, DHS moved forward without an approved expedited procurement from DOAS. Additionally, DHS did not subsequently notify DOAS of the procurement due to key personnel turnover within the DHS Office of Procurement and Contracts. Effect: Federal funds may be used to fund contracts with entities that are not in compliance with federal provisions and the Georgia Procurement Manual. In addition, DHS could enter into contracts that are not the most advantageous to the State. Recommendation: The DHS should improve internal controls as they relate to the procurement and contracting processes to ensure that all contracts follow the processes established in the Georgia Procurement Manual. Views of Responsible Officials: The Georgia Department of Human Services (DHS) concurs with the finding.
Show full finding ▾Hide full finding ▴2023-032 Improve Controls over Procurement Competitive Bidding Compliance Requirement: Procurement and Suspension and Debarment Internal Control Impact: Material Weakness Compliance Impact: Material Noncompliance Federal Awarding Agency: U.S. Department of the Treasury Pass-Through Entity: None AL Number and Title: 21.027 – COVID-19 – Coronavirus State and Local Fiscal Recovery Funds Federal Award Number: SLFRP1029 (Year: 2023) Questioned Costs: None Identified Description: The Georgia Department of Human Services should improve internal controls to ensure that required procurement activities regarding competitive bidding are performed appropriately. Background Information: The Coronavirus State Fiscal Recovery Fund (CSLFRF), provides direct payments to states, US territories, Tribal governments, metropolitan cities, counties, and non-entitlement units of local government to: 1. Respond to the public health emergency with respect to Coronavirus Disease 2019 (COVID-19) or its negative economic impacts, including by providing assistance to households, small businesses, nonprofits, and impacted industries, such as tourism, travel, and hospitality ; 2. Respond to workers performing essential work during the COVID-19 public health emergency by providing premium pay to eligible workers of the recipient that perform essential work or by providing grants to eligible employers that have eligible workers who are performing essential work; 3. Provide government services, to the extent of the reduction in revenue of the eligible entities due to the COVID-19 public health emergency relative to revenues collected in the most recent full fiscal year of the eligible entities prior to the emergency; and 4. Make necessary investments in water, sewer, or broadband infrastructure. In August 2022, the Governor’s Office of Planning and Budget (OPB) dedicated more than $1 billion of CSLFRF federal funds to the Department of Human Services (DHS) to establish the Cash Assistance program. The Cash Assistance program provided one-time cash assistance of up to $350 for active enrollees of the Medicaid, PeachCare for Kids, Supplemental Nutrition Assistance Program, and/or Temporary Assistance for Needy Families government benefit programs in response to the negative economic impacts of the COVID-19 public health emergency. Criteria: As a recipient of federal awards, the DHS is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls. The DHS is also required to comply with the procurement standards set forth in 2 CFR 200.317 through 2 CFR 200.327 of the Uniform Guidance. Pursuant to 2 CFR 200.317, “When procuring property and services under a Federal award, a State must follow the same policies and procedures it uses for procurements from its non-Federal funds.” As a state agency, DHS adheres to the State of Georgia Procurement Manual issued by the Department of Administrative Services (DOAS). Per the State of Georgia Procurement Manual, State entities should utilize competitively bid contracts to the extent feasible. State purchasing regulations require State entities to publicly advertise solicitations using the Georgia Procurement Registry (GPR). The GPR is a public listing of solicitations posted by Georgia government entities. Additionally, the Georgia Procurement Manual notes that the existence of emergency situations creates an urgent need for supplies or services that may not be met through the normal procurement process. If an emergency purchase requires prompt but not immediate action, the State Entity should, to the extent possible given the circumstances of such an emergency, contact multiple suppliers and solicit informal quotes. In the event of an emergency purchase, State entities must provide DOAS with written notice and justification by completing form SPD-NI004 Emergency Justification Form. Condition: Our examination of compliance with Procurement and Suspension and Debarment regulations for the Cash Assistance program revealed that DHS did not follow the State’s competitive bidding process for the selection of the vendor, as the agency did not post the solicitation using the Georgia Procurement Registry as required. DHS was also unable to provide the required written notice and justification documentation to support the need to deviate from the competitive bidding process. Cause: Through discussion with DHS management, the sensitive nature of the Cash Assistance program required prompt action and disbursal of funds to eligible individuals, which the competitive bidding process would delay. Due to the tight project timetable, DHS moved forward without an approved expedited procurement from DOAS. Additionally, DHS did not subsequently notify DOAS of the procurement due to key personnel turnover within the DHS Office of Procurement and Contracts. Effect: Federal funds may be used to fund contracts with entities that are not in compliance with federal provisions and the Georgia Procurement Manual. In addition, DHS could enter into contracts that are not the most advantageous to the State. Recommendation: The DHS should improve internal controls as they relate to the procurement and contracting processes to ensure that all contracts follow the processes established in the Georgia Procurement Manual. Views of Responsible Officials: The Georgia Department of Human Services (DHS) concurs with the finding.
DHS has established a process for ensuring all Open Market Purchases above $24,999.99 are directed to a competitive solicitation per the State of Georgia Procurement Manual. The new DHS Office of Procurement Services is accountable for monitoring all Open Market Purchases and the DHS competitive solicitation process.
FAC accepted this audit on May 10, 2023 — management decision was due November 10, 2023.
Upon performing testing over subrecipient monitoring, auditors noted the following deficiencies: ? A sample of 23 subrecipients associated with the Special Education Cluster, 21st CCLC program, Title II, Part A program, and ESF program was randomly selected for testing using a non-statistical sampling method. Auditors examined documentation to determine if the GaDOE had reviewed the results of each subrecipient?s audits appropriately; however, this testing revealed that one of the audits was not obtained or reviewed by the GaDOE as required. Additionally, the GaDOE could not provide documentation that the results of this audit were considered in the risk assessment process and followed up on to ensure that the subrecipient took appropriate and timely action to correct any deficiencies noted in the audit. ? A sample of seven subrecipients associated with the 21st CCLC program was selected for testing using a non-statistical sampling method. Auditors reviewed documentation to determine if appropriate monitoring was conducted over these subrecipients in accordance with the GaDOE?s internal policy and the Uniform Guidance; however, this testing revealed that proper monitoring activities were not conducted for one subrecipient tested. ? A sample of 23 subawards related to the Special Education Cluster was randomly selected for testing using a non-statistical sampling method. These subawards were reviewed to determine if all required components were included; however, this testing revealed that the subrecipient?s unique entity identifier was omitted from the subaward document in three instances. Cause: The GaDOE stated that the responsibility for maintaining documentation for audits of non-profit subrecipients was shifted to a new department due to the elimination of positions during the pandemic and was inadvertently overlooked. Additionally, the GaDOE stated that though other monitoring activities associated with the 21st CCLC program were performed, cross-functional monitoring and a site visit was not performed due to the fact that it was the last year that this particular subrecipient would be funded. Furthermore, the spreadsheet used to accumulate all subrecipient information did not include the UEI for three subrecipients due to the fact that the UEI requirement was recently implemented and the GaDOE experienced difficulty in obtaining the numbers. Effect: The subrecipient monitoring deficiencies resulted in noncompliance with federal regulations. Without effective subrecipient monitoring controls in place to ensure compliance with all applicable federal requirements, there is an increased risk of federal funds being expended for unallowable purposes, subrecipients not properly administering federal programs in accordance with federal statutes, regulations, and the terms and conditions of the subawards, and untimely detection and correction of noncompliance. Recommendation: We recommend that the GaDOE: ? Follow established policies and procedures to ensure that subrecipients receive audits when necessary, the results of these audits are considered in the risk assessment process, and timely management decisions are made for any audit findings pertaining to federal awards; ? Follow established policies and procedures for monitoring of subrecipients to ensure proper accountability and compliance program requirements; and ? Update the spreadsheet used to accumulate all subrecipient information to ensure that all subaward documents include the required components reflected within the Uniform Guidance. Views of Responsible Officials: We concur with this finding. We have transitioned the subrecipient audit monitoring process to the Financial Review team within GaDOE which currently performs LEA audit monitoring. The controls already in place for the Financial Review team?s LEA audit monitoring will be duplicated for nonprofit audit monitoring to ensure all required procedures are complete and timely. Additionally, we will review the Division of Federal Programs Handbook, the 21st CCLC Subgrantee Manual, and the 21st CCLC Internal Operations manual to ensure compliance to the Uniform Grants Guidance for subrecipient monitoring. Where needed, language will be added to each manual to clarify and emphasize that subrecipient monitoring includes application review, budget review, drawdown approval, completion report review in addition to virtual or onsite monitoring of specific program indicators. The 21st CCLC documents will be updated to ensure a clear subrecipient monitoring process is established for the final year of a cohort. This process will clarify that subrecipient monitoring during the last funded year will include application review, budget review, drawdown approval, and completion report review. Additionally, LEAs identified as ?high-risk? will have an onsite or virtual monitoring on specific 21st CCLC indicators.
Show full finding ▾Hide full finding ▴2022-010 Improve Controls over Subrecipient Monitoring Compliance Requirement: Subrecipient Monitoring Internal Control Impact: Significant Deficiency Compliance Impact: Nonmaterial Noncompliance Federal Awarding Agency: U.S. Department of Education Pass-Through Entity: None AL Number and Title: 84.027 ? Special Education Grants to States 84.173 ? Special Education Preschool Grants 84.287 ? Twenty-First Century Community Learning Centers 84.367 ? Supporting Effective Instruction State Grants 84.425C ? COVID-19 ? Governor?s Emergency Education Relief Fund 84.425D ? COVID-19 ? Elementary and Secondary Emergency Relief (ESSER) Fund 84.425R ? COVID-19 ? Coronavirus Response and Relief Supplemental Appropriations Act, 2021 ? Emergency Assistance to Non-Public Schools (CRRSA EANS) 84.425U ? COVID-19 ? American Rescue Plan ? Elementary and Secondary Emergency Relief (ARP ESSER) Federal Award Number: H027A180073 (Year: 2019), H027A190073 (Year: 2020), H027A200073 (Year: 2021), H027A210073 (Year: 2022), H027X210073 (Year: 2022), H173A180081 (Year: 2019), H173A190081 (Year: 2020), H173A200081 (Year: 2021), H173A210081 (Year: 2022), H173X210081 (Year: 2022), S287C1900010 (Year: 2020), S287C200010 (Year 2021), S287C210010 (Year: 2022), S367A190001 (Year: 2020), S367A20001 (Year: 2021), S367A210001 (Year: 2022), S425C200049 (Year: 2021), S425C210049 (Year: 2021), S425D200012 (Year: 2020), S425D210012 (Year: 2021), S425R210034 (Year: 2021), S425U210012-21A (Year: 2021) Questioned Costs: None Identified Description: The Georgia Department of Education should improve internal controls to ensure that required subrecipient monitoring activities are performed appropriately. Background Information: The Special Education Cluster, which is comprised of the Special Education Grants to States (IDEA, Part B) and Special Education Preschool Grants (IDEA Preschool) programs, was created by the Individuals with Disabilities Education Act (IDEA). Special Education Cluster funding is available to ensure that all children with disabilities have available to them a free appropriate public education that emphasizes special education and related services designed to meet their unique needs and prepares them for further education, employment, and independent living; ensure that the rights of children with disabilities and their parents are protected; assist states, localities, educational service agencies, and federal agencies to provide for the education of all children with disabilities; and assess and ensure the effectiveness of efforts to educate children with disabilities. The Twenty-First Century Community Learning Centers (21st CCLC) program was created by the Elementary and Secondary Education Act of 1965 to establish or expand community learning centers that provide students with academic enrichment opportunities during non-school hours or periods when school is not in session. These community learning centers provide services to support student learning and development, including tutoring and mentoring, homework help, academic enrichment, community service opportunities, and music, arts, sports, and cultural activities. The Supporting Effective Instruction State Grants (Title II, Part A) program was created by the Elementary and Secondary Education Act of 1965 to provide funds to state educational agencies and local educational agencies to increase student achievement consistent with the challenging state academic standards; improve the quality and effectiveness of teachers, principals, and other school leaders; increase the number of teachers, principals, and other school leaders who are effective in improving student academic achievement in schools; and provide low-income and minority students greater access to effective teachers, principals, and other school leaders. The Education Stabilization Fund (ESF) was created by the Coronavirus Aid, Relief, and Economic Security (CARES) Act to provide financial resources to educational entities to prevent, prepare for, and respond to coronavirus. Various ESF subprograms were created and allotted funding through COVID-19-related legislation. Many of these subprograms were designed to address the impact that COVID-19 has had, and continues to have, on elementary and secondary schools across the nation. These subprograms include the Elementary and Secondary School Emergency Relief (ESSER) Fund, American Rescue Plan ? Elementary and Secondary School Emergency Relief (ARP ESSER), and Coronavirus Response and Relief Supplemental Appropriations Act, 2021 ? Emergency Assistance to Non-Public School (CRRSA EANS) programs. Additionally, elementary and secondary schools were allotted funding through the Governor?s Emergency Education Relief (GEER) Fund, which allocated resources to governors to provide emergency assistance to education-related-entities. Funds associated with the Special Education Cluster, 21st CCLC program, Title II, Part A program, and ESF subprograms are provided to the Georgia Department of Education (GaDOE) for allocation to eligible subrecipients. Because the GaDOE subgrants program funds to various entities, the GaDOE must perform certain monitoring activities related to these subrecipients. Criteria: As a recipient of federal awards, the GaDOE is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 ? Internal Controls. Additionally, provisions included in the Uniform Guidance, Section 200.332 establish requirements for pass-through entities and state in part that ?All pass-through entities must: (a) Ensure that every subaward is clearly identified to the subrecipient as a subaward and includes? [required] information at the time of the subaward? (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward; and that subaward performance goals are achieved. Pass-through monitoring of the subrecipient must include? (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and other means. (3) Issuing a management decision for audit findings pertaining to the Federal award provided to the subrecipient from the passthrough entity? (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? (g) Consider whether the results of the subrecipient?s audits, on-site reviews, or other monitoring indicate conditions that necessitate adjustments to the pass-through entity?s own records. (h) Consider taking enforcement against noncompliant subrecipients.? Condition: Upon performing testing over subrecipient monitoring, auditors noted the following deficiencies: ? A sample of 23 subrecipients associated with the Special Education Cluster, 21st CCLC program, Title II, Part A program, and ESF program was randomly selected for testing using a non-statistical sampling method. Auditors examined documentation to determine if the GaDOE had reviewed the results of each subrecipient?s audits appropriately; however, this testing revealed that one of the audits was not obtained or reviewed by the GaDOE as required. Additionally, the GaDOE could not provide documentation that the results of this audit were considered in the risk assessment process and followed up on to ensure that the subrecipient took appropriate and timely action to correct any deficiencies noted in the audit. ? A sample of seven subrecipients associated with the 21st CCLC program was selected for testing using a non-statistical sampling method. Auditors reviewed documentation to determine if appropriate monitoring was conducted over these subrecipients in accordance with the GaDOE?s internal policy and the Uniform Guidance; however, this testing revealed that proper monitoring activities were not conducted for one subrecipient tested. ? A sample of 23 subawards related to the Special Education Cluster was randomly selected for testing using a non-statistical sampling method. These subawards were reviewed to determine if all required components were included; however, this testing revealed that the subrecipient?s unique entity identifier was omitted from the subaward document in three instances. Cause: The GaDOE stated that the responsibility for maintaining documentation for audits of non-profit subrecipients was shifted to a new department due to the elimination of positions during the pandemic and was inadvertently overlooked. Additionally, the GaDOE stated that though other monitoring activities associated with the 21st CCLC program were performed, cross-functional monitoring and a site visit was not performed due to the fact that it was the last year that this particular subrecipient would be funded. Furthermore, the spreadsheet used to accumulate all subrecipient information did not include the UEI for three subrecipients due to the fact that the UEI requirement was recently implemented and the GaDOE experienced difficulty in obtaining the numbers. Effect: The subrecipient monitoring deficiencies resulted in noncompliance with federal regulations. Without effective subrecipient monitoring controls in place to ensure compliance with all applicable federal requirements, there is an increased risk of federal funds being expended for unallowable purposes, subrecipients not properly administering federal programs in accordance with federal statutes, regulations, and the terms and conditions of the subawards, and untimely detection and correction of noncompliance. Recommendation: We recommend that the GaDOE: ? Follow established policies and procedures to ensure that subrecipients receive audits when necessary, the results of these audits are considered in the risk assessment process, and timely management decisions are made for any audit findings pertaining to federal awards; ? Follow established policies and procedures for monitoring of subrecipients to ensure proper accountability and compliance program requirements; and ? Update the spreadsheet used to accumulate all subrecipient information to ensure that all subaward documents include the required components reflected within the Uniform Guidance. Views of Responsible Officials: We concur with this finding. We have transitioned the subrecipient audit monitoring process to the Financial Review team within GaDOE which currently performs LEA audit monitoring. The controls already in place for the Financial Review team?s LEA audit monitoring will be duplicated for nonprofit audit monitoring to ensure all required procedures are complete and timely. Additionally, we will review the Division of Federal Programs Handbook, the 21st CCLC Subgrantee Manual, and the 21st CCLC Internal Operations manual to ensure compliance to the Uniform Grants Guidance for subrecipient monitoring. Where needed, language will be added to each manual to clarify and emphasize that subrecipient monitoring includes application review, budget review, drawdown approval, completion report review in addition to virtual or onsite monitoring of specific program indicators. The 21st CCLC documents will be updated to ensure a clear subrecipient monitoring process is established for the final year of a cohort. This process will clarify that subrecipient monitoring during the last funded year will include application review, budget review, drawdown approval, and completion report review. Additionally, LEAs identified as ?high-risk? will have an onsite or virtual monitoring on specific 21st CCLC indicators.
2022-010 Improve Controls over Subrecipient Monitoring Federal Agency: U.S. Department of Education State Entity: Department of Education (GaDOE) Corrective Action Plans: We have transitioned the subrecipient audit monitoring process to the Financial Review team within GaDOE which currently performs local educational agency (LEA) audit monitoring. The controls already in place for the Financial Review team?s LEA audit monitoring will be duplicated for nonprofit audit monitoring to ensure all required procedures are complete and timely. Additionally, we will review the Division of Federal Programs Handbook, the 21st Century Community Learning Centers (CCLC) Subgrantee Manual, and the 21st CCLC Internal Operations manual to ensure compliance to the Uniform Grants Guidance for subrecipient monitoring. Where needed, language will be added to each manual to clarify and emphasize that subrecipient monitoring includes application review, budget review, drawdown approval, completion report review in addition to virtual or onsite monitoring of specific program indicators. The 21st CCLC documents will be updated to ensure a clear subrecipient monitoring process is established for the final year of a cohort. This process will clarify that subrecipient monitoring during the last funded year will include application review, budget review, drawdown approval, and completion report review. Additionally, LEAs identified as ?high-risk? will have an onsite or virtual monitoring on specific 21st CCLC indicators. Estimated Completion Date: June 30, 2023 Contact Person: Metsehet Ketsela, Assistant Director Telephone: 678-472-7898; E-mail: metsehet.ketsela@doe.k12.ga.us
Our examination of reporting requirements associated with the Title II, Part A program revealed that the GaDOE failed to submit subaward data to the FSRS. Therefore, all first-tier subawards of $30,000 or more, and the associated subaward data, was not reflected on the USASpending.gov website as required. Additionally, a sample of 25 first-tier subawards of $30,000 or more associated with ESF subprograms was randomly selected for testing using a non-statistical sampling method. This testing revealed that subaward data was not submitted to the FSRS for 24 of the sampled subrecipients. Therefore, these 24 first-tier subawards of $30,000 or more, and the associated subaward data, was not reflected on the USASpending.gov website as required. Cause: The GaDOE had established procedures in place to comply with the FFATA reporting requirements for federal awards. However, due to an error during the upload process, the GaDOE was unable to successfully upload the subaward data to FSRS appropriately. Effect: The deficiencies noted in the FFATA reporting process resulted in noncompliance with federal regulations. Without effective controls in place to ensure compliance with federal reporting requirements, the transparency objective associated with the FFATA requirements was not achieved as the general public was unable to review expenditure data associated with the State of Georgia?s Title II, Part A program and ESF subprograms. Recommendation: We recommend that the GaDOE: ? Follow established processes and procedures associated with the FFATA reporting requirements; ? Incorporate additional oversight, training, and/or staff to aid in the identification of subawards to be reported and the reporting of appropriate data elements, as applicable, in a timely manner; and ? Maintain documentation of subaward agreements and the determination of whether each subaward should be entered into the FSRS in compliance with the FFATA reporting requirements. Views of Responsible Officials: The Department of Education concurs with this audit finding. We hired additional staff during June 2022 to complete FFATA reporting to ensure the reports are submitted timely and accurately moving forward.
Show full finding ▾Hide full finding ▴2022-011 Improve Controls over Transparency Act Reporting Compliance Requirement: Reporting Internal Control Impact: Material Weakness Compliance Impact: Material Noncompliance Federal Awarding Agency: U.S. Department of Education Pass-Through Entity: None AL Number and Title: 84.367 ? Supporting Effective Instruction State Grants 84.425C ? COVID-19 ? Governor?s Emergency Education Relief Fund 84.425D ? COVID-19 ? Elementary and Secondary Emergency Relief (ESSER) Fund 84.425R ? COVID-19 ? Coronavirus Response and Relief Supplemental Appropriations Act, 2021 ? Emergency Assistance to Non-Public Schools (CRRSA EANS) 84.425U ? COVID-19 ? American Rescue Plan ? Elementary and Secondary Emergency Relief (ARP ESSER) Federal Award Number: S367A190001 (Year: 2020), S367A200001 (Year: 2021), S367A210001 (Year: 2022), S425C200049 (Year: 2021), S425C210049 (Year: 2021), S425D200012 (Year: 2020), S425D210012 (Year: 2021), S425R210034 (Year: 2021), S425U210012 21A (Year: 2021) Questioned Costs: None Identified Description: The Georgia Department of Education should improve internal controls to ensure that subaward information associated with the Federal Funding Accountability and Transparency Act is reported appropriately and timely. Background Information: The Supporting Effective Instruction State Grants (Title II, Part A) program was created by the Elementary and Secondary Education Act of 1965 to provide funds to state educational agencies and local educational agencies to increase student achievement consistent with the challenging state academic standards; improve the quality and effectiveness of teachers, principals, and other school leaders; increase the number of teachers, principals, and other school leaders who are effective in improving student academic achievement in schools; and provide low-income and minority students greater access to effective teachers, principals, and other school leaders. The Education Stabilization Fund (ESF) was created by the Coronavirus Aid, Relief, and Economic Security (CARES) Act to provide financial resources to educational entities to prevent, prepare for, and respond to coronavirus. Various ESF subprograms were created and allotted funding through COVID-19-related legislation. Many of these subprograms were designed to address the impact that COVID-19 has had, and continues to have, on elementary and secondary schools across the nation. These subprograms include the Elementary and Secondary School Emergency Relief (ESSER) Fund, American Rescue Plan ? Elementary and Secondary School Emergency Relief (ARP ESSER), and Coronavirus Response and Relief Supplemental Appropriations Act, 2021 ? Emergency Assistance to Non-Public School (CRRSA EANS) programs. Additionally, elementary and secondary schools were allotted funding through the Governor?s Emergency Education Relief (GEER) Fund, which allocated resources to governors to provide emergency assistance to education-related-entities Funds associated with the Title II, Part A program and the various ESF subprograms are provided to the Georgia Department of Education (GaDOE) for allocation to eligible subrecipients. Because the GaDOE subgrants program funds to various entities, the GaDOE must comply with the Federal Funding Accountability and Transparency Act of 2006 (FFATA). The FFATA requirements were signed into law on September 26, 2006 in an effort to give the American public access to information on how their tax dollars are being spent. Criteria: As a recipient of federal awards, the GaDOE is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 ? Internal Controls. Under the FFATA (Public Law 109-282), as codified in Title 2 CFR Part 170, Reporting Subaward and Executive Compensation Information, recipients of grants or cooperative agreements, including GaDOE, who make first-tier subawards of $30,000 or more are required to register in the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Subaward data, such as the subaward date, subawardee Data Universal Numbering System number, amount of subaward, subaward obligation/action date, date of report submission, and subaward number, are submitted through the FSRS and accessible to the general public through the USASpending.gov website. Condition: Our examination of reporting requirements associated with the Title II, Part A program revealed that the GaDOE failed to submit subaward data to the FSRS. Therefore, all first-tier subawards of $30,000 or more, and the associated subaward data, was not reflected on the USASpending.gov website as required. Additionally, a sample of 25 first-tier subawards of $30,000 or more associated with ESF subprograms was randomly selected for testing using a non-statistical sampling method. This testing revealed that subaward data was not submitted to the FSRS for 24 of the sampled subrecipients. Therefore, these 24 first-tier subawards of $30,000 or more, and the associated subaward data, was not reflected on the USASpending.gov website as required. Cause: The GaDOE had established procedures in place to comply with the FFATA reporting requirements for federal awards. However, due to an error during the upload process, the GaDOE was unable to successfully upload the subaward data to FSRS appropriately. Effect: The deficiencies noted in the FFATA reporting process resulted in noncompliance with federal regulations. Without effective controls in place to ensure compliance with federal reporting requirements, the transparency objective associated with the FFATA requirements was not achieved as the general public was unable to review expenditure data associated with the State of Georgia?s Title II, Part A program and ESF subprograms. Recommendation: We recommend that the GaDOE: ? Follow established processes and procedures associated with the FFATA reporting requirements; ? Incorporate additional oversight, training, and/or staff to aid in the identification of subawards to be reported and the reporting of appropriate data elements, as applicable, in a timely manner; and ? Maintain documentation of subaward agreements and the determination of whether each subaward should be entered into the FSRS in compliance with the FFATA reporting requirements. Views of Responsible Officials: The Department of Education concurs with this audit finding. We hired additional staff during June 2022 to complete FFATA reporting to ensure the reports are submitted timely and accurately moving forward.
2022-011 Improve Controls over Transparency Act Reporting Federal Agency: U.S. Department of Education State Entity: Department of Education Corrective Action Plans: The Department of Education concurs with this audit finding. We hired additional staff during June 2022 to complete Federal Funding Accountability and Transparency Act (FFATA) reporting to ensure the reports are submitted timely and accurately moving forward. Estimated Completion Date: June 30, 2023 Contact Person: Metsehet Ketsela, Assistant Director Telephone: 678-472-7898; E-mail: metsehet.ketsela@doe.k12.ga.us
Upon performing procedures associated with the MCO annual audited financial report submissions specific to Medicaid, it was noted that the contracts between the DCH and the MCOs did not contain the necessary clause requiring each MCO to submit their audited financial report to the DCH. In addition, although the periodic independent audits of the accuracy, truthfulness, and completeness of the encounter and financial data submitted by, or on behalf of, each MCO were conducted, the results of these four required periodic audits were not posted on the State?s website until auditors inquired about the location of the audits. Cause: Staff turnover within the DCH led to delays in updating contract clauses and procedures associated with ensuring that each MCO submits audited financial reports to the DCH in accordance with Medicaid regulations. Additionally, the DCH did not have procedures in place to ensure the results of the periodic audits are being posted to the State?s website in a timely manner. Effect: Failure to ensure that appropriate clauses are included in contracts with the MCOs and that the MCOs are aware that audited financial statements are to be submitted to the DCH increases the likelihood that inappropriate uses of Medicaid and CHIP funds may occur and not be detected by management in a timely manner. Furthermore, noncompliance with federal regulations may result in the grantor penalizing the DCH for noncompliance by suspending or terminating the award or withholding future awards. Recommendation: The DCH should revise the current contracts with the MCOs to include a clause requiring the MCOs to submit on an annual basis, to the DCH, audited financial reports specific to the Medicaid contract. In addition, the DCH should implement policies and procedures to ensure that the results of the periodic audits are posted to the State?s website in a timely manner. Views of Responsible Officials: We concur with this finding.
Show full finding ▾Hide full finding ▴2022-012 Improve Controls over Managed Care Organization Financial Audits Compliance Requirement: Special Tests and Provisions Internal Control Impact: Significant Deficiency Compliance Impact: Nonmaterial Noncompliance Federal Awarding Agency: U.S. Department of Health and Human Services Pass-Through Entity: None AL Numbers and Titles: 93.767 ? Children?s Health Insurance Program 93.778 - Medical Assistance Program (Medicaid: Title XIX) 93.778 ? COVID -19 ? Medical Assistance Program (Medicaid: Title XIX) Federal Award Number: 2105GA5MAP (Year: 2021), 2205GA5MAP (Year: 2022), 2105GA5021 (Year: 2021), 2205GA5021 (Year: 2022) Questioned Costs: None Identified Repeat of Prior Year Finding: 2021-028 Description: The Department of Community Health did not have adequate controls in place to ensure the required managed care financial audits are being conducted or the results of the required periodic audits are posted on the State?s website. Background Information: The Department of Community Health (DCH) administers the State of Georgia?s Medicaid program that provides payments for medical assistance to low-income individuals. Medicaid is one of the State?s largest public assistance programs with federal and state funds totaling $14 billion for fiscal year 2022. The DCH is also responsible for administering the Children?s Health Insurance Program (CHIP) that provides child medical coverage to low-income families who exceed Medicaid income limits. The State may use managed care to deliver Medicaid and CHIP benefits and services. The DCH partners with private managed care organizations (MCO) that provide health services to members of Medicaid. Partnering with multiple organizations provides members with a choice of various health plans and allows them to choose the option that best fits their needs. As part of our fiscal year 2022 audit, we followed up on the DCH?s efforts to implement corrective action plans in response to the prior year finding in which we reported that the DCH did not have adequate controls in place to ensure the required managed care financial audits were being conducted and the results of the required periodic audits were posted on the State?s website. However, the DCH was unable to fully implement their corrective action plans prior to fiscal year-end. Criteria: As a recipient of federal awards, the DCH is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 ? Internal Controls. Pursuant to Title 42 CFR Section 438.3(m), the contract between the State and an MCO must require MCOs to submit audited financial reports specific to the Medicaid contract on an annual basis. The audit must be conducted in accordance with generally accepted accounting principles and generally accepted auditing standards. Additionally, pursuant to Title 42 CFR Section 438.602(e) and (g) and Title 42 CFR Section 457.1285, the DCH is required to 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 at least once every three years. The results of the periodic audits are required to be posted on the State?s website. Condition: Upon performing procedures associated with the MCO annual audited financial report submissions specific to Medicaid, it was noted that the contracts between the DCH and the MCOs did not contain the necessary clause requiring each MCO to submit their audited financial report to the DCH. In addition, although the periodic independent audits of the accuracy, truthfulness, and completeness of the encounter and financial data submitted by, or on behalf of, each MCO were conducted, the results of these four required periodic audits were not posted on the State?s website until auditors inquired about the location of the audits. Cause: Staff turnover within the DCH led to delays in updating contract clauses and procedures associated with ensuring that each MCO submits audited financial reports to the DCH in accordance with Medicaid regulations. Additionally, the DCH did not have procedures in place to ensure the results of the periodic audits are being posted to the State?s website in a timely manner. Effect: Failure to ensure that appropriate clauses are included in contracts with the MCOs and that the MCOs are aware that audited financial statements are to be submitted to the DCH increases the likelihood that inappropriate uses of Medicaid and CHIP funds may occur and not be detected by management in a timely manner. Furthermore, noncompliance with federal regulations may result in the grantor penalizing the DCH for noncompliance by suspending or terminating the award or withholding future awards. Recommendation: The DCH should revise the current contracts with the MCOs to include a clause requiring the MCOs to submit on an annual basis, to the DCH, audited financial reports specific to the Medicaid contract. In addition, the DCH should implement policies and procedures to ensure that the results of the periodic audits are posted to the State?s website in a timely manner. Views of Responsible Officials: We concur with this finding.
2022-012 Improve Controls over Managed Care Organization Financial Audits Federal Agency: U.S. Department of Health and Human Services State Entity: Department of Community Health (DCH) Corrective Action Plans: DCH has already included a statement in the Managed Care Organization (MCO) contracts regarding submitting financial statements in accordance with Generally Accepted Accounting Principles (GAAP) and Generally Accepted Auditing Standards (GAAS); however, MCOs submitted reports on a different basis. Going forward, DCH will review financial statements submitted to ensure the proper basis is used for the financial statements and then post to our website within the timeframes contained in the regulations. Estimated Completion Date: June 30, 2023 Contact Person: Lynnette Rhodes, MAP Executive Director Telephone: 404-656-7513; E-mail: lrhodes@dch.ga.gov
2021-028
Our audit of the Medicaid program revealed that improper payments were made to Medicaid providers after beneficiaries? deaths. Using data analytics, we compared the DMF to claims made during the fiscal year to identify claims made after the date of death. We identified a total of 3,090 claims that were paid to providers for 550 unique members after the date of death. We used a nonstatistical sampling method to select a random sample of 28 members from this population and tested the sample along with 36 members with individually significant payment amounts to determine if the associated claims were for services provided before the date of death. We found that the DCH made payments to providers for eight Medicaid members with service dates after the date of death resulting in overpayments in which the funds were not recouped. Questioned Costs: Upon testing a sample of $142,285 in claims paid after the date of death, known questioned costs of $6,416 were identified for benefit payments made to providers for the eight Medicaid members with service dates after beneficiaries? deaths. The Federal and State share of known questioned costs is approximately $4,693 and $1,723, respectively. Using the total population amount of $142,285, we project the likely questioned costs to be approximately $35,167. The Federal and State share of likely questioned costs is approximately $25,690 and $9,477, respectively. The projected likely questioned costs are based on the testing of the sample of 28 Medicaid members. Cause: System modifications that the DCH requested to be made by its third-party vendor within GAMMIS, which should have prohibited payments from being made for dates of service after a member?s date of death, were implemented during the previous audit period. However, upon subsequent review, the DCH identified a defect with the quarterly automated date of death claims adjustments process and determined additional changes were needed to prohibit payments from being made for dates of service after a member?s date of death. These additional changes were not made appropriately during the year under review; therefore, another mass adjustment will be required to correct those claims related to periods prior to the GAMMIS modification. Effect: The improper Medicaid payments resulted in noncompliance with federal regulations and questioned costs. Weaknesses in controls over Medicaid payments also increase the risk of improper payments due to error or fraud that may need further investigation. In addition, grant provisions allow the grantor to penalize the DCH for noncompliance by suspending or terminating the award or withholding future awards. Recommendation: The DCH management should continue to dedicate the necessary resources and execute their plan to ensure that additional modifications to the date of death processes within GAMMIS are implemented appropriately and that Medicaid benefit payments to providers are not made after beneficiaries? deaths. Until all appropriate modifications to the GAMMIS system are made, the DCH should perform procedures to compare the DMF to claims made after the date of death and analyze the results to identify improper payments. Additionally, the DCH should investigate and recover funds for all overpayments and if necessary, refer to the Georgia Medicaid Fraud Control Unit for further investigation into any potential provider fraud or abuse. The DCH should also consult with the grantor to discuss whether questioned costs identified in the audit should be repaid. Views of Responsible Officials: We concur with this finding.
Show full finding ▾Hide full finding ▴2022-013 Improve Controls over Medicaid Payments after Date of Death Compliance Requirement: Activities Allowed or Unallowed Allowable Costs/Cost Principles Internal Control Impact: Significant Deficiency Compliance Impact: Nonmaterial Noncompliance Federal Awarding Agency: U.S. Department of Health and Human Services Pass-Through Entity: None AL Numbers and Titles: 93.778 ? Medical Assistance Program (Medicaid: Title XIX) 93.778 ? COVID -19 ? Medical Assistance Program (Medicaid: Title XIX) Federal Award Number: 2105GA5MAP (Year 2021), 2205GA5MAP (Year 2022) Questioned Costs: $6,416 Repeat of Prior Year Finding: 2021-029, 2020-025, 2019-022 Description: The Department of Community Health made improper payments to Medicaid providers after beneficiaries? deaths. Background Information: The Department of Community Health (DCH) administers the State of Georgia?s Medicaid program that provides payments for medical assistance to low-income individuals. Medicaid is one of the State?s largest public assistance program with federal and state funds totaling $14 billion for fiscal year 2022. The Social Security Administration (SSA) maintains the national record of death information called the Death Master File (DMF). The DMF is provided to States via a data exchange agreement. The DMF interfaces with the Georgia Medicaid Management Information System (GAMMIS) to update the beneficiary profiles. Additionally, the State Office of Vital Records submits an electronic file updated with the date of death that also interfaces with GAMMIS. The DCH has a process in place to identify when a beneficiary?s profile is updated with the date of death and to reverse payments to managed-care organizations for claims made after the beneficiary?s death. As part of our fiscal year 2022 audit, we followed up on the DCH?s efforts to implement corrective action plans in response to the prior year finding in which we reported that the DCH made improper payments to Medicaid providers after beneficiaries? deaths. However, the DCH was unable to implement their corrective action plan and apply modifications to GAMMIS prior to fiscal year-end. Criteria: As a recipient of federal awards, the DCH is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 ? Internal Controls. Additionally, the Uniform Guidance, Section 200.53 ? Improper payments states: Improper payment means any payment that should not have been made or that was made in an incorrect amount (including overpayments and underpayments) under statutory, contractual, administrative, or other legally applicable requirements. An improper payment includes any payment to an ineligible party, any payment for an ineligible good or service, any duplicate payment, any payment for a good or service not received (except for such payments where authorized by law), any payment that does not account for credit for applicable discounts, and any payment where insufficient or lack of documentation prevents a reviewer from discerning whether a payment was proper. Pursuant to Title 42 CFR Part 433, State Fiscal Administration, Subpart F ? Refunding of Federal Share of Medicaid Overpayments to Providers Section 433.304, an overpayment means the amount paid by a Medicaid agency to a provider which is in excess of the amount that is allowable for services furnished. Because medically necessary services cannot be provided after a beneficiaries? death, no medical services are allowable after a beneficiaries? death and any payment to a provider would result in an overpayment. Condition: Our audit of the Medicaid program revealed that improper payments were made to Medicaid providers after beneficiaries? deaths. Using data analytics, we compared the DMF to claims made during the fiscal year to identify claims made after the date of death. We identified a total of 3,090 claims that were paid to providers for 550 unique members after the date of death. We used a nonstatistical sampling method to select a random sample of 28 members from this population and tested the sample along with 36 members with individually significant payment amounts to determine if the associated claims were for services provided before the date of death. We found that the DCH made payments to providers for eight Medicaid members with service dates after the date of death resulting in overpayments in which the funds were not recouped. Questioned Costs: Upon testing a sample of $142,285 in claims paid after the date of death, known questioned costs of $6,416 were identified for benefit payments made to providers for the eight Medicaid members with service dates after beneficiaries? deaths. The Federal and State share of known questioned costs is approximately $4,693 and $1,723, respectively. Using the total population amount of $142,285, we project the likely questioned costs to be approximately $35,167. The Federal and State share of likely questioned costs is approximately $25,690 and $9,477, respectively. The projected likely questioned costs are based on the testing of the sample of 28 Medicaid members. Cause: System modifications that the DCH requested to be made by its third-party vendor within GAMMIS, which should have prohibited payments from being made for dates of service after a member?s date of death, were implemented during the previous audit period. However, upon subsequent review, the DCH identified a defect with the quarterly automated date of death claims adjustments process and determined additional changes were needed to prohibit payments from being made for dates of service after a member?s date of death. These additional changes were not made appropriately during the year under review; therefore, another mass adjustment will be required to correct those claims related to periods prior to the GAMMIS modification. Effect: The improper Medicaid payments resulted in noncompliance with federal regulations and questioned costs. Weaknesses in controls over Medicaid payments also increase the risk of improper payments due to error or fraud that may need further investigation. In addition, grant provisions allow the grantor to penalize the DCH for noncompliance by suspending or terminating the award or withholding future awards. Recommendation: The DCH management should continue to dedicate the necessary resources and execute their plan to ensure that additional modifications to the date of death processes within GAMMIS are implemented appropriately and that Medicaid benefit payments to providers are not made after beneficiaries? deaths. Until all appropriate modifications to the GAMMIS system are made, the DCH should perform procedures to compare the DMF to claims made after the date of death and analyze the results to identify improper payments. Additionally, the DCH should investigate and recover funds for all overpayments and if necessary, refer to the Georgia Medicaid Fraud Control Unit for further investigation into any potential provider fraud or abuse. The DCH should also consult with the grantor to discuss whether questioned costs identified in the audit should be repaid. Views of Responsible Officials: We concur with this finding.
2022-013 Improve Controls over Medicaid Payments after Date of Death Federal Agency: U.S. Department of Health and Human Services State Entity: Department of Community Health (DCH) Corrective Action Plans: Modifications to the date of death process in Georgia Medicaid Management Information System (GAMMIS) have been completed. Mass adjustments # 700, 702, and 720 are pending to correct the claims that require a recoupment. The mass adjustments should be completed by June 30, 2023. Estimated Completion Date: June 30, 2023 Contact Person: Lynnette Rhodes, MAP Executive Director Telephone: 404-656-7513; E-mail: lrhodes@dch.ga.gov
2021-029
Our audit of the Medicaid program revealed improper, simultaneous payments to Medicaid providers. Using computer-assisted auditing techniques, we identified a population of 15,966 claim payments disbursed to home and community-based service providers and institutional care providers for the same member with the same dates of service. We used a nonstatistical sampling method to select a random sample of 60 potential simultaneous payments from this population and tested the sample to determine if there were any improper payments. We found that the DCH made two payments to providers for home and community-based services while members were in a long-term care facility, which resulted in overpayments totaling $489. Questioned Costs: Known questioned costs of $489 were identified for improper benefit payments made to providers for home and community-based services while members were in a long-term care facility. The Federal and State share of known questioned costs is approximately $358 and $131, respectively. Using the total population amount of $135,086,310, we project the likely questioned costs to be approximately $91,831. The Federal and State share of likely questioned costs is approximately $67,158 and $24,673, respectively. The projected likely questioned costs are based on the testing of the sample of 60 potential simultaneous payments. Cause: The Medical Assistance Plans (MAP) Division and Office of the Inspector General (OIG) are continuing to review the claims in order to determine the root cause of the deficiencies identified but have not yet determined what it is. Therefore, all necessary controls needed to identify and prevent improper payments made for home and community-based services and institutional care providers for the same Medicaid member with the same dates of service were not appropriately implemented within GAMMIS. Effect: The simultaneous home and community-based services payments resulted in noncompliance with federal regulations and questioned costs. Weaknesses in controls over Medicaid payments also increase the risk of improper payments due to error or fraud that may need further investigation. In addition, grant provisions allow the grantor to penalize the DCH for noncompliance by suspending or terminating the award or withholding future awards. This may prevent eligible individuals from receiving benefits in the future. Recommendation: The DCH management should strengthen internal controls over home and community-based services payments to ensure improper payments are not made for Medicaid members. Specifically, the DCH should implement analytical procedures or system modifications to identify improper, simultaneous payments made for home and community-based services while members are in long-term care facilities. Additionally, we recommend the DCH consult with the grantor to discuss whether the questioned costs identified in the audit should be repaid. Views of Responsible Officials: We concur with this finding.
Show full finding ▾Hide full finding ▴2022-014 Improve Controls over Payments for Home and Community-Based Services Compliance Requirement: Activities Allowed or Unallowed Allowable Costs/Cost Principles Internal Control Impact: Significant Deficiency Compliance Impact: Nonmaterial Noncompliance Federal Awarding Agency: U.S. Department of Health and Human Services Pass-Through Entity: None AL Numbers and Titles: 93.778 - Medical Assistance Program (Medicaid: Title XIX) 93.778 ? COVID -19 ? Medical Assistance Program (Medicaid: Title XIX) Federal Award Number: 2105GA5MAP (Year 2021), 2205GA5MAP (Year 2022) Questioned Costs: $489.00 Repeat of Prior Year Finding: 2020-027 Description: The Department of Community Health made improper payments for Medicaid home and community-based services while members were in a long-term care facility. Background Information: The Department of Community Health (DCH) administers the State of Georgia?s Medicaid program that provides payments for medical assistance to low-income individuals. Medicaid is one of the State?s largest public assistance programs with federal and state funds totaling $14 billion for fiscal year 2022. The DCH offers a variety of Medicaid waiver programs that help people who are elderly or have disabilities. Some of these waiver programs are as follows: ? The Community Care Services Program (CCSP) and Service Options Using Resources in Community Environment (SOURCE) program operates under the authority of the Elderly and Disabled Waiver program. The CCSP and SOURCE programs serve frail, elderly and disabled members otherwise eligible under a nursing facility level of care with many long-term health services in a person?s home or community setting to prevent unnecessary emergency room visits and hospital stays and to avoid institutionalization. ? The Independent Care Waiver Program (ICWP) operates under a Home-and-Community-Based Waiver and offers services that help a limited number of adult Medicaid members with physical disabilities or traumatic brain injuries live in their own homes or in the community instead of a hospital or nursing home. As part of our fiscal year 2022 audit, we followed up on the DCH?s efforts to implement a corrective action plan in response to the prior year finding in which we reported that the DCH made improper payments for Medicaid home and community-based services while members were either inpatient in the hospital or in a long-term care facility. While no improper payments associated with members who were inpatient in the hospital were identified, the DCH was unable to fully implement their corrective action plan and apply modifications to the Georgia Medicaid Management Information System (GAMMIS) prior to fiscal year-end to address improper payments related to members in a long-term care facility. Criteria: As a recipient of federal awards, the DCH is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 ? Internal Controls. Additionally, the Uniform Guidance, Section 200.53 - Improper Payment states, ?(a) Improper payment means any payment that should not have been made or that was made in an incorrect amount (including overpayments and underpayments) under statutory, contractual, administrative, or other legally applicable requirements; and (b) Improper payment includes any payment to an ineligible party, any payment for an ineligible good or service, any duplicate payment, any payment for a good or service not received (except for such payments where authorized by law), any payment that does not account for credit for applicable discounts, and any payment where insufficient or lack of documentation prevents a reviewer from discerning whether a payment was proper.? Pursuant to Title 42 CFR Part 433, State Fiscal Administration, Subpart F ? Refunding of Federal Share of Medicaid Overpayments to Providers Section 433.304, ?overpayment means the amount paid by a Medicaid agency to a provider which is in excess of the amount that is allowable for services furnished? and which is required to be refunded?? Because home and community-based services cannot be provided to a Medicaid member who is also either an inpatient in a hospital or in a long-term care facility, any payment to a home and community-based service provider during a period in which a member is receiving services from an institutional care provider would result in an overpayment. Condition: Our audit of the Medicaid program revealed improper, simultaneous payments to Medicaid providers. Using computer-assisted auditing techniques, we identified a population of 15,966 claim payments disbursed to home and community-based service providers and institutional care providers for the same member with the same dates of service. We used a nonstatistical sampling method to select a random sample of 60 potential simultaneous payments from this population and tested the sample to determine if there were any improper payments. We found that the DCH made two payments to providers for home and community-based services while members were in a long-term care facility, which resulted in overpayments totaling $489. Questioned Costs: Known questioned costs of $489 were identified for improper benefit payments made to providers for home and community-based services while members were in a long-term care facility. The Federal and State share of known questioned costs is approximately $358 and $131, respectively. Using the total population amount of $135,086,310, we project the likely questioned costs to be approximately $91,831. The Federal and State share of likely questioned costs is approximately $67,158 and $24,673, respectively. The projected likely questioned costs are based on the testing of the sample of 60 potential simultaneous payments. Cause: The Medical Assistance Plans (MAP) Division and Office of the Inspector General (OIG) are continuing to review the claims in order to determine the root cause of the deficiencies identified but have not yet determined what it is. Therefore, all necessary controls needed to identify and prevent improper payments made for home and community-based services and institutional care providers for the same Medicaid member with the same dates of service were not appropriately implemented within GAMMIS. Effect: The simultaneous home and community-based services payments resulted in noncompliance with federal regulations and questioned costs. Weaknesses in controls over Medicaid payments also increase the risk of improper payments due to error or fraud that may need further investigation. In addition, grant provisions allow the grantor to penalize the DCH for noncompliance by suspending or terminating the award or withholding future awards. This may prevent eligible individuals from receiving benefits in the future. Recommendation: The DCH management should strengthen internal controls over home and community-based services payments to ensure improper payments are not made for Medicaid members. Specifically, the DCH should implement analytical procedures or system modifications to identify improper, simultaneous payments made for home and community-based services while members are in long-term care facilities. Additionally, we recommend the DCH consult with the grantor to discuss whether the questioned costs identified in the audit should be repaid. Views of Responsible Officials: We concur with this finding.
2022-014 Improve Controls over Payments for Home and Community Based Services Federal Agency: U.S. Department of Health and Human Services State Entity: Department of Community Health Corrective Action Plans: Centers for Medicare & Medicaid Services? (CMS) approval of Appendix K: Emergency Preparedness and Waiver form allowed for some payments to go through to ensure continuity of services during the Public Health Emergency (PHE). The Medical Assistance Plan program continues to evaluate these payments to determine if the appropriate documents were filed under this exemption. This evaluation should be completed by June 30, 2023. Estimated Completion Date: June 30, 2023 Contact Person: Lynnette Rhodes, MAP Executive Director Telephone: 404-656-7513; E-mail: lrhodes@dch.ga.gov
Our audit of the Medicaid program revealed deficiencies in the capitation payments paid to MCOs for Managed Care members with Medicare insurance coverage. We obtained Medicare coverage information from the DCH for all Medicaid-eligible members. Using data analytics, we identified a total of 176 members who had Medicare coverage during the same month for which a monthly managed care capitation payment was made on their behalf. We tested all of these payments to determine if the DCH made monthly managed care premium payments for the members during the same time period the member?s Medicare coverage was effective. We found that the DCH made improper payments to MCOs for 175 out of the 176 members tested and these funds were not recouped. Additionally, we noted that for 149 out of 176 members tested, a retroactive Medicare effective date was issued, which was during the time period that managed care payments were made to MCOs. The DCH did discontinue paying the MCO after it received notification from Medicare of the member?s eligibility; however, they did not recoup the payments made to the MCOs for the retroactive period of Medicare coverage. Furthermore, we noted that for 26 out of 176 members tested, improper payments continued to be made after Medicare notified the DCH of the member?s Medicare eligibility. Questioned Costs: Known questioned costs of $466,907 were identified for the capitation payments to MCOs for Managed Care members that were paid during the same time the Managed Care member was enrolled in Medicare. The Federal and State share of known questioned costs is approximately $341,346 and $125,561, respectively. Cause: The DCH completed the modifications required in GAMMIS to recoup capitation payments for Medicare eligible recipients; however, these modifications have not been implemented within the system due to the burden associated with the ongoing public health emergency. Effect: Without effective controls in place, the DCH increases its risk of providing and not detecting improper payments to MCOs. The improper capitation payments resulted in noncompliance with federal regulations and questioned costs. Improper payments could occur for an ineligible recipient that are unallowable and cannot be claimed for federal reimbursement. In addition, grant provisions allow the grantor to penalize the DCH for noncompliance by suspending or terminating the award or withholding future awards. Recommendation: The DCH management should continue to dedicate the necessary resources and execute their plan to ensure that modifications to retroactively recoup capitation payments from its MCOs upon receipt of notice that a member is eligible for Medicare are implemented appropriately within GAMMIS. For periods prior to the implementation of the GAMMIS system modifications, the DCH should perform analytical procedures over Medicare effective dates for Managed Care members to determine whether capitation payments have been recouped. Additionally, the DCH should investigate and recover funds for all improper payments. The DCH should consult with the grantor to discuss whether the questioned costs identified in the audit should be repaid. Views of Responsible Officials: We concur with this finding.
Show full finding ▾Hide full finding ▴2022-015 Improve Controls over Medicaid Capitation Payments for Medicare Members Compliance Requirement: Activities Allowed or Unallowed Allowable Costs/Cost Principles Internal Control Impact: Significant Deficiency Compliance Impact: Nonmaterial Noncompliance Federal Awarding Agency: U.S. Department of Health and Human Services Pass-Through Entity: None AL Numbers and Titles: 93.778 - Medical Assistance Program (Medicaid: Title XIX) 93.778 ? COVID -19 ? Medical Assistance Program (Medicaid: Title XIX) Federal Award Number: 2105GA5MAP (Year: 2021), 2205GA5MAP (Year: 2022) Questioned Costs: $466,907.00 Repeat of Prior Year Findings: 2021-030, 2020-026, 2019-023 Description: The Department of Community Health made improper capitation payments for Medicaid Managed Care members with Medicare insurance coverage. Background Information: The Department of Community Health (DCH) administers the State of Georgia?s Medicaid program that provides payments for medical assistance to low-income individuals. Medicaid is one of the State?s largest public assistance programs with federal and state funds totaling $14 billion for fiscal year 2022. The DCH, the State?s Medicaid agency, administers Georgia?s managed-care program. The program is a partnership between the DCH and private managed care organizations (MCOs). The State pays a monthly fixed rate per person (capitation rate) without regard to the actual medical services utilized to cover the costs of Medicaid claims. Managed care is a prepaid, comprehensive system of medical and health care delivery, including preventive, primary, specialty and ancillary health care services. The program is designed to reduce the cost of providing health benefits, improve the quality of care and deliver health care to clients. Capitation payments for the year totaled $6 billion (federal and state). As part of our fiscal year 2022 audit, we followed up on the DCH?s efforts to implement a corrective action plan in response to the prior year findings in which we reported that the DCH made improper capitation payments for Medicaid Managed Care members with Medicare insurance coverage. However, the DCH was unable to fully implement their corrective action plan and apply modifications to the Georgia Medicaid Management Information System (GAMMIS) prior to fiscal year-end. Criteria: As a recipient of federal awards, the DCH is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) Section 200.303 ? Internal Controls. The Uniform Guidance, Section 200.53 ? Improper Payment states, ?(a) Improper payment means any payment that should not have been made or that was made in an incorrect amount (including overpayments and underpayments) under statutory, contractual, administrative, or other legally applicable requirements; and (b) Improper payment includes any payment to an ineligible party, any payment for an ineligible good or service, any duplicate payment, any payment for a good or service not received (except for such payments where authorized by law), any payment that does not account for credit for applicable discounts, and any payment where insufficient or lack of documentation prevents a reviewer from discerning whether a payment was proper.? Additionally, U.S. Code Title 42, Chapter 7 ? Social Security, Subchapter XIX ? Grants to States for Medical Assistance Programs, Section 1396u-2 ? Provisions relating to managed care, states ?a state may not require? the enrollment in a managed care entity of an individual who is a qualified medicare beneficiary?? Furthermore, according to the DCH?s state plan, Medicare recipients should not be enrolled in managed care, and any monthly premium payments made for Medicare recipients are unallowable. Condition: Our audit of the Medicaid program revealed deficiencies in the capitation payments paid to MCOs for Managed Care members with Medicare insurance coverage. We obtained Medicare coverage information from the DCH for all Medicaid-eligible members. Using data analytics, we identified a total of 176 members who had Medicare coverage during the same month for which a monthly managed care capitation payment was made on their behalf. We tested all of these payments to determine if the DCH made monthly managed care premium payments for the members during the same time period the member?s Medicare coverage was effective. We found that the DCH made improper payments to MCOs for 175 out of the 176 members tested and these funds were not recouped. Additionally, we noted that for 149 out of 176 members tested, a retroactive Medicare effective date was issued, which was during the time period that managed care payments were made to MCOs. The DCH did discontinue paying the MCO after it received notification from Medicare of the member?s eligibility; however, they did not recoup the payments made to the MCOs for the retroactive period of Medicare coverage. Furthermore, we noted that for 26 out of 176 members tested, improper payments continued to be made after Medicare notified the DCH of the member?s Medicare eligibility. Questioned Costs: Known questioned costs of $466,907 were identified for the capitation payments to MCOs for Managed Care members that were paid during the same time the Managed Care member was enrolled in Medicare. The Federal and State share of known questioned costs is approximately $341,346 and $125,561, respectively. Cause: The DCH completed the modifications required in GAMMIS to recoup capitation payments for Medicare eligible recipients; however, these modifications have not been implemented within the system due to the burden associated with the ongoing public health emergency. Effect: Without effective controls in place, the DCH increases its risk of providing and not detecting improper payments to MCOs. The improper capitation payments resulted in noncompliance with federal regulations and questioned costs. Improper payments could occur for an ineligible recipient that are unallowable and cannot be claimed for federal reimbursement. In addition, grant provisions allow the grantor to penalize the DCH for noncompliance by suspending or terminating the award or withholding future awards. Recommendation: The DCH management should continue to dedicate the necessary resources and execute their plan to ensure that modifications to retroactively recoup capitation payments from its MCOs upon receipt of notice that a member is eligible for Medicare are implemented appropriately within GAMMIS. For periods prior to the implementation of the GAMMIS system modifications, the DCH should perform analytical procedures over Medicare effective dates for Managed Care members to determine whether capitation payments have been recouped. Additionally, the DCH should investigate and recover funds for all improper payments. The DCH should consult with the grantor to discuss whether the questioned costs identified in the audit should be repaid. Views of Responsible Officials: We concur with this finding.
2022-015 Improve Controls over Medicaid Capitation Payments for Medicare Members Federal Agency: U.S. Department of Health and Human Services State Entity: Department of Community Health (DCH) Corrective Action Plans: This correction was put into production on 7/1/2022. The recoupments began April 1, 2023, to coincide with the termination of the continuous coverage requirement of the Public Health Emergency (PHE). Estimated Completion Date: April 1, 2023 Contact Person: Lynnette Rhodes, MAP Executive Director Telephone: 404-656-7513; E-mail: lrhodes@dch.ga.gov
2021-030
Our audit of the Medicaid program revealed deficiencies in the capitation payments paid to MCOs for Managed Care members. Using data analytics, we found 135 million capitation payments paid to MCOs for Managed Care members totaling $6 billion and identified all claims with the same name and date of birth. Based upon this review, we isolated a population of 77 potential Medicaid ID numbers for Managed Care members that appeared to have more than one Medicaid ID number or improper duplicate payments. Upon review of payments made to all 77 Managed Care members included in the population of potential duplicate payments, we found that the DCH made duplicate payments to MCOs for 44 of the members reviewed. Questioned Costs: Known questioned costs of $63,636 were identified for duplicate payments made to MCOs for Managed Care members. The Federal and State share of known questioned costs is $46,490 and $17,146, respectively. Cause: We noted that for 32 out of the 44 members with duplicate payments identified, the Managed Care members had multiple Medicaid ID numbers. The duplicate payments are made when a member has more than one Medicaid ID number in the Georgia Medicaid Management Information System (GAMMIS), which is used to generate payments. Multiple Medicaid ID numbers can be assigned to the same member for various reasons, such as a variation in the information entered into GAMMIS for the member. Additionally, we noted that for 12 out of the 44 members with duplicate payments, a system issue occurred and caused duplicate payments to be made to the same member. While improvements were made in a previous fiscal year, the DCH review and revision to its current policy and process intended to identify and merge members within GAMMIS with multiple ID numbers or identify duplicate payments was not fully implemented during the audit period due to time constraints associated with the COVID-19 pandemic. Effect: Without effective controls in place, the DCH increases its risk of providing duplicate payments to MCOs and not detecting improper payments. The duplicate capitation payments resulted in noncompliance with federal regulations and questioned costs. In addition, grant provisions allow the grantor to penalize the DCH for noncompliance by suspending or terminating the award or withholding future awards. This may prevent eligible individuals from receiving benefits in the future. Recommendation: The DCH management should dedicate the necessary resources and execute their plan to ensure that modifications are implemented appropriately within GAMMIS to ensure duplicate capitation payments are not made to MCOs for Managed Care members. For periods prior to the implementation of policy and process changes, the DCH should perform analytical procedures to identify potential duplicate payments made to MCOs. Additionally, the DCH should investigate and recover funds for all overpayments. The DCH should also consult with the grantor to discuss whether the questioned costs identified in the audit should be repaid. Views of Responsible Officials: We concur with this finding.
Show full finding ▾Hide full finding ▴2022-016 Improve Controls over Medicaid Capitation Payments for Managed Care Recipients Compliance Requirement: Activities Allowed or Unallowed Allowable Costs/Cost Principles Internal Control Impact: Significant Deficiency Compliance Impact: Nonmaterial Noncompliance Federal Awarding Agency: U.S. Department of Health and Human Services Pass-Through Entity: None AL Numbers and Titles: 93.778 - Medical Assistance Program (Medicaid: Title XIX) 93.778 ? COVID -19 ? Medical Assistance Program (Medicaid: Title XIX) Federal Award Number: 2105GA5MAP (Year: 2021), 2205GA5MAP (Year: 2022) Questioned Costs: $63,636.00 Description: The Department of Community Health made improper duplicate payments for Medicaid Managed Care recipients. Background Information: The Department of Community Health (DCH) administers the State of Georgia?s Medicaid program that provides payments for medical assistance to low-income individuals. Medicaid is one of the State?s largest public assistance program with federal and state funds totaling $14 billion for fiscal year 2022. The DCH, the State?s Medicaid agency, administers Georgia?s managed care program. The program is a partnership between the DCH and private care management organizations (MCOs). The State pays a monthly fixed rate per person (capitation rate) without regard to the actual medical services utilized to cover the costs of Medicaid claims. Managed care is a prepaid, comprehensive system of medical and health care delivery, including preventive, primary, specialty and ancillary health care services. The program is designed to reduce the cost of providing health benefits, improve the quality of care and deliver health care to clients. Capitation payments for the year totaled $6 billion (federal and state). Criteria: As a recipient of federal awards, the DCH is required to establish and maintain effective internal controls over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) Section 200.303 ? Internal Controls. Additionally, the Uniform Guidance, Section 200.53 ? Improper Payment states, ?(a) Improper payment means any payment that should not have been made or that was made in an incorrect amount (including overpayments and underpayments) under statutory, contractual, administrative, or other legally applicable requirements; and (b) Improper payment includes any payment to an ineligible party, any payment for an ineligible good or service, any duplicate payment, any payment for a good or service not received (except for such payments where authorized by law), any payment that does not account for credit for applicable discounts, and any payment where insufficient or lack of documentation prevents a reviewer from discerning whether a payment was proper.? Condition: Our audit of the Medicaid program revealed deficiencies in the capitation payments paid to MCOs for Managed Care members. Using data analytics, we found 135 million capitation payments paid to MCOs for Managed Care members totaling $6 billion and identified all claims with the same name and date of birth. Based upon this review, we isolated a population of 77 potential Medicaid ID numbers for Managed Care members that appeared to have more than one Medicaid ID number or improper duplicate payments. Upon review of payments made to all 77 Managed Care members included in the population of potential duplicate payments, we found that the DCH made duplicate payments to MCOs for 44 of the members reviewed. Questioned Costs: Known questioned costs of $63,636 were identified for duplicate payments made to MCOs for Managed Care members. The Federal and State share of known questioned costs is $46,490 and $17,146, respectively. Cause: We noted that for 32 out of the 44 members with duplicate payments identified, the Managed Care members had multiple Medicaid ID numbers. The duplicate payments are made when a member has more than one Medicaid ID number in the Georgia Medicaid Management Information System (GAMMIS), which is used to generate payments. Multiple Medicaid ID numbers can be assigned to the same member for various reasons, such as a variation in the information entered into GAMMIS for the member. Additionally, we noted that for 12 out of the 44 members with duplicate payments, a system issue occurred and caused duplicate payments to be made to the same member. While improvements were made in a previous fiscal year, the DCH review and revision to its current policy and process intended to identify and merge members within GAMMIS with multiple ID numbers or identify duplicate payments was not fully implemented during the audit period due to time constraints associated with the COVID-19 pandemic. Effect: Without effective controls in place, the DCH increases its risk of providing duplicate payments to MCOs and not detecting improper payments. The duplicate capitation payments resulted in noncompliance with federal regulations and questioned costs. In addition, grant provisions allow the grantor to penalize the DCH for noncompliance by suspending or terminating the award or withholding future awards. This may prevent eligible individuals from receiving benefits in the future. Recommendation: The DCH management should dedicate the necessary resources and execute their plan to ensure that modifications are implemented appropriately within GAMMIS to ensure duplicate capitation payments are not made to MCOs for Managed Care members. For periods prior to the implementation of policy and process changes, the DCH should perform analytical procedures to identify potential duplicate payments made to MCOs. Additionally, the DCH should investigate and recover funds for all overpayments. The DCH should also consult with the grantor to discuss whether the questioned costs identified in the audit should be repaid. Views of Responsible Officials: We concur with this finding.
2022-016 Improve Controls over Medicaid Capitation Payments for Managed Care Recipients Federal Agency: U.S. Department of Health and Human Services State Entity: Department of Community Health (DCH) Corrective Action Plans: Third party vendor corrected the error that led to the duplicate capitation payment issue on a single Georgia Medicaid Management Information System (GAMMIS) ID on 9/16/22. Additional research is required to identify if other instances of duplicate payments to Managed Care Organizations (MCOs) exist and to determine if funds should be recovered. We will also establish a plan to monitor the duplicate member files and address the issue on an ongoing basis. This should be completed by August 2023. Estimated Completion Date: August 31, 2023 Contact Person: Lynnette Rhodes, MAP Executive Director Telephone: 404-656-7513; E-mail: lrhodes@dch.ga.gov
Our audit of the Medicaid program revealed deficiencies in the capitation payments paid to MCOs for Managed Care members. Using data analytics, we found 135 million capitation payments paid to MCOs for Managed Care members totaling $6 billion and identified all capitation overpayments and underpayments by comparing the approved payment rates that should have been used to the actual rates used during the fiscal year under review. Based upon this review, we identified 8,475 overpayments, which totaled $365,350. In addition, we identified 571,519 underpayments totaling $3,207,692 during the fiscal year under review. Questioned Costs: Known questioned costs of $365,350 were identified for the 8,475 overpayments made to MCOs for the Managed Care members. The Federal and State share of known questioned costs is $266,902 and $98,448, respectively. Cause: In August 2021, the Centers for Medicare and Medicaid Services (CMS) approved the rates that should have been used to calculate capitation payments during the period under review. The DCH actuary, then updated these rates to account for risk adjustments. However, these rates were not accurately implemented in the Georgia Medicaid Management Information System (GAMMIS) resulting in improper payments to MCOs. Effect: Without effective controls in place, the DCH increases its risk of providing improper payments to MCOs and not detecting improper payments. The improper payments resulted in noncompliance with federal regulations and questioned costs. In addition, grant provisions allow the grantor to penalize DCH for noncompliance by suspending or terminating the award or withholding future awards. This may prevent eligible individuals from receiving benefits in the future. Recommendation: The DCH management should dedicate the necessary resources to enter accurate rates within GAMMIS each year to ensure improper capitation payments are not made to MCOs for Managed Care members. For periods prior to the implementation of appropriate rate changes, the DCH should perform analytical procedures to identify potential overpayments made to MCOs. Additionally, the DCH should investigate and recover funds for all overpayments. The DCH should also consult with the grantor to discuss whether the questioned costs identified in the audit should be repaid. Views of Responsible Officials: We concur with this finding.
Show full finding ▾Hide full finding ▴2022-017 Improve Controls over Medicaid Capitation Payment Rates Compliance Requirement: Activities Allowed or Unallowed Allowable Costs/Cost Principles Internal Control Impact: Significant Deficiency Compliance Impact: Nonmaterial Noncompliance Federal Awarding Agency: U.S. Department of Health and Human Services Pass-Through Entity: None AL Numbers and Titles: 93.778 - Medical Assistance Program (Medicaid: Title XIX) 93.778 ? COVID -19 ? Medical Assistance Program (Medicaid: Title XIX) Federal Award Number: 2105GA5MAP (Year: 2021), 2205GA5MAP (Year: 2022) Questioned Costs: $365,350.00 Description: The Department of Community Health made Medicaid capitation payments for Medicaid Managed Care recipients using the improper payment rates. Background Information: The Department of Community Health (DCH) administers the State of Georgia?s Medicaid program that provides payments for medical assistance to low-income individuals. Medicaid is one of the State?s largest public assistance programs with federal and state funds totaling $14 billion for fiscal year 2022. The DCH, the State?s Medicaid agency, administers Georgia?s managed-care program. The program is a partnership between the DCH and private care management organizations (MCOs). The State pays a monthly fixed rate per person (capitation rate) without regard to the actual medical services utilized to cover the costs of Medicaid claims. Managed care is a prepaid, comprehensive system of medical and health care delivery, including preventive, primary, specialty and ancillary health care services. The program is designed to reduce the cost of providing health benefits, improve the quality of care and deliver health care to clients. Capitation payments for the year totaled $6 billion (federal and state). Criteria: As a recipient of federal awards, the DCH is required to establish and maintain effective internal controls over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) Section 200.303 ? Internal Controls. The Uniform Guidance, Section 200.53 ? Improper Payment states, ?(a) Improper payment means any payment that should not have been made or that was made in an incorrect amount (including overpayments and underpayments) under statutory, contractual, administrative, or other legally applicable requirements; and (b) Improper payment includes any payment to an ineligible party, any payment for an ineligible good or service, any duplicate payment, any payment for a good or service not received (except for such payments where authorized by law), any payment that does not account for credit for applicable discounts, and any payment where insufficient or lack of documentation prevents a reviewer from discerning whether a payment was proper.? Condition: Our audit of the Medicaid program revealed deficiencies in the capitation payments paid to MCOs for Managed Care members. Using data analytics, we found 135 million capitation payments paid to MCOs for Managed Care members totaling $6 billion and identified all capitation overpayments and underpayments by comparing the approved payment rates that should have been used to the actual rates used during the fiscal year under review. Based upon this review, we identified 8,475 overpayments, which totaled $365,350. In addition, we identified 571,519 underpayments totaling $3,207,692 during the fiscal year under review. Questioned Costs: Known questioned costs of $365,350 were identified for the 8,475 overpayments made to MCOs for the Managed Care members. The Federal and State share of known questioned costs is $266,902 and $98,448, respectively. Cause: In August 2021, the Centers for Medicare and Medicaid Services (CMS) approved the rates that should have been used to calculate capitation payments during the period under review. The DCH actuary, then updated these rates to account for risk adjustments. However, these rates were not accurately implemented in the Georgia Medicaid Management Information System (GAMMIS) resulting in improper payments to MCOs. Effect: Without effective controls in place, the DCH increases its risk of providing improper payments to MCOs and not detecting improper payments. The improper payments resulted in noncompliance with federal regulations and questioned costs. In addition, grant provisions allow the grantor to penalize DCH for noncompliance by suspending or terminating the award or withholding future awards. This may prevent eligible individuals from receiving benefits in the future. Recommendation: The DCH management should dedicate the necessary resources to enter accurate rates within GAMMIS each year to ensure improper capitation payments are not made to MCOs for Managed Care members. For periods prior to the implementation of appropriate rate changes, the DCH should perform analytical procedures to identify potential overpayments made to MCOs. Additionally, the DCH should investigate and recover funds for all overpayments. The DCH should also consult with the grantor to discuss whether the questioned costs identified in the audit should be repaid. Views of Responsible Officials: We concur with this finding.
2022-017 Improve Controls over Medicaid Capitation Payment Rates Federal Agency: U.S. Department of Health and Human Services State Entity: Department of Community Health (DCH) Corrective Action Plans: The Department acknowledges that some of the capitation rates in Georgia Medicaid Management Information System (GAMMIS) were inaccurate. The Department will implement the following procedures to ensure capitation rates are accurate: (1) review all capitation rates in GAMMIS from July 1, 2021, to current date, (2) correct all inaccurate capitation rates in GAMMIS, (3) test rates in GAMMIS for accuracy prior to production and (4) re-process Per Member Per Month (PMPM) payments to correct over/under payments. The Department will implement capitation rate adjustments as they are approved by Centers for Medicare & Medicaid Services? (CMS) in conjunction with our Actuaries. The Department will implement this process immediately. Estimated Completion Date: June 30, 2023 Contact Person: Lynnette Rhodes, MAP Executive Director Telephone: 404-656-7513; E-mail: lrhodes@dch.ga.gov
See Financial Finding at 2022-003. Cause: See Financial Finding at 2022-003. Effect: See Financial Finding at 2022-003. Recommendation: See Financial Finding at 2022-003. Views of Responsible Officials: We concur with this finding.
Show full finding ▾Hide full finding ▴2022-018 Continue to Strengthen Application Risk Management Program Compliance Requirement: Special Tests and Provisions Internal Control Impact: Significant Deficiency Compliance Impact: Nonmaterial Noncompliance Federal Awarding Agency: U.S. Department of Health and Human Services Pass-Through Entity: None AL Numbers and Titles: 93.778 - Medical Assistance Program (Medicaid: Title XIX) 93.778 ? COVID -19 ? Medical Assistance Program (Medicaid: Title XIX) Federal Award Number: 2105GA5MAP (Year 2021), 2105GA5ADM (Year: 2021), 2205GA5MAP (Year 2022), 2205GA5ADM (Year: 2022) Questioned Costs: None Identified Repeat of Prior Year Findings: 2021-031, 2020-028, 2019-024, 2018-026, 2017-037, 2016-044 Description: The Department of Community Health should continue to strengthen controls over its application risk management program. Background Information: See Financial Finding at 2022-003. Criteria: See Financial Finding at 2022-003. Condition: See Financial Finding at 2022-003. Cause: See Financial Finding at 2022-003. Effect: See Financial Finding at 2022-003. Recommendation: See Financial Finding at 2022-003. Views of Responsible Officials: We concur with this finding.
2022-018 Continue to Strengthen Application Risk Management Program Federal Agency: U.S. Department of Health and Human Services State Entity: Department of Community Health (DCH) Corrective Action Plans: Significant progress has been made in implementing the department's corrective action plan, which is still in progress. The Agency has acquired additional critical cybersecurity program resources and is recruiting others to assist the department in fully remediating the identified findings. These include hiring a Chief Information Security Officer and Cybersecurity Analyst on September 1, 2022, and December 15, 2022, respectively. Furthermore, ten Cybersecurity student interns will start on May 3, 2023, with ongoing recruitment for a Cybersecurity Architect/Engineer. Likewise, the necessary third-party security services required to remediate the Policy/Procedure findings have been procured via a Statewide contract awarded to Compliance Point. To date, the security services vendor has completed the initial drafting of 12 out of 20 Organization-wide Security Policies based on NIST Federal Computer Security Standards, with an expected completion date for all Organizational Policies by September 11, 2023. The CAP Remediation Plan Project is progressing well, and we should meet the planned completion date of December 31, 2023. Estimated Completion Date: December 31, 2023 Contact Person: Chad Purcell, CTO Telephone: 470-757-7871; E-mail: chad.purcell1@dch.ga.gov
2021-031
Upon completing procedures to ensure that the DCH complied with NCCI requirements, auditors reviewed the confidentiality agreement in place between the DCH and Gainwell Technologies (Gainwell), the contracted party that the DCH utilized to perform duties, such as processing Medicaid claims, implementing NCCI edit files, and performing other pertinent activities related to the management of the State?s Medicaid program. It was noted that the confidentiality agreement in place between the DCH and Gainwell did not contain any of the seven required elements reflected in the NCCI Technical Guidance Manual for Medicaid Services. Cause: The DCH experienced turnover during the year under review and was unable to make the appropriate modifications to the confidentiality agreement in place between the DCH and Gainwell to ensure that all required elements pursuant to the Medicaid NCCI Technical Guidance Manual were included within the agreement prior to fiscal year-end. Effect: The deficiency in internal controls over confidentiality agreements with contracted parties resulted in noncompliance with federal regulations. Additionally, failure to include appropriate elements in confidentiality agreements may lead to comprises associated with Medicaid beneficiaries? personal information. Furthermore, noncompliance with federal regulations may result in the grantor penalizing the DCH for noncompliance by suspending or terminating the award or withholding future awards. Recommendation: The DCH should revise its confidentiality agreement with Gainwell to minimize the risk to the confidentiality, integrity and availability of the Medicaid NCCI files and data. The confidentiality agreement should include at a minimum the elements required pursuant to Section 7.1.3 of the NCCI Technical Guidance Manual for Medicaid Services. Views of Responsible Officials: We concur with this finding.
Show full finding ▾Hide full finding ▴2022-019 Strengthen Controls over NCCI Program Requirements Compliance Requirement: Special Tests and Provisions Internal Control Impact: Significant Deficiency Compliance Impact: Nonmaterial Noncompliance Federal Awarding Agency: U.S. Department of Health and Human Services Pass-Through Entity: None AL Numbers and Titles: 93.778 - Medical Assistance Program (Medicaid: Title XIX) 93.778 ? COVID -19 ? Medical Assistance Program (Medicaid: Title XIX) Federal Award Number: 2105GA5MAP (Year 2021), 2205GA5MAP (Year 2022) Questioned Costs: None Identified Description: The Department of Community Health does not have adequate controls in place to ensure the confidentiality agreements with contracted parties contain all required elements. Background Information: The Department of Community Health (DCH) administers the State of Georgia?s Medicaid program that provides payments for medical assistance to low-income individuals. Medicaid is one of the State?s largest public assistance programs with federal and state funds totaling $14 billion for fiscal year 2022. State Medicaid Agencies, including the DCH, are required to incorporate National Correct Coding Initiative (NCCI) methodologies into the state Medicaid programs pursuant to the requirements in Section 6507 of the Affordable Care Act. The purpose of the NCCI Program is to promote correct coding, prevent coding, errors, prevent code manipulation, reduce improper payments and reduce the paid claims improper payment rate. Criteria: As a recipient of federal awards, the DCH is required to establish and maintain effective internal controls over federal awards that provide reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 ? Internal Controls. In implementing NCCI methodologies, the DCH must follow additional requirements reflected within the NCCI Technical Guidance Manual for Medicaid Services. Specifically, Section 7.1.3 ? Confidentiality Agreements Requirements for Contracted Parties of the NCCI Technical Guidance Manual for Medicaid Services requires the DCH to include specific elements in confidentiality agreements with contracted parties. Condition: Upon completing procedures to ensure that the DCH complied with NCCI requirements, auditors reviewed the confidentiality agreement in place between the DCH and Gainwell Technologies (Gainwell), the contracted party that the DCH utilized to perform duties, such as processing Medicaid claims, implementing NCCI edit files, and performing other pertinent activities related to the management of the State?s Medicaid program. It was noted that the confidentiality agreement in place between the DCH and Gainwell did not contain any of the seven required elements reflected in the NCCI Technical Guidance Manual for Medicaid Services. Cause: The DCH experienced turnover during the year under review and was unable to make the appropriate modifications to the confidentiality agreement in place between the DCH and Gainwell to ensure that all required elements pursuant to the Medicaid NCCI Technical Guidance Manual were included within the agreement prior to fiscal year-end. Effect: The deficiency in internal controls over confidentiality agreements with contracted parties resulted in noncompliance with federal regulations. Additionally, failure to include appropriate elements in confidentiality agreements may lead to comprises associated with Medicaid beneficiaries? personal information. Furthermore, noncompliance with federal regulations may result in the grantor penalizing the DCH for noncompliance by suspending or terminating the award or withholding future awards. Recommendation: The DCH should revise its confidentiality agreement with Gainwell to minimize the risk to the confidentiality, integrity and availability of the Medicaid NCCI files and data. The confidentiality agreement should include at a minimum the elements required pursuant to Section 7.1.3 of the NCCI Technical Guidance Manual for Medicaid Services. Views of Responsible Officials: We concur with this finding.
2022-019 Strengthen Controls over NCCI Program Requirements Federal Agency: U.S. Department of Health and Human Services State Entity: Department of Community Health (DCH) Corrective Action Plans: On or before September 30, 2023, the Department will revise its contract with the third party to incorporate the required changes related to the Medicaid National Correct Coding Initiative (NCCI) edits and confidentiality. Estimated Completion Date: September 30, 2023 Contact Person: Lynnette Rhodes, MAP Executive Director Telephone: 404-656-7513; E-mail: lrhodes@dch.ga.gov
Our audit of the Medicaid program revealed deficiencies in the procedures associated with MUE UOS edits for durable medical equipment. Using data analytics, auditors identified potential instances in which the DCH had initiated overrides and paid for an excessive number or quantity of the same service. Auditors, then, selected seven durable medical equipment procedure codes that reflected individually significant payments to providers for testing to determine if appropriate documentation of CMS approval for these overrides was maintained on-file. It was noted that the DCH initiated the override of the maximum allowed quantity related to three durable medical equipment procedure codes but documentation of CMS approval was not appropriately maintained on-file. Questioned Costs: Known questioned costs of $66,307 were identified for payments made to providers for the three durable medical equipment procedure codes exceeding the maximum allowed quantity, which were not supported by adequate CMS approval documentation. The Federal and State share of known questioned costs is $48,462 and $17,845, respectively. Cause: The DCH has experienced turnover in recent years and was unable to locate adequate documentation of CMS approval for the three durable medical equipment procedure codes for which the DCH initiated an override of the maximum allowed quantity. Effect: The deficiency in internal controls over maintaining adequate approval documentation for NCCI edit overrides resulted in noncompliance with federal regulations. Additionally, noncompliance with federal regulations may result in the grantor penalizing the DCH for noncompliance by suspending or terminating the award or withholding future awards. Recommendation: The DCH should strengthen controls over its approval process related to NCCI edit overrides by incorporating additional policies and procedures to ensure that approval documentation is obtained and maintained on-file. Additionally, we recommend that the DCH consult with the grantor to discuss whether the questioned costs identified in the audit should be repaid. Views of Responsible Officials: We concur with this finding.
Show full finding ▾Hide full finding ▴2022-020 Improve Controls over the NCCI Medically Unlikely Edits Process Compliance Requirement: Special Tests and Provisions Internal Control Impact: Significant Deficiency Compliance Impact: Nonmaterial Noncompliance Federal Awarding Agency: U.S. Department of Health and Human Services Pass-Through Entity: None AL Numbers and Titles: 93.778 - Medical Assistance Program (Medicaid: Title XIX) 93.778 ? COVID -19 ? Medical Assistance Program (Medicaid: Title XIX) Federal Award Number: 2105GA5MAP (Year 2021), 2205GA5MAP (Year 2022) Questioned Costs: $66,307.00 Description: The Department of Community Health does not have adequate controls in place to ensure that documentation is maintained on-file to evidence the Centers for Medicare and Medicaid Services approval of National Correct Coding Initiative edit overrides. Background Information: The Department of Community Health (DCH) administers the State of Georgia?s Medicaid program that provides payments for medical assistance to low-income individuals. Medicaid is one of the State?s largest public assistance programs with federal and state funds totaling $14 billion for fiscal year 2022. State Medicaid Agencies, including the DCH, are required to incorporate National Correct Coding Initiative (NCCI) methodologies into the state Medicaid programs pursuant to the requirements in Section 6507 of the Affordable Care Act. The purpose of the NCCI Program is to promote correct coding, prevent coding errors, prevent code manipulation, reduce improper payments and reduce the paid claims improper payment rate. Specifically, Medically Unlikely Edits (MUEs) are unit of service (UOS) edits that were established by the Centers for Medicare and Medicaid Services (CMS) to prevent payment for an inappropriate number or quantity of the same service. Criteria: As a recipient of federal awards, the DCH is required to establish and maintain effective internal controls over federal awards that provide reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 ? Internal Controls. Under the Affordable Care Act, the DCH is required to completely and correctly implement six Medicaid NCCI methodologies, including MUE UOS edits for durable medical equipment billed to providers, to ensure that only proper payments of procedures are reimbursed. Changes or overrides of NCCI edits are required to be approved by CMS and documentation of such approval should be maintained on-file. Condition: Our audit of the Medicaid program revealed deficiencies in the procedures associated with MUE UOS edits for durable medical equipment. Using data analytics, auditors identified potential instances in which the DCH had initiated overrides and paid for an excessive number or quantity of the same service. Auditors, then, selected seven durable medical equipment procedure codes that reflected individually significant payments to providers for testing to determine if appropriate documentation of CMS approval for these overrides was maintained on-file. It was noted that the DCH initiated the override of the maximum allowed quantity related to three durable medical equipment procedure codes but documentation of CMS approval was not appropriately maintained on-file. Questioned Costs: Known questioned costs of $66,307 were identified for payments made to providers for the three durable medical equipment procedure codes exceeding the maximum allowed quantity, which were not supported by adequate CMS approval documentation. The Federal and State share of known questioned costs is $48,462 and $17,845, respectively. Cause: The DCH has experienced turnover in recent years and was unable to locate adequate documentation of CMS approval for the three durable medical equipment procedure codes for which the DCH initiated an override of the maximum allowed quantity. Effect: The deficiency in internal controls over maintaining adequate approval documentation for NCCI edit overrides resulted in noncompliance with federal regulations. Additionally, noncompliance with federal regulations may result in the grantor penalizing the DCH for noncompliance by suspending or terminating the award or withholding future awards. Recommendation: The DCH should strengthen controls over its approval process related to NCCI edit overrides by incorporating additional policies and procedures to ensure that approval documentation is obtained and maintained on-file. Additionally, we recommend that the DCH consult with the grantor to discuss whether the questioned costs identified in the audit should be repaid. Views of Responsible Officials: We concur with this finding.
2022-020 Improve Controls over the NCCI Medically Unlikely Edits Process Federal Agency: U.S. Department of Health and Human Services State Entity: Department of Community Health (DCH) Corrective Action Plans: DCH has made changes to ensure proper record keeping and approval is maintained. The changes made to Medically Unlikely Edits (MUEs) occurred in 2017, several years prior to the audit in 2022. Moving forward, policy compliance specialists for Durable Medical Equipment (DME) will be required to sign an employee attestation that acknowledges and ensures they understand the Standard Operating Procedure (SOP) as outlined in the Centers for Medicare & Medicaid Services? (CMS) technical guidance manual in section 7.4. This change will be implemented on June 30, 2023. CMS approval of all MUE changes are maintained through the Georgia Medicaid Management Information System (GAMMIS) Georgia Interactive Portal. Upon approval from CMS to deactivate a MUE, the program policy specialist initiates a change order through the Georgia Interactive Portal requesting the current MUE edits to be deactivated and then modified per CMS approval. The approval from CMS is submitted as part of the request. The change order needs to be approved by management before changes can be made in GAMMIS. This process went into effect after the MUE changes made in 2017 in November of 2018. Estimated Completion Date: June 30, 2023 Contact Person: Lynnette Rhodes, MAP Executive Director Telephone: 404-656-7513; E-mail: lrhodes@dch.ga.gov
A sample of 40 claims paid on-behalf of eligible households during the fiscal year under review was selected for testing using a non-statistical sampling method. In addition, 44 individually significant claims were selected for testing. These claims were reviewed to determine if appropriate internal controls were implemented and applicable compliance requirements were met. The following deficiencies were identified: ? Two case file applications were not properly reviewed or approved before payment. ? Three claims over $3,500 did not receive additional review and approval before payment as required by the DHS?s policies and procedures. ? A leak inspection was not performed before payment was made for six claims over $3,500 as required by federal guidelines. ? In two instances, leaks were identified and pipes were repaired; however, no negotiation was performed to reduce the water bill before claim payment as required by federal guidelines. ? Overpayments totaling $12,967 were noted for ten claims that were not supported by adequate documentation and/or supporting documentation reflected activity for which reimbursement was not allowable. In addition, a review of 60 processed claims that were later voided revealed that 16 were voided by employees without adequate documentation of access controls. Questioned Costs: Upon testing a sample of $15,473 in LIHWAP program payments, known questioned costs of $319 were identified. Using the total population amount of $12,035,675, we project the likely questioned costs to be approximately $247,767. In addition, known questioned costs identified for improper payments associated with individually significant items tested totaled $12,648; therefore, the known questioned costs identified for improper payments throughout the sample and individually significant items tested totaled $12,967. Cause: The DHS management stated that the staff tasked with administering and distributing LIHWAP funds at the inception of the program lacked an understanding of the program?s policies. Also, the additional approvals for the larger claims were overlooked due to the newness of the program. Effect: Without effective controls in place, there is an increased risk of federal funds being expended for unallowable purposes, subrecipients not properly administering federal programs in accordance with federal statutes, regulations, and the terms and conditions of the subawards, and untimely detection and correction of noncompliance. In addition, grant conditions allow the grantor to penalize the DHS for noncompliance by suspending or terminating the award or withholding future awards. Recommendation: The DHS management should continue to improve controls over Allowable Activities and Costs to ensure the funds it passes through to subrecipients are only expended for allowable purposes and are administered in accordance with the federal statutes, regulations, and the terms and conditions of the federal awards. Improved controls will help ensure the DHS achieves its objectives in complying with the Allowable Activities and Cost requirements prescribed by the Uniform Guidance and the federal award. In addition, the DHS should better monitor the policies and procedures in place to ensure that only allowable payments are made. Views of Responsible Officials: DHS concurs with the finding. Federal guidelines do not require negotiation to reduce the water bill to be eligible for LIHWAP funds. State Policy requires the negotiation of the water bill. State Policy does not require the water bill to be reduced to be eligible for LIHWAP funds. The State Program Office agrees to implement additional internal controls to ensure expenditures are allowable.
Show full finding ▾Hide full finding ▴2022-021 Improve Controls over Expenditures Compliance Requirement: Activities Allowed and Unallowed Allowable Costs/Cost Principles Internal Control Impact: Significant Deficiency Compliance Impact: Nonmaterial Noncompliance Federal Awarding Agency: U.S. Department of Health and Human Services Pass-Through Entity: None AL Numbers and Titles: 93.499 ? COVID-19 ? Low-Income Household Water Assistance Program Federal Award Number: 2101GALWC5 (Year: 2021), 2101GALWC6 (Year: 2021) Questioned Costs: $12,967.00 Description: The Georgia Department of Human Services should improve internal controls to ensure that expenditures are allowable and federal program guidelines are being met. Background Information: The Low-Income Household Water Assistance Program (LIHWAP) was established as part of the federal government?s response to the COVID-19 pandemic. The program is designed to assist low-income households pay for drinking water and wastewater services. The Department of Human Services (DHS) administers LIHWAP for the State of Georgia. Funds are issued by the DHS on behalf of eligible households to owners or operators of public water systems or treatment works to reduce delinquencies of and rates charged to such households for those services. Criteria: As a recipient of federal awards, the DHS is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 ? Internal Controls. Additionally, the Uniform Guidance, Section 200.53 ? Improper Payment states, ?(a) Improper payment means any payment that should not have been made or that was made in an incorrect amount (including overpayments and underpayments) under statutory, contractual, administrative, or other legally applicable requirements; and (b) Improper payment includes any payment to an ineligible party, any payment for an ineligible good or service, any duplicate payment, any payment for a good or service not received (except for such payments where authorized by law), any payment that does not account for credit for applicable discounts, and any payment where insufficient or lack of documentation prevents a reviewer from discerning whether a payment was proper.? Furthermore, both Section 533 of the Consolidated Appropriations Act of 2021 and Section 2912 of the American Rescue Plan Act of 2021 provide general guidance for the use of LIHWAP funds and states that funds should be used ?to assist low-income households, particularly those with the lowest incomes, that pay a high proportion of household income for drinking water and wastewater services, by providing funds to owners or operators of public water systems or treatment works to reduce arrearages of and rates charged to such households for such services.? Further, the LIHWAP Manual for Grant Recipient Staff issued by the U.S. Department of Health and Human Services states ?LIHWAP benefits may only be used to pay for water and wastewater services and associated fees? Allowable uses of funds include: Water bills, wastewater bills, storm water bills, late fees, service fees and taxes, reconnection fees, bottled water, water cisterns, and septic tank pumping.? Condition: A sample of 40 claims paid on-behalf of eligible households during the fiscal year under review was selected for testing using a non-statistical sampling method. In addition, 44 individually significant claims were selected for testing. These claims were reviewed to determine if appropriate internal controls were implemented and applicable compliance requirements were met. The following deficiencies were identified: ? Two case file applications were not properly reviewed or approved before payment. ? Three claims over $3,500 did not receive additional review and approval before payment as required by the DHS?s policies and procedures. ? A leak inspection was not performed before payment was made for six claims over $3,500 as required by federal guidelines. ? In two instances, leaks were identified and pipes were repaired; however, no negotiation was performed to reduce the water bill before claim payment as required by federal guidelines. ? Overpayments totaling $12,967 were noted for ten claims that were not supported by adequate documentation and/or supporting documentation reflected activity for which reimbursement was not allowable. In addition, a review of 60 processed claims that were later voided revealed that 16 were voided by employees without adequate documentation of access controls. Questioned Costs: Upon testing a sample of $15,473 in LIHWAP program payments, known questioned costs of $319 were identified. Using the total population amount of $12,035,675, we project the likely questioned costs to be approximately $247,767. In addition, known questioned costs identified for improper payments associated with individually significant items tested totaled $12,648; therefore, the known questioned costs identified for improper payments throughout the sample and individually significant items tested totaled $12,967. Cause: The DHS management stated that the staff tasked with administering and distributing LIHWAP funds at the inception of the program lacked an understanding of the program?s policies. Also, the additional approvals for the larger claims were overlooked due to the newness of the program. Effect: Without effective controls in place, there is an increased risk of federal funds being expended for unallowable purposes, subrecipients not properly administering federal programs in accordance with federal statutes, regulations, and the terms and conditions of the subawards, and untimely detection and correction of noncompliance. In addition, grant conditions allow the grantor to penalize the DHS for noncompliance by suspending or terminating the award or withholding future awards. Recommendation: The DHS management should continue to improve controls over Allowable Activities and Costs to ensure the funds it passes through to subrecipients are only expended for allowable purposes and are administered in accordance with the federal statutes, regulations, and the terms and conditions of the federal awards. Improved controls will help ensure the DHS achieves its objectives in complying with the Allowable Activities and Cost requirements prescribed by the Uniform Guidance and the federal award. In addition, the DHS should better monitor the policies and procedures in place to ensure that only allowable payments are made. Views of Responsible Officials: DHS concurs with the finding. Federal guidelines do not require negotiation to reduce the water bill to be eligible for LIHWAP funds. State Policy requires the negotiation of the water bill. State Policy does not require the water bill to be reduced to be eligible for LIHWAP funds. The State Program Office agrees to implement additional internal controls to ensure expenditures are allowable.
2022-021 Improve Controls over Expenditures Federal Agency: U.S. Department of Health and Human Services State Entity: Department of Human Services (DHS) Corrective Action Plans: ? The Low-Income Household Water Assistance Program (LIHWAP) State Office Unit implemented a $5,000 maximum amount on the total benefit per household. ? Any benefit over $3,500 requires review and approval from the LIHWAP State Office with a LIHWAP Waiver Request Form and provide a copy of the form to the Community Action Agency (CAA). ? The State Office will require that each LIHWAP Waiver Request Form approval be submitted with the Agency?s Monthly Expenditure Report packet and retained in the file. ? The Community Action Agency will be required to submit a monthly checklist and supporting documents for all applications in which the household had a leak and/or benefit amount over $3,500. ? The State Program Office will update and distribute the LIHWAP State Policy to the CAAs. The Program will provide training and guidance to the network to ensure that policies and procedures are consistently enforced and operating effectively. Estimated Completion Date: August 1, 2023 Contact Person: Cynthia Bryant, Unit Director Telephone: 470-259-8188; E-mail: cynthia.bryant@dhs.ga.gov
Our examination of reporting requirements associated with the LIHWAP and SSBG programs revealed that the DHS failed to submit subaward data for these two programs to the FSRS. Therefore, all first-tier subawards of $30,000 or more, and the associated subaward data, were not reflected on the USASpending.gov website as required. Cause: Through discussion with management, it was noted that high staff turnover caused delays reporting information by the required deadlines. Additionally, the reporting procedures in place did not clearly identify the roles and responsibilities of personnel involved in the FFATA reporting process related to these programs, and therefore, subaward information was not reported through the FSRS appropriately. Furthermore, the DHS had insufficient procedures for monitoring the status of reporting of applicable subawards in the FSRS as required by the FFATA. Effect: The deficiencies noted in the FFATA reporting process resulted in noncompliance with federal regulations. Without effective controls in place to ensure compliance with federal reporting requirements, the transparency objective associated with the FFATA requirements was not achieved as the general public was unable to review expenditure data associated with the State of Georgia?s LIHWAP and SSBG programs. Recommendation: We recommend that the DHS: ? Follow established processes and procedures associated with the FFATA reporting requirements; ? Clearly define roles and responsibilities for personnel involved in the reporting process to ensure that all programs are reported appropriately; and ? Incorporate additional oversight, training, and/or staff to aid in the identification of subawards to be reported and the reporting of appropriate data elements, as applicable, in a timely manner. Views of Responsible Officials: DHS concurs with this finding.
Show full finding ▾Hide full finding ▴2022-022 Improve Controls over Transparency Act Reporting Compliance Requirement: Reporting Internal Control Impact: Material Weakness Compliance Impact: Material Noncompliance Federal Awarding Agency: U.S. Department of Health and Human Services Pass-Through Entity: None AL Numbers and Titles: 93.499 ? COVID-19 ? Low-Income Household Water Assistance Program 93.667 ? Social Services Block Grant Federal Award Number: 2101GALWC5 (Year: 2021), 2101GALWC6 (Year: 2021), 2001GASOSR (Year: 2020), 2101GASOSR (Year: 2021), 2201GASOSR (Year: 2022) Questioned Costs: None Identified Description: The Georgia Department of Human Services should improve internal controls to ensure that subaward information associated with the Federal Funding Accountability and Transparency Act is reported appropriately and timely. Background Information: The Low-Income Household Water Assistance Program (LIHWAP) was established as part of the federal government?s response to the COVID-19 pandemic. The program is designed to assist low-income households pay for drinking water and wastewater services. Funds are issued on behalf of eligible households to owners or operators of public water systems or treatment works to reduce delinquencies of and rates charged to such households for those services. The Social Services Block Grant (SSBG) is a flexible funding source that allows states and territories to tailor social service programming to their population?s needs. Through the SSBG, states provide essential social services that help achieve a myriad of goals to reduce dependency and promote self-sufficiency; protect children and adults from neglect, abuse, and exploitation; and help individuals who are unable to take care of themselves to stay in their homes or to find the best institutional arrangements. Funds associated with the LIHWAP and SSBG programs are provided to the Georgia Department of Human Services (DHS) for allocation to eligible beneficiaries and subrecipients. Because the DHS subgrants SSBG and LIHWAP funds to various entities, the DHS must comply with the Federal Funding Accountability and Transparency Act of 2006 (FFATA). The FFATA requirements were signed into law on September 26, 2006 in an effort to give the American public access to information on how their tax dollars are being spent. This information, including information associated with the use of LIHWAP and SSBG program funds, is accessible via the USASpending.gov website. Criteria: As a recipient of federal awards, the DHS is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 ? Internal Controls. Under the FFATA (Public Law 109-282), as codified in Title 2 CFR Part 170, Reporting Subaward and Executive Compensation Information, recipients of grants or cooperative agreements, including the DHS, who make first-tier subawards of $30,000 or more are required to register in the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Subaward data, such as the subaward date, sub awardee Data Universal Numbering System number, amount of subaward, subaward obligation/action date, date of report submission, and subaward number, are submitted through the FSRS and accessible to the general public through the USASpending.gov website. Condition: Our examination of reporting requirements associated with the LIHWAP and SSBG programs revealed that the DHS failed to submit subaward data for these two programs to the FSRS. Therefore, all first-tier subawards of $30,000 or more, and the associated subaward data, were not reflected on the USASpending.gov website as required. Cause: Through discussion with management, it was noted that high staff turnover caused delays reporting information by the required deadlines. Additionally, the reporting procedures in place did not clearly identify the roles and responsibilities of personnel involved in the FFATA reporting process related to these programs, and therefore, subaward information was not reported through the FSRS appropriately. Furthermore, the DHS had insufficient procedures for monitoring the status of reporting of applicable subawards in the FSRS as required by the FFATA. Effect: The deficiencies noted in the FFATA reporting process resulted in noncompliance with federal regulations. Without effective controls in place to ensure compliance with federal reporting requirements, the transparency objective associated with the FFATA requirements was not achieved as the general public was unable to review expenditure data associated with the State of Georgia?s LIHWAP and SSBG programs. Recommendation: We recommend that the DHS: ? Follow established processes and procedures associated with the FFATA reporting requirements; ? Clearly define roles and responsibilities for personnel involved in the reporting process to ensure that all programs are reported appropriately; and ? Incorporate additional oversight, training, and/or staff to aid in the identification of subawards to be reported and the reporting of appropriate data elements, as applicable, in a timely manner. Views of Responsible Officials: DHS concurs with this finding.
2022-022 Improve Controls over Transparency Act Reporting Federal Agency: U.S. Department of Health and Human Services State Entity: Department of Human Services (DHS) Corrective Action Plans: The agency will: ? The Office of Financial Services will work with the DHS Chief Financial Officer to determine the direct accountability and submission of the FFATA report ? Provide written procedures and training for the FFATA reporting requirement and process; ? The Office of Financial Services will provide oversight to ensure timely and complete FFATA reporting; ? The Office of Financial Services will provide quarterly FFATA status reporting to the DHS Chief Financial Officer. Estimated Completion Date: January 31, 2024 Contact Person: Bill Zisek, Director, Office of Financial Services Telephone: 404-273-9427; E-mail: Bill.Zisek@dhs.ga.gov
The DHS was unable to provide a reliable and accurate report to allow for sufficient testing of individual eligibility requirements for recipients of benefits associated with the CSBG program. The report provided by DHS could not be reconciled to the general ledger or other supporting documentation to verify the completeness of the population. The report provided to auditors included unapproved applicants and vendors that could not be distinguished from the approved beneficiaries for the program under review. Therefore, auditors were unable to perform procedures associated with eligibility requirements for the program. Questioned Costs: Though likely questioned costs may exist, these amounts are unknown. Auditors were unable to perform testing over eligibility requirements as an accurate and complete beneficiary listing was not available. Cause: The DHS stated that the software system, EZ Track, was used for various eligibility functions and specific identifiers were not maintained in the system to properly identify a list of eligible beneficiaries. Effect: The deficiencies in internal controls over eligibility documentation resulted in noncompliance with federal regulations and potential questioned costs. Weaknesses in controls over eligibility requirements also increase the risk of improper payments due to error or fraud that may need further investigation. In addition, grant provisions allow the grantor to penalize the DHS for noncompliance by suspending or terminating the award or withholding future awards. This may prevent eligible individuals from receiving benefits. Recommendation: The DHS management should strengthen internal control policies and procedures over eligibility documentation to ensure proper reporting and tracking of individuals who received benefits. The DHS should also ensure its policies and procedures are consistently enforced and operating effectively. In addition, the DHS should implement specific identifiers with the EZ Track system to properly identify eligible recipients of program funding. Views of Responsible Officials: DHS agrees with the finding.
Show full finding ▾Hide full finding ▴2022-023 Strengthen Controls over Eligibility Records Compliance Requirement: Eligibility Internal Control Impact: Material Weakness Compliance Impact: Material Noncompliance Federal Awarding Agency: U.S. Department of Health and Human Services Pass-Through Entity: None AL Numbers and Titles: 93.569 ? Community Services Block Grant 93.569 ? COVID-19 ? Community Services Block Grant Federal Award Number: 2001GACOSR (Year: 2019), 2001GACSC3 (Year: 2020), 2102GACOSR (Year: 2021), 2201GACOSR (Year: 2022) Questioned Costs: Unknown Description: The Department of Human Services was not able to provide a reliable report that accurately reflects all Community Services Block Grant applicants who received benefits for testing. Background Information: The Community Services Block Grant (CSBG) is provided to states to address the causes of poverty in communities. The Department of Human Services (DHS) administers the State of Georgia?s CSBG program. The DHS is responsible for ensuring that recipients of CSBG funding meet the poverty guidelines published by the U.S. Department of Health and Human Services annually and distributing funding to beneficiaries and subrecipients that meet these eligibility requirements. Criteria: As a recipient of federal awards, the DHS is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 ? Internal Controls. The Community Services Block Grant Act, which is reflected at U.S. Code Title 42, Chapter 106 ? Community Services Block Grant Program, governs requirements associated with the CSBG program, including eligibility determinations. Condition: The DHS was unable to provide a reliable and accurate report to allow for sufficient testing of individual eligibility requirements for recipients of benefits associated with the CSBG program. The report provided by DHS could not be reconciled to the general ledger or other supporting documentation to verify the completeness of the population. The report provided to auditors included unapproved applicants and vendors that could not be distinguished from the approved beneficiaries for the program under review. Therefore, auditors were unable to perform procedures associated with eligibility requirements for the program. Questioned Costs: Though likely questioned costs may exist, these amounts are unknown. Auditors were unable to perform testing over eligibility requirements as an accurate and complete beneficiary listing was not available. Cause: The DHS stated that the software system, EZ Track, was used for various eligibility functions and specific identifiers were not maintained in the system to properly identify a list of eligible beneficiaries. Effect: The deficiencies in internal controls over eligibility documentation resulted in noncompliance with federal regulations and potential questioned costs. Weaknesses in controls over eligibility requirements also increase the risk of improper payments due to error or fraud that may need further investigation. In addition, grant provisions allow the grantor to penalize the DHS for noncompliance by suspending or terminating the award or withholding future awards. This may prevent eligible individuals from receiving benefits. Recommendation: The DHS management should strengthen internal control policies and procedures over eligibility documentation to ensure proper reporting and tracking of individuals who received benefits. The DHS should also ensure its policies and procedures are consistently enforced and operating effectively. In addition, the DHS should implement specific identifiers with the EZ Track system to properly identify eligible recipients of program funding. Views of Responsible Officials: DHS agrees with the finding.
2022-023 Strengthen Controls over Eligibility Records Federal Agency: U.S. Department of Health and Human Services State Entity: Department of Human Services (DHS) Corrective Action Plans: ? The Program will work with the Community Action Agencies (CAAs) and the third party to modify the data system and establish a Community Services Block Grant (CSBG) Eligibility Date and Federal Poverty Level percentage or categorical eligibility status within the data system with each application. ? This modification will clearly identify the date that the household was eligible for CSBG services and ensure compliance with 42 U.S.C. ? 9902 (defining "low-income" and "poverty line"). The Household will be eligible for CSBG services for 90 days. At the 90-day marker, the Agency must re-determine eligibility to continue CSBG services. The services will end at the end of the current Federal Fiscal Year Contract and must be reestablished annually. ? For community events or indirect services aimed at assisting low-income communities, in accordance with 42 U.S.C. ? 9901 (objectives and purposes of the CSBG program), the CAAs will flag these events in the data system as "Community Event" and document the event's purpose, attendance, and any relevant eligibility information for participants. This approach will help demonstrate the services? validity and ensure compliance with the CSBG program's objectives. ? DHS will provide the reconciliation parameters and methodology to the CAAs for their quarterly reconciliation. ? The Program will update the CSBG Policy Manual and distribute to the network. The Program will provide training and guidance to the network to ensure that policies and procedures are consistently enforced and operating effectively. Estimated Completion Date: August 1, 2024 Contact Person: Cynthia Bryant, Unit Director Telephone: 470-259-8188; E-mail: cynthia.bryant@dhs.ga.gov
Our audit of the SSBG program included a review of expenditures with performance period beginning dates during the audit period to ensure that costs were not incurred before the allowable time period. A sample of two expenditures was randomly selected for testing using a non-statistical sampling approach. Additionally, three individually significant expenditure transactions were selected for testing. Upon performing this testing, it was noted that the three individually significant expenditures reviewed were incurred before the period of performance. In addition, our audit of the MHBG program included a review of expenditures with performance period ending dates during the audit period to ensure that the amounts were obligated and liquidated within the appropriate time period. A sample of four expenditures was randomly selected for testing using a non-statistical sampling approach. Additionally, seven individually significant expenditure transactions were selected for testing. It was noted that five of these individually significant expenditures were not liquidated within 90 days of the end of the period of performance as required. Additionally, these expenditures were not identified by the DBHDD and reclassified to an appropriate, subsequent award number as is reflected within the DBHDD?s internal policy. Questioned Costs: Known questioned costs of $61,630 related to the SSGB program were identified for expenditures that were incurred before the period of performance and $105,850 related to the MHBG program were identified for expenditures that were paid outside of the allowable liquidation period. These known questioned costs related to expenditures that were not tested as part of a sample, and therefore, should not be projected to a population to determine likely questioned costs. Cause: While the DBHDD had established procedures in place to comply with the period of performance requirements for federal awards, human error and a lack of appropriate oversight contributed to the errors identify by auditors. Also, the DBHDD policy governing period of performance does not address the correction of errors in a timely manner as the policy only recommends that corrections be completed during the close-out process for the grant award. Effect: The deficiencies noted in the period of performance process resulted in noncompliance with federal regulations. Without effective controls in place to ensure compliance with federal period of performance requirements, the DBHDD is at a higher risk of making improper payments and performing inaccurate financial reporting. Recommendation: We recommend that the DBHDD: ? Update policy, processes, and procedures associated with period of performance requirements to recommend corrections be made in a timely manner; ? Follow currently established grant close-out processes and procedures associated with period of performance requirements; and ? Incorporate additional oversight, training, and/or staff to aid in the identification of the period of performance to ensure costs are associated with the correct fund source. Views of Responsible Officials: The Department concurs with the audit finding.
Show full finding ▾Hide full finding ▴2022-024 Improve Controls over Period of Performance Compliance Requirement: Period of Performance Internal Control Impact: Significant Deficiency Compliance Impact: Nonmaterial Noncompliance Federal Awarding Agency: U.S. Department of Health and Human Services Pass-Through Entity: None AL Numbers and Titles: 93.667 ? Social Services Block Grant 93.958 ? Block Grants for Community Mental Health Federal Award Number: 2201GASOSR (Year: 2022), B09SM082594 (Year: 2020) Questioned Costs: $167,480.00 Description: The Georgia Department of Behavioral Health and Developmental Disabilities should improve internal controls to ensure that program costs are obligated within the period of performance and liquidated within the allowed time period. Background Information: The Social Services Block Grant (SSBG) is a flexible funding source that allows states and territories to tailor social service programming to their population?s needs. Through the SSBG, states provide essential social services that help achieve a myriad of goals to reduce dependency and promote self-sufficiency; protect children and adults from neglect, abuse, and exploitation; and help individuals who are unable to take care of themselves to stay in their homes or to find the best institutional arrangements. The Community Mental Health Services Block Grant (MHBG) program was created to provide funds to states and territories to enable them to carry out their respective plans for providing comprehensive community-based mental health services for adults with serious mental illness and children with serious emotional disturbances. MHBG program funds are allocated to individual states based upon a formula. This funding may be distributed to cities, counties, or service providers within each state to carry out activities associated with the state plan. Funds associated with the SSBG and MHBG programs are administered by the Department of Behavioral Health and Developmental Disabilities (DBHDD). The DBHDD is responsible for becoming familiar with the performance period during which recipients must obligate and liquidate costs for each of these programs. These periods typically align with the federal fiscal year of October 1 through September 30, and payments for costs incurred before a grant award?s beginning date or after the liquidation period are not allowed without the grantor?s prior approval. Criteria: As a recipient of federal awards, the DBHDD is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 ? Internal Controls. Provisions included in the Uniform Guidance, Section 200.403 ? Factors Affecting Allowability of Costs state that ?costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles, (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items, (c) Be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the non-Federal entity? (g) Be adequately documented, (h) Cost must be incurred during the approved budget period?? Additionally, provisions included in the Uniform Guidance, Section 200.77 state, ?Period of performance means the time during which the non-Federal entity may incur new obligations to carry out the work authorized under the Federal award.? Further, the DBHDD?s policies 17-202 ? Federal Fund Source and Parent Project Code Assignments and 17-203 ? Federal Financial Report Preparation, Reconciliation, and Submission prescribe actions that must be taken by staff to ensure that costs are obligated, incurred, and liquidated within the appropriate period as specified in each grant award?s terms and conditions. Condition: Our audit of the SSBG program included a review of expenditures with performance period beginning dates during the audit period to ensure that costs were not incurred before the allowable time period. A sample of two expenditures was randomly selected for testing using a non-statistical sampling approach. Additionally, three individually significant expenditure transactions were selected for testing. Upon performing this testing, it was noted that the three individually significant expenditures reviewed were incurred before the period of performance. In addition, our audit of the MHBG program included a review of expenditures with performance period ending dates during the audit period to ensure that the amounts were obligated and liquidated within the appropriate time period. A sample of four expenditures was randomly selected for testing using a non-statistical sampling approach. Additionally, seven individually significant expenditure transactions were selected for testing. It was noted that five of these individually significant expenditures were not liquidated within 90 days of the end of the period of performance as required. Additionally, these expenditures were not identified by the DBHDD and reclassified to an appropriate, subsequent award number as is reflected within the DBHDD?s internal policy. Questioned Costs: Known questioned costs of $61,630 related to the SSGB program were identified for expenditures that were incurred before the period of performance and $105,850 related to the MHBG program were identified for expenditures that were paid outside of the allowable liquidation period. These known questioned costs related to expenditures that were not tested as part of a sample, and therefore, should not be projected to a population to determine likely questioned costs. Cause: While the DBHDD had established procedures in place to comply with the period of performance requirements for federal awards, human error and a lack of appropriate oversight contributed to the errors identify by auditors. Also, the DBHDD policy governing period of performance does not address the correction of errors in a timely manner as the policy only recommends that corrections be completed during the close-out process for the grant award. Effect: The deficiencies noted in the period of performance process resulted in noncompliance with federal regulations. Without effective controls in place to ensure compliance with federal period of performance requirements, the DBHDD is at a higher risk of making improper payments and performing inaccurate financial reporting. Recommendation: We recommend that the DBHDD: ? Update policy, processes, and procedures associated with period of performance requirements to recommend corrections be made in a timely manner; ? Follow currently established grant close-out processes and procedures associated with period of performance requirements; and ? Incorporate additional oversight, training, and/or staff to aid in the identification of the period of performance to ensure costs are associated with the correct fund source. Views of Responsible Officials: The Department concurs with the audit finding.
2022-024 Improve Controls over Period of Performance Federal Agency: U.S. Department of Health and Human Services State Entity: Department of Behavioral Health and Developmental Disabilities (DBHDD) Corrective Action Plans: The Department will continue to improve the internal controls to ensure that expenditures are liquidated within 90 days of the end of the period of performance as required. The Department will update processes and procedures associated with period of performance requirements and provide training that outlines close-out processes associated with the specific grant awards. DBHDD will update the internal controls related to period of performance no later than June 30, 2023. Estimated Completion Date: June 30, 2023 Contact Person: Kenneth Ward, Director of Internal Audit Telephone: 404-884-5486; E-mail: kenneth.ward@dbhdd.ga.gov
Our examination of reporting requirements associated with the MHBG program revealed that the DBHDD failed to submit subaward data to the FSRS. Therefore, all first-tier subawards of $30,000 or more, and the associated subaward data, was not reflected on the USASpending.gov website as required. Cause: The DBHDD had established procedures in place to comply with the FFATA reporting requirements for federal awards. However, management over the MHBG program was not aware of these requirements or procedures, and therefore, no information was reported through the FSRS. Effect: The deficiencies noted in the FFATA reporting process resulted in noncompliance with federal regulations. Without effective controls in place to ensure compliance with federal reporting requirements, the transparency objective associated with the FFATA requirements was not achieved as the general public was unable to review expenditure data associated with the State of Georgia?s MHBG program. Recommendation: We recommend that the DBHDD: ? Follow established processes and procedures associated with the FFATA reporting requirements; ? Incorporate additional oversight, training, and/or staff to aid in the identification of subawards to be reported and the reporting of appropriate data elements, as applicable, in a timely manner; and ? Maintain documentation of subaward agreements and the determination of whether each subaward should be entered into the FSRS in compliance with the FFATA reporting requirements. Views of Responsible Officials: The Department concurs with the audit finding.
Show full finding ▾Hide full finding ▴2022-025 Improve Controls over Transparency Act Reporting Compliance Requirement: Reporting Internal Control Impact: Material Weakness Compliance Impact: Material Noncompliance Federal Awarding Agency: U.S. Department of Health & Human Services Pass-Through Entity: None AL Numbers and Titles: 93.958 ? Block Grants for Community Mental Health Services 93.958 ? COVID-19 ? Block Grants for Community Mental Health Services Federal Award Number: B09SM082594 (Year: 2020), B09SM083833 (Year: 2021), 1B09SM084001-01 (Year: 2021), 1B09SM085388-01 (Year: 2021), 1B09SM085916-01 (Year: 2021), B09SM086001 (Year: 2022) Questioned Costs: None Identified Description: The Georgia Department of Behavioral Health and Developmental Disabilities should improve internal controls to ensure that subaward information associated with the Federal Funding Accountability and Transparency Act is reported appropriately and timely. Background Information: The Community Mental Health Services Block Grant (MHBG) program was created to provide funds to states and territories to enable them to carry out their respective plans for providing comprehensive community-based mental health services for adults with serious mental illness and children with serious emotional disturbances. MHBG program funds are allocated to individual states based upon a formula. This funding may be distributed to cities, counties, or service providers within each state to carry out activities associated with the state plan. Funds associated with the MHBG program are provided to the Georgia Department of Behavioral Health and Developmental Disabilities (DBHDD) for allocation to eligible subrecipients. Because the DBHDD subgrants MHBG program funds to various entities, the DBHDD must comply with the Federal Funding Accountability and Transparency Act of 2006 (FFATA). The FFATA requirements were signed into law on September 26, 2006 in an effort to give the American public access to information on how their tax dollars are being spent. This information, including information associated with the use of MHBG program funds, is accessible via the USASpending.gov website. Criteria: As a recipient of federal awards, the DBHDD is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 ? Internal Controls. Under the FFATA (Public Law 109-282), as codified in Title 2 CFR Part 170, Reporting Subaward and Executive Compensation Information, recipients of grants or cooperative agreements, including the DBHDD, who make first-tier subawards of $30,000 or more are required to register in the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Subaward data, such as the subaward date, subawardee Data Universal Numbering System number, amount of subaward, subaward obligation/action date, date of report submission, and subaward number, are submitted through the FSRS and accessible to the general public through the USASpending.gov website. Condition: Our examination of reporting requirements associated with the MHBG program revealed that the DBHDD failed to submit subaward data to the FSRS. Therefore, all first-tier subawards of $30,000 or more, and the associated subaward data, was not reflected on the USASpending.gov website as required. Cause: The DBHDD had established procedures in place to comply with the FFATA reporting requirements for federal awards. However, management over the MHBG program was not aware of these requirements or procedures, and therefore, no information was reported through the FSRS. Effect: The deficiencies noted in the FFATA reporting process resulted in noncompliance with federal regulations. Without effective controls in place to ensure compliance with federal reporting requirements, the transparency objective associated with the FFATA requirements was not achieved as the general public was unable to review expenditure data associated with the State of Georgia?s MHBG program. Recommendation: We recommend that the DBHDD: ? Follow established processes and procedures associated with the FFATA reporting requirements; ? Incorporate additional oversight, training, and/or staff to aid in the identification of subawards to be reported and the reporting of appropriate data elements, as applicable, in a timely manner; and ? Maintain documentation of subaward agreements and the determination of whether each subaward should be entered into the FSRS in compliance with the FFATA reporting requirements. Views of Responsible Officials: The Department concurs with the audit finding.
2022-025 Improve Controls over Transparency Act Reporting Federal Agency: U.S. Department of Health and Human Services State Entity: Department of Behavioral Health and Developmental Disabilities (DBHDD) Corrective Action Plans: The Department will continue refining the capabilities of the Regulatory Reporting Database such that it contains all of the necessary reporting data elements required for timely and accurate Federal Funding Accountability and Transparency Act (FFATA) reporting. The Department will develop documentation requirements of each subaward to ensure the appropriate data elements; the reporting guidelines associated with the subawards are properly followed. DBHDD will update the internal controls related to Transparency Act Reporting no later than June 30, 2023. Estimated Completion Date: June 30, 2023 Contact Person: Kenneth Ward, Director of Internal Audit Telephone: 404-884-5486; E-mail: kenneth.ward@dbhdd.ga.gov
Our audit of the CDBG program included a review of FFATA reporting of subaward information related to various CDBG subprograms, including State CDBG, CDBG-CV, CDBG-DR, and CDBG-MIT. A sample of 14 first-tier subawards of $30,000 or more issued by the DCA was randomly selected for testing using a non-statistical sampling method. This examination revealed that information associated with two subawards selected for testing was not appropriately submitted to the FSRS. Upon further review of subaward activity reflected on the USASpending.gov website, it was noted that while appropriate information was reported for the subawards associated with State CDBG and CDBG-CV, no subaward information was submitted for CDBG-DR or CDBG-MIT as required. Cause: Management over the CDBG program did not establish sufficient procedures to comply with the FFATA reporting requirements for all subawards of $30,000 or more related to the CDBG-DR and CDBG-MIT subprograms. The procedures in place did not clearly identify the roles and responsibilities of personnel involved in the reporting process related to CDBG-DR and CDBG-MIT, and therefore, subaward information associated with these subprograms was not reported through the FSRS appropriately. Effect: The deficiencies noted in the FFATA reporting process resulted in noncompliance with federal regulations. Without effective controls in place to ensure compliance with federal reporting requirements, the transparency objective associated with the FFATA was not achieved as the general public was unable to review expenditure data associated with the State?s CDBG-DR and CDBG-MIT subprograms. Recommendation: We recommend that the DCA follow established processes and procedures associated with FFATA reporting for all subprograms, including CDBG-DR and CDBG-MIT, and clearly define roles and responsibilities for personnel involved in the reporting process to ensure that all subprograms are reported appropriately. Views of Responsible Officials: DCA concurs and has already implemented the recommended change. Roles and responsibilities of each party involved in providing details for the report have been updated to ensure all federal awards are included in the FFATA report. Additionally, final approval includes a cover page detailing the month/year of the FFATA report along with the signatures of management to ensure all awards have been captured.
Show full finding ▾Hide full finding ▴2022-026 Improve Controls over Transparency Act Reporting Compliance Requirement: Reporting Internal Control Impact: Significant Deficiency Compliance Impact: Nonmaterial Noncompliance Federal Awarding Agency: U.S. Department of Housing and Urban Development Pass-Through Entity: None AL Numbers and Titles: 14.228 ? Community Development Block Grants/ State?s Program and Non-Entitlement Grants in Hawaii 14.228 ? COVID-19 ? Community Development Block Grants/State?s Program and Non-Entitlement Grants in Hawaii Federal Award Number: B-15-DC-13-0001 (Year: 2015), B-16-DC-13-0001 (Year: 2016), B-17-DC-13-0001 (Year: 2018), B-18-DC-13-0001 (Year: 2018), B-18-DP-13-0001 (Year: 2019), B-18-DP-13-0002 (Year: 2021), B-19-DC-13-0001 (Year: 2019), B-19-DV-13-0001 (Year: 2021), B-19-DV-13-0002 (Year: 2021), B-20-DC-13-0001 (Year: 2021), B-20-DW-13-0001 (Year: 2021), B-21-DC-13-0001 (Year: 2021) Questioned Costs: None Identified Description: The Georgia Department of Community Affairs should improve internal controls to ensure that subaward information associated with the Federal Funding Accountability and Transparency Act is reported appropriately and timely. Background Information: The Community Development Block Grants (CDBG)/State?s Program and Non-Entitlement Grants in Hawaii (State CDBG) program was created for the development of viable communities by providing decent housing, a suitable living environment, and expanded economic opportunities, principally for persons of low- and moderate-income. The State of Georgia (State) has elected to administer CDBG non-entitlement funds, and as such, distributes most of its CDBG allocation to units of general local government in non-entitlement areas through the State CDBG program. In addition, the Coronavirus Aid, Relief, and Economic Security (CARES) Act provided an emergency supplemental appropriation of CDBG funding (CDBG-CV) to the State to be used for a wide range of activities to prevent, prepare for, and respond to coronavirus. Furthermore, the State also receives CDBG funding associated with disaster recovery (CDBG-DR) and mitigation (CDBG-MIT). The State?s CDBG program funds are provided to the Georgia Department of Community Affairs (DCA) for allocation to subrecipients. Because the DCA subgrants CDBG program funds to various entities, the DCA must comply with the Federal Funding Accountability and Transparency Act of 2006 (FFATA). The FFATA requirements were signed into law on September 26, 2006 in an effort to give the American public access to information on how their tax dollars are being spent. This information, including information associated with the use of CDBG program funds, is accessible via the USASpending.gov website. Criteria: As a recipient of federal awards, the DCA is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 ? Internal Controls. Under the FFATA (Public Law 109-282), as codified in Title 2 CFR Part 170, Reporting Subaward and Executive Compensation Information, recipients of grants or cooperative agreements, including DCA, who make first-tier subawards of $30,000 or more are required to register in the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Subaward data, such as the subaward date, subawardee Data Universal Numbering System number, amount of subaward, subaward obligation/action date, date of report submission, and subaward number, are submitted through the FSRS and accessible to the general public through the USASpending.gov website. Condition: Our audit of the CDBG program included a review of FFATA reporting of subaward information related to various CDBG subprograms, including State CDBG, CDBG-CV, CDBG-DR, and CDBG-MIT. A sample of 14 first-tier subawards of $30,000 or more issued by the DCA was randomly selected for testing using a non-statistical sampling method. This examination revealed that information associated with two subawards selected for testing was not appropriately submitted to the FSRS. Upon further review of subaward activity reflected on the USASpending.gov website, it was noted that while appropriate information was reported for the subawards associated with State CDBG and CDBG-CV, no subaward information was submitted for CDBG-DR or CDBG-MIT as required. Cause: Management over the CDBG program did not establish sufficient procedures to comply with the FFATA reporting requirements for all subawards of $30,000 or more related to the CDBG-DR and CDBG-MIT subprograms. The procedures in place did not clearly identify the roles and responsibilities of personnel involved in the reporting process related to CDBG-DR and CDBG-MIT, and therefore, subaward information associated with these subprograms was not reported through the FSRS appropriately. Effect: The deficiencies noted in the FFATA reporting process resulted in noncompliance with federal regulations. Without effective controls in place to ensure compliance with federal reporting requirements, the transparency objective associated with the FFATA was not achieved as the general public was unable to review expenditure data associated with the State?s CDBG-DR and CDBG-MIT subprograms. Recommendation: We recommend that the DCA follow established processes and procedures associated with FFATA reporting for all subprograms, including CDBG-DR and CDBG-MIT, and clearly define roles and responsibilities for personnel involved in the reporting process to ensure that all subprograms are reported appropriately. Views of Responsible Officials: DCA concurs and has already implemented the recommended change. Roles and responsibilities of each party involved in providing details for the report have been updated to ensure all federal awards are included in the FFATA report. Additionally, final approval includes a cover page detailing the month/year of the FFATA report along with the signatures of management to ensure all awards have been captured.
2022-026 Improve Controls over Transparency Act Reporting Federal Agency: U.S. Department of Housing and Urban Development State Entity: Department of Community Affairs (DCA) Corrective Action Plans: Since the State audit, DCA has revised its processes and procedures related to the submission of the Federal Funding Accountability and Transparency Act (FFATA) for all federal programs, including CDBG-DR and CDBG-MIT. These processes include a formal review and approval of the report by the Office Director and the Division Director prior to submission. Estimated Completion Date: February 3, 2023 Contact Person: Nina Gyasi, Financial Ops and Reporting Manager Telephone: 404-679-5820; E-mail: nina.gyasi@dca.ga.gov
Our audit of the UI program revealed deficiencies in the expenditure review process. A total of 107 expenditure transactions were randomly selected for testing using a non-statistical sampling method. Auditors found that seven expenditure transactions related to utility bills did not reflect evidence of management review and approval. Cause: Due to the impact of COVID-19, the DOL had numerous personnel changes and closed regional offices to prevent the spread of the virus. The DOL had utility bill invoices redirected to the Financial Services Department at the main office location rather than the regional offices to prevent payment delays and incurring any penalties for late payment. The DOL also made a change in the processing of these bills, which resulted in the DOL?s failure to follow their internal control policy and the initiation of payments without appropriate review and approval. Effect: The DOL is not in compliance with the Uniform Guidance. In addition, without effective controls, the DOL increases its risk of charging unallowable costs to the UI program. This may prevent the DOL from effectively administering the UI program in the future. Furthermore, the U.S. Department of Labor may require repayment of costs that are determined to be unallowable, and the State of Georgia could be responsible for such repayment. Recommendation: The DOL should ensure that all current and future business practices follow the established policies and procedures of the Uniform Guidance, the U.S. Department of Labor, and the State of Georgia. Where vulnerable, the DOL should modify its policies and procedures to ensure that expenditures reflect appropriate evidence of review and approval. Furthermore, management should develop and implement a monitoring process to ensure that controls are operating appropriately. Views of Responsible Officials: We concur in part. The seven transactions related to utility bills for some local career centers did not have an approval signature from Regional Operations. Each was processed by line staff after being reviewed by a lead worker / manager in Accounts Payable to assure that the account numbers belonged to GDOL. The accounts were confirmed as longstanding accounts and the invoice amounts were reviewed to assure that they were in line with prior billings. These invoices are reviewed again at the end of the day the payment was processed to assure they were processed as appropriate. As stated, we had several regular billers redirect invoices directly to Financial Services in an attempt to avoid misdirected mail during the vestiges of the pandemic. We wanted to avoid the risk of creating adverse relations with any biller or have to use precious time dealing with penalties and fees being added to account balances or service terminations as a result of going beyond the standard payment window. These were standard billings for critically needed utility services that needed to continue uninterrupted. Currently, approval signatures are required on all invoices as was customary prior to the pandemic.
Show full finding ▾Hide full finding ▴2022-027 Improve Controls over Administrative Expenditures Compliance Requirement: Activities Allowed or Unallowed Allowable Costs/Cost Principles Internal Control Impact: Significant Deficiency Compliance Impact: Nonmaterial Noncompliance Federal Awarding Agency: U.S. Department of Labor Pass-Through Entity: None AL Numbers and Titles: 17.225 ? Unemployment Insurance 17.225 ? COVID-19 ? Unemployment Insurance Federal Award Number: UI356432155A13 (Year: 2021), UI372182255A13 (Year: 2022) Questioned Costs: None Identified Description: The Georgia Department of Labor did not have a review and approval process in place for certain program expenditures. Background Information: The Unemployment Insurance (UI) program, created by the Social Security Act (Pub. L. No. 74-271), provides Unemployment Compensation (UC) benefits to workers who are unemployed through no fault of their own and are seeking reemployment. Grants of funds for the administration of State UC laws and public employment service programs are made to States under the Social Security Act, the Wagner-Peyser Act, and the Appropriations Acts. These administrative grant funds are received and managed by the Georgia Department of Labor (DOL) for the State of Georgia. Criteria: As a recipient of federal awards, the Institution is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 ? Internal Controls. Additionally, provisions included in Title 20 CFR Section 601.6 provide that administrative grant funds should be used in ?amounts necessary for the proper and efficient administration of the State unemployment compensation law and employment service program.? Condition: Our audit of the UI program revealed deficiencies in the expenditure review process. A total of 107 expenditure transactions were randomly selected for testing using a non-statistical sampling method. Auditors found that seven expenditure transactions related to utility bills did not reflect evidence of management review and approval. Cause: Due to the impact of COVID-19, the DOL had numerous personnel changes and closed regional offices to prevent the spread of the virus. The DOL had utility bill invoices redirected to the Financial Services Department at the main office location rather than the regional offices to prevent payment delays and incurring any penalties for late payment. The DOL also made a change in the processing of these bills, which resulted in the DOL?s failure to follow their internal control policy and the initiation of payments without appropriate review and approval. Effect: The DOL is not in compliance with the Uniform Guidance. In addition, without effective controls, the DOL increases its risk of charging unallowable costs to the UI program. This may prevent the DOL from effectively administering the UI program in the future. Furthermore, the U.S. Department of Labor may require repayment of costs that are determined to be unallowable, and the State of Georgia could be responsible for such repayment. Recommendation: The DOL should ensure that all current and future business practices follow the established policies and procedures of the Uniform Guidance, the U.S. Department of Labor, and the State of Georgia. Where vulnerable, the DOL should modify its policies and procedures to ensure that expenditures reflect appropriate evidence of review and approval. Furthermore, management should develop and implement a monitoring process to ensure that controls are operating appropriately. Views of Responsible Officials: We concur in part. The seven transactions related to utility bills for some local career centers did not have an approval signature from Regional Operations. Each was processed by line staff after being reviewed by a lead worker / manager in Accounts Payable to assure that the account numbers belonged to GDOL. The accounts were confirmed as longstanding accounts and the invoice amounts were reviewed to assure that they were in line with prior billings. These invoices are reviewed again at the end of the day the payment was processed to assure they were processed as appropriate. As stated, we had several regular billers redirect invoices directly to Financial Services in an attempt to avoid misdirected mail during the vestiges of the pandemic. We wanted to avoid the risk of creating adverse relations with any biller or have to use precious time dealing with penalties and fees being added to account balances or service terminations as a result of going beyond the standard payment window. These were standard billings for critically needed utility services that needed to continue uninterrupted. Currently, approval signatures are required on all invoices as was customary prior to the pandemic.
2022-027 Improve Controls over Administrative Expenditures Federal Agency: U.S. Department of Labor State Entity: Department of Labor (GDOL) Corrective Action Plans: The seven transactions related to utility bills for some local career centers did not have an approval signature from Regional Operations. Each was processed by line staff after being reviewed by a lead worker/manager in Accounts Payable to assure that the account numbers belonged to GDOL. The accounts were confirmed as longstanding accounts and the invoice amounts were reviewed to assure that they were in line with prior billings. These invoices are reviewed again at the end of the day the payment was processed to assure they were processed as appropriate. As stated, we had several regular billers redirect invoices directly to Financial Services in an attempt to avoid misdirected mail during the vestiges of the pandemic. We wanted to avoid the risk of creating adverse relations with any biller or have to use precious time dealing with penalties and fees being added to account balances or service terminations as a result of going beyond the standard payment window. These were standard billings for critically needed utility services that needed to continue uninterrupted. Currently, approval signatures are required on all invoices as was customary prior to the pandemic. Estimated Completion Date: March 15, 2023 Contact Person: John Williams, Accounting Director II Telephone: 404-232-3577; E-mail: john.williams@gdol.ga.gov
Our audit of the Unemployment Compensation Fund (UCF) included a review of benefit payments related to regular UC, SEB, and CARES Act UI programs. A sample of 93 UI benefit payment transactions processed by the DOL was randomly selected for testing using a non-statistical sampling method. In addition, 17 individually significant UI benefit payment transactions were selected for testing. The following deficiencies were identified for improper payments totaling $10,057: ? Identity verification was not performed appropriately in eight instances. ? Non-monetary determination was not performed in two instances. ? Proof of employment or self-employment or a valid offer to begin employment and proof of wages was not submitted by two PUA claimants. ? Claimants did not self-certify for benefits in 18 instances. ? Claimant and payment information did not exist in the system of record in one instance. Questioned Cost: Upon testing a sample of $26,337 in UC program payments, known questioned costs of $4,710 were identified. Using the population of UC payments sampled, which totaled $461,976,942, we project likely questioned costs to be approximately $84,579,595. In addition, known questioned costs were also identified as noted below: ? $1,222 for improper payments associated with individually significant benefit payments tested; and ? $4,125 for improper FPUC and Lost Wages Assistance (LWA) payment amounts associated with the sample of benefit payments selected for testing; and The known questioned costs identified for improper payments totaled $10,057. Cause: Due to the unprecedented volume of UC claims related to the COVID-19 pandemic and the short time in which to implement the CARES Act programs with limited guidance, existing controls over claims processing were modified and/or eliminated. In addition, the DOL?s processes for lowering an individual?s weekly benefit amount (WBA) to the minimum amount and/or stopping payments for individuals who did not submit the required documentation by the deadline is completely manual and time consuming. Therefore, the DOL dedicated its resources to higher priorities to support its mission-essential functions due to the COVID-19 pandemic. Effect: Without effective controls, the DOL increases its risk of providing benefits to ineligible claimants and not detecting improper payments. The deficiencies in eligibility determinations also resulted in noncompliance with federal regulations and questioned costs. While funds for benefit payments are not provided to states through grant awards, states are awarded funds to administer these programs. Grant provisions allow the grantor to penalize the DOL for noncompliance by suspending or terminating the award or withholding future awards. This may prevent eligible individuals from receiving benefits in the future. Recommendation: The DOL management should develop and implement internal controls over eligibility and claims processing to ensure procedures are consistently enforced and operating effectively. Management should also provide training on procedures for processing unemployment claims for new programs created by the CARES Act. Strong monitoring controls should be implemented, as well, to ensure that the DOL achieves its objectives in complying with the eligibility requirements for the various UC programs. Additionally, the DOL management should develop analytical procedures and queries to identify duplicate payments and payments that are more than the claimant?s WBA. Analytical procedures and queries to identify payments that have been made to claimants without identify verification and non-monetary and monetary determinations should be developed, as well. Furthermore, the DOL management should develop IT controls to stop the release of payment until identity and eligibility requirements are substantiated and verified. The DOL management should also develop and implement procedures to stop or reduce payments when individuals do not provide required documentation. Views of Responsible Officials: We do not concur with this finding. (1) Identity verification was not performed appropriately in eight instances. GDOL Response: The Georgia Department of Labor disagrees with these findings as it relates to identity verification. The auditors did not identify the type of identity verification procedures not performed or any identity verification procedures that GDOL was required to perform. There was not a mandatory requirement to complete identity verification at the time most of these applications were submitted as the majority of these claims were employer-filed claims (EFC). Identity requirements for EFCs were implemented at a later date. At the start of the pandemic, the identity proofing processes available were Social Security Administration (SSA) verification, Department of Driver Services (DDS) crossmatch and for non-citizens, Department of Homeland Security Systematic Alien Verification for Entitlement (SAVE). As applicable, these processes were performed on all initial regular and EFCs, which includes the eight instances. (2) Non-monetary determination was not performed in two instances. GDOL Response: Instance 1: A disqualifying non-monetary determination was released and disqualification was entered into the system. The system erroneously released a payment for the week in question. An overpayment was established in January 2023. Instance 2: Claim was processed but issue did not get added to the claim to address separation reasons. A non-monetary determination was released in November 2022 to allow benefits. All payable weeks have been processed. There was no detriment to the claimant as they were determined eligible nor was there any monetary loss to the State. (3) Proof of employment or self-employment or a valid offer to begin employment and proof of wages was not submitted by two PUA claimants. GDOL Response: The GDOL disagrees with the findings related to proof of employment or self-employment or a valid offer to begin employment and proof of wages was not submitted by two PUA claimants. Under the CARES Act, claimants did not have to provide proof of employment or self-employment. It was not until CAA was enacted December 27, 2020 that such proof was required. The disqualification could not be applied retroactively, as outlined in Unemployment Insurance Program Letter (UIPL) No. 16-20, Change 4. Instance 1: Claimants who established Pandemic Unemployment Assistance (PUA) entitlement at the minimum weekly benefit amount were instructed to submit their proof of wages by email. Under the CARES Act, if claimants did not submit proof, federal requirements only allowed for payment of the minimum weekly benefit amount and no disqualification of benefits. The claim cited was originally established and remains established for the minimum weekly benefit amount. In accordance with CAA rules, the claimant was notified to provide proof of employment and wages for weeks paid on or after 12/27/20. To date, no proof has been provided by the claimant. The claimant has been disqualified effective 12/27/20 and an overpayment was established in January 2023. Instance 2: Claimants who established PUA entitlement with a weekly benefit amount greater than the minimum was based on wages entered by the claimant and/or wages reported by the employer. CARES Act only required proof of wages to be submitted. If claimants did not submit proof, federal requirements only allowed for payment of the minimum weekly benefit amount and no disqualification of benefits. Claims established at a higher weekly benefit amount had to be reduced to the minimum amount if no proof was provided. To date, no proof has been provided by the claimant cited. The claim was established above the minimum amount; therefore, benefits were reduced to the minimum amount. In accordance with CAA rules, claimants were notified to provide proof of employment and wages for weeks paid on or after 12/27/20. The claimant has been disqualified effective 12/27/20 and an overpayment was established in November 2022 for weeks paid over the minimum amount under CARES and weeks paid after 12/27/20 under CAA/ARPA. (4) Claimants did not self-certify for benefits in 18 instances. GDOL Response: The GDOL disagrees with the findings Claimants did not self-certify for benefits in 18 instances. Employer-Filed Claims (EFC) are submitted by employers on behalf of the claimant. The employer is responsible for attesting to the employment status and weekly earnings of the claimant for the EFC submitted. An affidavit certifying that the employer has obtained earnings from other employment as well as other requirements must be completed before EFCs can be entered or uploaded. Claimants for which EFCs are submitted are considered to be still attached to the employer and are exempt from the requirement to register for employment services per Georgia Employment Security Law Rule 300-2-4-.02. Such individuals are not required to be nor certify on a weekly basis to be able, available and actively seeking work. Additionally, USDOL encouraged states to waive work search requirements for all claimants during the pandemic. (5) Claimant and payment information did not exist in the system of record in one instance. GDOL Response: The identifying information the auditors provided for this claim does not match any claims in our system. Therefore, we are unable to validate the auditor?s finding. Summary The information above is provided for your consideration in dispelling some of the audit findings. GDOL took immediate action to establish the federal UI programs and comply with federal guidance and regulations. There was not a mandatory requirement to complete identity verification at the time most of these applications were submitted. At the start of the pandemic, the identity proofing processes available were Social Security Administration (SSA) verification, Department of Driver Services (DDS) crossmatch and for non-citizens, Department of Homeland Security Systematic Alien Verification for Entitlement (SAVE). As applicable, these processes were performed on all initial regular and employer-filed claims (EFC). Beginning January 2021, PUA applicants were required to complete additional identity verification processes. Beginning in December 2021, all applicants were required to complete identity verification prior to filing a claim for UI benefits. Effective December 6, 2021, the EFC process was revised to require individuals (employees) to complete an EFC profile to include a real-time identity verification before payments can be made. Employers are responsible for submitting the request for the payment to certify to the individual?s employment status, but the individuals must certify their identity and personal information for the claim to be processed. Employees are notified when a claim is filed on their behalf and provided instructions for their portion of completing the EFC process. Additionally, as system deficiencies were identified, changes were made as quickly as possible to mitigate risks of improper payments. Automation of PUA claims was suspended and reviews were handled manually by staff before a determination was released. GDOL established task forces to develop and implement strategies to address the ramped fraud attempts to bypass system and procedural safeguards. We regularly attended fraud meetings with various federal agencies and unemployment agencies from other states to share best practices for combatting fraud. As resources permitted, we did our best to implement these best practices and strategies. Prioritizing system changes was challenging with the time constraints, necessity to build a program based on an established program that operated manually in our state and the demands of all other federal UI programs; but GDOL made every attempt to maximize our system capacity to accommodate the guidelines of each program requirements. Georgia greatly appreciates your time and consideration of our response to the findings and welcome you to contact us if you have any questions. Auditor's Concluding Remarks: The Georgia Department of Audits and Accounts (DOAA) acknowledges the overwhelming burden placed on the DOL due to the effects of the COVID-19 pandemic and the urgency with which payments were made to the unemployed citizens of Georgia. However, given the information reflected above, we reaffirm our finding and will review the status of the finding during our next audit.
Show full finding ▾Hide full finding ▴2022-028 Improve Controls over Eligibility Determinations Compliance Requirement: Eligibility Internal Control Impact: Material Weakness Compliance Impact: Material Noncompliance Federal Awarding Agency: U.S. Department of Labor Pass-Through Entity: None AL Numbers and Titles: 17.225 ? Unemployment Insurance 17.225 ? COVID-19 ? Unemployment Insurance Federal Award Number: UI325941955A13 (Year: 2019), UI340532055A13 (Year: 2020), UI344912060A13 (Year: 2020), UI347102055A13 (Year: 2020), UI356432155A13 (Year: 2021), UI356992155A13 (Year: 2021), UI359392160A13 (Year: 2021), UI370592155A13 (Year: 2021), UI372182255A13 (Year: 2022), UI372752255A13 (Year: 2022), UI379762260A13 (Year: 2022) Questioned Costs: $10,057.00 Repeat of Prior Year Finding: 2021-035, 2020-036 Description: The Georgia Department of Labor did not have effective internal controls in place to ensure unemployment benefit payments were made correctly and only to eligible claimants. Background Information: The Unemployment Insurance (UI) program, created by the Social Security Act (Pub. L. No. 74-271), provides Unemployment Compensation (UC) benefits to workers who are unemployed through no fault of their own and are seeking reemployment. To receive benefits, claimants must be able to work, available for work, and actively seeking work. On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law. The CARES Act was designed to mitigate the economic effects of the COVID-19 pandemic in a variety of ways, including providing additional UI provisions. Title II, Subtitle A of the CARES Act, authorizes the following temporary UI programs: ? Federal Pandemic Unemployment Compensation (FPUC) ? The FPUC program provides eligible individuals with $600 per week in addition to the weekly benefit amount they receive from certain other UC programs. ? Pandemic Emergency Unemployment Compensation (PEUC) ? The PEUC program provides up to 13 weeks of benefits to individuals who have exhausted all rights to regular compensation under State law or Federal law with respect to a benefit year that ended on or after July 1, 2019, have no rights to regular compensation with respect to a week under any other State or Federal UC law, are not receiving compensation with respect to such week under the UC law of Canada, and are able to work, available to work, and actively seeking work. ? Pandemic Unemployment Assistance (PUA) ? The PUA program provides up to 39 weeks of benefits to those individuals who are not eligible for regular UC or extended benefits under State or Federal law or PEUC, including those who have exhausted all rights to such benefits. In addition, the State Extended Benefits (SEB) program, which is an extension of UC benefits, becomes available for payment when the State?s 13-week insured unemployment rate (IUR) exceeds 5% and pays claimants up to an additional 13 weeks of compensation. Under the SEB program, the State is required to provide 50% of the amounts paid to the majority of eligible SEB claimants, which are those not covered by Federal law or special provisions of State law. However, under the CARES Act, the U.S. Department of Labor will reimburse the State at 100% of eligible costs for the SEB program. The State of Georgia became eligible to pay SEB May 10, 2020. However, the first payable weekending date (WED) was on July 4, 2020, as the first payable WED of PEUC was April 4, 2020. Further, the last payable WED for SEB was February 6, 2021. Criteria: As a recipient of federal awards, the Georgia Department of Labor (DOL) is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 ? Internal Controls. The Uniform Guidance, Section 200.53 - Improper Payment states, ?(a) Improper payment means any payment that should not have been made or that was made in an incorrect amount (including overpayments and underpayments) under statutory, contractual, administrative, or other legally applicable requirements; and (b) Improper payment includes any payment to an ineligible party, any payment for an ineligible good or service, any duplicate payment, any payment for a good or service not received (except for such payments where authorized by law), any payment that does not account for credit for applicable discounts, and any payment where insufficient or lack of documentation prevents a reviewer from discerning whether a payment was proper.? Additionally, provisions included in Title 20 CFR Section 604.3(a) states, ?A State may pay UC only to an individual who is able to work and available for work for the week for which UC is claimed.? Furthermore, Title II, Subtitle A of the CARES Act provides specific eligibility guidance for the FPUC, PEUC, and PUA programs Condition: Our audit of the Unemployment Compensation Fund (UCF) included a review of benefit payments related to regular UC, SEB, and CARES Act UI programs. A sample of 93 UI benefit payment transactions processed by the DOL was randomly selected for testing using a non-statistical sampling method. In addition, 17 individually significant UI benefit payment transactions were selected for testing. The following deficiencies were identified for improper payments totaling $10,057: ? Identity verification was not performed appropriately in eight instances. ? Non-monetary determination was not performed in two instances. ? Proof of employment or self-employment or a valid offer to begin employment and proof of wages was not submitted by two PUA claimants. ? Claimants did not self-certify for benefits in 18 instances. ? Claimant and payment information did not exist in the system of record in one instance. Questioned Cost: Upon testing a sample of $26,337 in UC program payments, known questioned costs of $4,710 were identified. Using the population of UC payments sampled, which totaled $461,976,942, we project likely questioned costs to be approximately $84,579,595. In addition, known questioned costs were also identified as noted below: ? $1,222 for improper payments associated with individually significant benefit payments tested; and ? $4,125 for improper FPUC and Lost Wages Assistance (LWA) payment amounts associated with the sample of benefit payments selected for testing; and The known questioned costs identified for improper payments totaled $10,057. Cause: Due to the unprecedented volume of UC claims related to the COVID-19 pandemic and the short time in which to implement the CARES Act programs with limited guidance, existing controls over claims processing were modified and/or eliminated. In addition, the DOL?s processes for lowering an individual?s weekly benefit amount (WBA) to the minimum amount and/or stopping payments for individuals who did not submit the required documentation by the deadline is completely manual and time consuming. Therefore, the DOL dedicated its resources to higher priorities to support its mission-essential functions due to the COVID-19 pandemic. Effect: Without effective controls, the DOL increases its risk of providing benefits to ineligible claimants and not detecting improper payments. The deficiencies in eligibility determinations also resulted in noncompliance with federal regulations and questioned costs. While funds for benefit payments are not provided to states through grant awards, states are awarded funds to administer these programs. Grant provisions allow the grantor to penalize the DOL for noncompliance by suspending or terminating the award or withholding future awards. This may prevent eligible individuals from receiving benefits in the future. Recommendation: The DOL management should develop and implement internal controls over eligibility and claims processing to ensure procedures are consistently enforced and operating effectively. Management should also provide training on procedures for processing unemployment claims for new programs created by the CARES Act. Strong monitoring controls should be implemented, as well, to ensure that the DOL achieves its objectives in complying with the eligibility requirements for the various UC programs. Additionally, the DOL management should develop analytical procedures and queries to identify duplicate payments and payments that are more than the claimant?s WBA. Analytical procedures and queries to identify payments that have been made to claimants without identify verification and non-monetary and monetary determinations should be developed, as well. Furthermore, the DOL management should develop IT controls to stop the release of payment until identity and eligibility requirements are substantiated and verified. The DOL management should also develop and implement procedures to stop or reduce payments when individuals do not provide required documentation. Views of Responsible Officials: We do not concur with this finding. (1) Identity verification was not performed appropriately in eight instances. GDOL Response: The Georgia Department of Labor disagrees with these findings as it relates to identity verification. The auditors did not identify the type of identity verification procedures not performed or any identity verification procedures that GDOL was required to perform. There was not a mandatory requirement to complete identity verification at the time most of these applications were submitted as the majority of these claims were employer-filed claims (EFC). Identity requirements for EFCs were implemented at a later date. At the start of the pandemic, the identity proofing processes available were Social Security Administration (SSA) verification, Department of Driver Services (DDS) crossmatch and for non-citizens, Department of Homeland Security Systematic Alien Verification for Entitlement (SAVE). As applicable, these processes were performed on all initial regular and EFCs, which includes the eight instances. (2) Non-monetary determination was not performed in two instances. GDOL Response: Instance 1: A disqualifying non-monetary determination was released and disqualification was entered into the system. The system erroneously released a payment for the week in question. An overpayment was established in January 2023. Instance 2: Claim was processed but issue did not get added to the claim to address separation reasons. A non-monetary determination was released in November 2022 to allow benefits. All payable weeks have been processed. There was no detriment to the claimant as they were determined eligible nor was there any monetary loss to the State. (3) Proof of employment or self-employment or a valid offer to begin employment and proof of wages was not submitted by two PUA claimants. GDOL Response: The GDOL disagrees with the findings related to proof of employment or self-employment or a valid offer to begin employment and proof of wages was not submitted by two PUA claimants. Under the CARES Act, claimants did not have to provide proof of employment or self-employment. It was not until CAA was enacted December 27, 2020 that such proof was required. The disqualification could not be applied retroactively, as outlined in Unemployment Insurance Program Letter (UIPL) No. 16-20, Change 4. Instance 1: Claimants who established Pandemic Unemployment Assistance (PUA) entitlement at the minimum weekly benefit amount were instructed to submit their proof of wages by email. Under the CARES Act, if claimants did not submit proof, federal requirements only allowed for payment of the minimum weekly benefit amount and no disqualification of benefits. The claim cited was originally established and remains established for the minimum weekly benefit amount. In accordance with CAA rules, the claimant was notified to provide proof of employment and wages for weeks paid on or after 12/27/20. To date, no proof has been provided by the claimant. The claimant has been disqualified effective 12/27/20 and an overpayment was established in January 2023. Instance 2: Claimants who established PUA entitlement with a weekly benefit amount greater than the minimum was based on wages entered by the claimant and/or wages reported by the employer. CARES Act only required proof of wages to be submitted. If claimants did not submit proof, federal requirements only allowed for payment of the minimum weekly benefit amount and no disqualification of benefits. Claims established at a higher weekly benefit amount had to be reduced to the minimum amount if no proof was provided. To date, no proof has been provided by the claimant cited. The claim was established above the minimum amount; therefore, benefits were reduced to the minimum amount. In accordance with CAA rules, claimants were notified to provide proof of employment and wages for weeks paid on or after 12/27/20. The claimant has been disqualified effective 12/27/20 and an overpayment was established in November 2022 for weeks paid over the minimum amount under CARES and weeks paid after 12/27/20 under CAA/ARPA. (4) Claimants did not self-certify for benefits in 18 instances. GDOL Response: The GDOL disagrees with the findings Claimants did not self-certify for benefits in 18 instances. Employer-Filed Claims (EFC) are submitted by employers on behalf of the claimant. The employer is responsible for attesting to the employment status and weekly earnings of the claimant for the EFC submitted. An affidavit certifying that the employer has obtained earnings from other employment as well as other requirements must be completed before EFCs can be entered or uploaded. Claimants for which EFCs are submitted are considered to be still attached to the employer and are exempt from the requirement to register for employment services per Georgia Employment Security Law Rule 300-2-4-.02. Such individuals are not required to be nor certify on a weekly basis to be able, available and actively seeking work. Additionally, USDOL encouraged states to waive work search requirements for all claimants during the pandemic. (5) Claimant and payment information did not exist in the system of record in one instance. GDOL Response: The identifying information the auditors provided for this claim does not match any claims in our system. Therefore, we are unable to validate the auditor?s finding. Summary The information above is provided for your consideration in dispelling some of the audit findings. GDOL took immediate action to establish the federal UI programs and comply with federal guidance and regulations. There was not a mandatory requirement to complete identity verification at the time most of these applications were submitted. At the start of the pandemic, the identity proofing processes available were Social Security Administration (SSA) verification, Department of Driver Services (DDS) crossmatch and for non-citizens, Department of Homeland Security Systematic Alien Verification for Entitlement (SAVE). As applicable, these processes were performed on all initial regular and employer-filed claims (EFC). Beginning January 2021, PUA applicants were required to complete additional identity verification processes. Beginning in December 2021, all applicants were required to complete identity verification prior to filing a claim for UI benefits. Effective December 6, 2021, the EFC process was revised to require individuals (employees) to complete an EFC profile to include a real-time identity verification before payments can be made. Employers are responsible for submitting the request for the payment to certify to the individual?s employment status, but the individuals must certify their identity and personal information for the claim to be processed. Employees are notified when a claim is filed on their behalf and provided instructions for their portion of completing the EFC process. Additionally, as system deficiencies were identified, changes were made as quickly as possible to mitigate risks of improper payments. Automation of PUA claims was suspended and reviews were handled manually by staff before a determination was released. GDOL established task forces to develop and implement strategies to address the ramped fraud attempts to bypass system and procedural safeguards. We regularly attended fraud meetings with various federal agencies and unemployment agencies from other states to share best practices for combatting fraud. As resources permitted, we did our best to implement these best practices and strategies. Prioritizing system changes was challenging with the time constraints, necessity to build a program based on an established program that operated manually in our state and the demands of all other federal UI programs; but GDOL made every attempt to maximize our system capacity to accommodate the guidelines of each program requirements. Georgia greatly appreciates your time and consideration of our response to the findings and welcome you to contact us if you have any questions. Auditor's Concluding Remarks: The Georgia Department of Audits and Accounts (DOAA) acknowledges the overwhelming burden placed on the DOL due to the effects of the COVID-19 pandemic and the urgency with which payments were made to the unemployed citizens of Georgia. However, given the information reflected above, we reaffirm our finding and will review the status of the finding during our next audit.
2022-028 Improve Controls over Eligibility Determinations Federal Agency: U.S. Department of Labor State Entity: Department of Labor (GDOL) Corrective Action Plans: (1) Identity verification was not performed appropriately in eight instances. GDOL Response: The Georgia Department of Labor disagrees with these findings as it relates to identity verification. The auditors did not identify the type of identity verification procedures not performed or any identity verification procedures that GDOL was required to perform. There was not a mandatory requirement to complete identity verification at the time most of these applications were submitted as the majority of these claims were employer-filed claims (EFC). Identity requirements for EFCs were implemented at a later date. At the start of the pandemic, the identity proofing processes available were Social Security Administration (SSA) verification, Department of Driver Services (DDS) crossmatch and for non-citizens, Department of Homeland Security Systematic Alien Verification for Entitlement (SAVE). As applicable, these processes were performed on all initial regular and EFCs, which includes the eight instances. (2) Non-monetary determination was not performed in two instances. GDOL Response: Instance 1: A disqualifying non-monetary determination was released and disqualification was entered into the system. The system erroneously released a payment for the week in question. An overpayment was established in January 2023. Instance 2: Claim was processed but issue did not get added to the claim to address separation reasons. A non-monetary determination was released in November 2022 to allow benefits. All payable weeks have been processed. There was no detriment to the claimant as they were determined eligible nor was there any monetary loss to the State. (3) Proof of employment or self-employment or a valid offer to begin employment and proof of wages was not submitted by two Pandemic Unemployment Assistance (PUA) claimants. GDOL Response: The GDOL disagrees with the findings related to proof of employment or self-employment or a valid offer to begin employment and proof of wages was not submitted by two PUA claimants. Under the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), claimants did not have to provide proof of employment or self-employment. It was not until Continued Assistance Act (CAA) was enacted December 27, 2020 that such proof was required. The disqualification could not be applied retroactively, as outlined in Unemployment Insurance Program Letter (UIPL) No. 16-20, Change 4. Instance 1: Claimants who established PUA entitlement at the minimum weekly benefit amount were instructed to submit their proof of wages by email. Under the CARES Act, if claimants did not submit proof, federal requirements only allowed for payment of the minimum weekly benefit amount and no disqualification of benefits. The claim cited was originally established and remains established for the minimum weekly benefit amount. In accordance with CAA rules, the claimant was notified to provide proof of employment and wages for weeks paid on or after 12/27/20. To date, no proof has been provided by the claimant. The claimant has been disqualified effective 12/27/20 and an overpayment was established in January 2023. Instance 2: Claimants who established PUA entitlement with a weekly benefit amount greater than the minimum was based on wages entered by the claimant and/or wages reported by the employer. CARES Act only required proof of wages to be submitted. If claimants did not submit proof, federal requirements only allowed for payment of the minimum weekly benefit amount and no disqualification of benefits. Claims established at a higher weekly benefit amount had to be reduced to the minimum amount if no proof was provided. To date, no proof has been provided by the claimant cited. The claim was established above the minimum amount; therefore, benefits were reduced to the minimum amount. In accordance with CAA rules, claimants were notified to provide proof of employment and wages for weeks paid on or after 12/27/20. The claimant has been disqualified effective 12/27/20 and an overpayment was established in November 2022 for weeks paid over the minimum amount under CARES and weeks paid after 12/27/20 under CAA/American Rescue Plan Act (ARPA). (4) Claimants did not self-certify for benefits in 18 instances. GDOL Response: The GDOL disagrees with the findings Claimants did not self-certify for benefits in 18 instances. Employer-Filed Claims (EFC) are submitted by employers on behalf of the claimant. The employer is responsible for attesting to the employment status and weekly earnings of the claimant for the EFC submitted. An affidavit certifying that the employer has obtained earnings from other employment as well as other requirements must be completed before EFCs can be entered or uploaded. Claimants for which EFCs are submitted are considered to be still attached to the employer and are exempt from the requirement to register for employment services per Georgia Employment Security Law Rule 300-2-4-.02. Such individuals are not required to be nor certify on a weekly basis to be able, available and actively seeking work. Additionally, USDOL encouraged states to waive work search requirements for all claimants during the pandemic. (5) Claimant and payment information did not exist in the system of record in one instance. GDOL Response: The identifying information the auditors provided for this claim does not match any claims in our system. Therefore, we are unable to validate the auditor?s finding. Summary The information above is provided for your consideration in dispelling some of the audit findings. GDOL took immediate action to establish the federal UI programs and comply with federal guidance and regulations. There was not a mandatory requirement to complete identity verification at the time most of these applications were submitted. At the start of the pandemic, the identity proofing processes available were Social Security Administration (SSA) verification, Department of Driver Services (DDS) crossmatch and for non-citizens, Department of Homeland Security Systematic Alien Verification for Entitlement (SAVE). As applicable, these processes were performed on all initial regular and employer-filed claims (EFC). Beginning January 2021, PUA applicants were required to complete additional identity verification processes. Beginning in December 2021, all applicants were required to complete identity verification prior to filing a claim for UI benefits. Effective December 6, 2021, the EFC process was revised to require individuals (employees) to complete an EFC profile to include a real-time identity verification before payments can be made. Employers are responsible for submitting the request for the payment to certify to the individual?s employment status, but the individuals must certify their identity and personal information for the claim to be processed. Employees are notified when a claim is filed on their behalf and provided instructions for their portion of completing the EFC process. Additionally, as system deficiencies were identified, changes were made as quickly as possible to mitigate risks of improper payments. Automation of PUA claims was suspended and reviews were handled manually by staff before a determination was released. GDOL established task forces to develop and implement strategies to address the ramped fraud attempts to bypass system and procedural safeguards. We regularly attended fraud meetings with various federal agencies and unemployment agencies from other states to share best practices for combatting fraud. As resources permitted, we did our best to implement these best practices and strategies. Prioritizing system changes was challenging with the time constraints, necessity to build a program based on an established program that operated manually in our state and the demands of all other federal UI programs; but GDOL made every attempt to maximize our system capacity to accommodate the guidelines of each program requirements. Georgia greatly appreciates your time and consideration of our response to the findings and welcome you to contact us if you have any questions. Estimated Completion Date: December 16, 2021 Contact Person: Crystal Singleton, Policy and Procedure Manager Telephone: 404-232-3183; E-mail: Crystal.Singleton@gdol.ga.gov
2021-035
In an effort to assess risk and plan audit procedures, auditors obtained an understanding of the internal controls over the processes for identifying and recording overpayments. In performing these procedures, the DOL stated that crossmatches used to identify possible overpayments were several quarters behind. Typically, the DOL runs crossmatches three to six months after a quarter?s benefits have been paid. However, the crossmatches for third quarter of 2021, which includes the months of July 2021 to September 2021, were not completed until September 15, 2022 and crossmatches for fourth quarter of 2021, which includes the months of October 2021 to December 2021, were not completed until November 15, 2022. Based upon this information, auditors requested a complete population of overpayment cases and a reconciliation of this population data to the financial statements. Auditors planned to select a sample of overpayment cases that the DOL had established during the fiscal year under review and verify that the DOL was properly identifying and processing overpayments. Although the DOL provided a listing of overpayment cases and a reconciliation two months after initially requested, the amounts reflected on the listing did not agree to amounts reported on the financial statements or reconciliation. Furthermore, auditors inquired if overpayment data in the system of record was reconciled to the billing system and the DOL stated they did not perform such reconciliation. While auditors were unable to verify that the population of overpayment cases was complete and accurate, auditors chose to test the overpayment data to gain a better understanding of and review controls and processes and follow up on the prior year findings. In doing so, no exceptions were noted, but auditors ultimately could not rely on the data provided by the DOL. Cause: The benefit system was unable to track and provide reporting related to the CARES Act UI programs. The DOL did not have the ability to easily run transaction-level or claimant-level queries for overpayments in their systems. Furthermore, the DOL did not reconcile overpayment data to subsystems, federal reports, or accounting records and was not able to do so in a timely manner when requested by the Department of Audits and Accounts and the State Accounting Office. The DOL dedicated its resources to higher priorities to support its mission-essential functions due to the COVID-19 pandemic. Effect: Due to the lack of controls, there is an increased risk that possible fraudulent claims and improper benefits paid during the fiscal year 2022 will not be identified and investigated. The deficiencies in the identification and recording of benefit overpayments resulted in noncompliance with federal and state regulations. Additionally, inaccurate reports were likely filed with the U.S. Department of Labor. Furthermore, the lack of accurate and complete data associated with benefit overpayments prevented auditors from testing compliance requirements associated with overpayments. These unknown factors, along with additional issues, are the basis for our adverse of opinion on the UI program. Recommendation: The DOL management should develop and implement procedures to identify and record benefit overpayments in a timely and accurate manner. These procedures should allow for the tracking of information by fiscal year and the periodic reconciliation of detail records to the general ledger and various required reports. In addition, the DOL should dedicate appropriate resources and develop a plan to complete any remaining system modifications necessary to support the identification, tracking and reporting of overpayments both internally and to the U.S. Department of Labor associated with the CARES Act UI programs. Views of Responsible Officials: We do not concur with this finding. The Georgia Department of Labor did not maintain adequate controls over the identification, recording, and reporting of benefit overpayments associated with the Unemployment Insurance programs. GDOL Response: The Georgia Department of Labor disagrees with this finding. USDOL provides guidance and recommended procedures for crossmatches but does not dictate a frequency or cadence for performing them. The crossmatch process is conducted using Onpoint BARTS software which runs a systematic check against weeks in a quarter for which benefits are paid and wages are reported during the same quarter. Although the program may detect weeks paid and wages reported, this alone is not indicative of an overpayment. Therefore, the process involves verification correspondence being sent to both the claimant and the employer, as applicable, to verify the status of employment, the wages earned as well as the weeks in which an individual worked and earned the wages. Based on responses, an assessment is made to determine if an overpayment exists and subsequent actions are taken accordingly. We are prohibited from assuming a match is an overpayment. It is not an overpayment until we have completed a full investigation and provided due process to all parties. The audit report indicates misinterpretation of the data reflected on the federal reports, specifically the ETA 227. The ETA 227 is for reporting of overpayment detection and recovery activities that the Agency performed in a quarter. It is not for reporting the amount of benefits overpaid for specific weeks during that quarter. A federal reporting team was created to accurately identify and track overpayments. The Department is taking necessary actions to complete the overpayment reconciliation for the ETA 227 and 902 reports. Federal regulations require an actual person to review and establish fraudulent overpayments. Due to the volume of claims and the number of cross matches to be performed on all state and federal pandemic programs, it would require multiple GDOL staffing levels to review all cross matches, requiring increased levels of state and federal funding. Summary GDOL has developed an aggressive plan to complete all remaining state and pandemic program cross matches. We have filled all of our budgeted positions for the Overpayment Unit and are utilizing non-overpayment staff to assist with identification and overpayment investigations. Additionally, we are utilizing temp agency staff to perform some clerical duties; however, federal regulations prohibit non-merit staff from adjudicating and releasing overpayment decisions. In early 2022, we started to freeze the overpayment data at the end of every month so that we can conduct periodic reconciliation of the overpayment records. GDOL is coordinating with USDOL to ensure the timely and accurate identification, tracking and reporting of overpayments. GDOL greatly appreciates the feedback and recommendations and will consider this information in future endeavors to modernize and update system and business processes. Auditor's Concluding Remarks: The Georgia Department of Audits and Accounts (DOAA) acknowledges the overwhelming burden placed on the DOL due to the effects of the COVID-19 pandemic and the urgency with which payments were made to the unemployed citizens of Georgia. However, as noted in the finding details above, it is clear that procedures associated with the identification, recording, and reporting of UI benefit overpayments were not performed in a timely and accurate manner. We reaffirm our finding and will review the status of the finding during our next audit.
Show full finding ▾Hide full finding ▴2022-029 Improve Controls over the Identification, Recording, and Reporting of Overpayments Compliance Requirement: Special Tests and Provisions Internal Control Impact: Material Weakness Compliance Impact: Material Noncompliance Federal Awarding Agency: U.S. Department of Labor Pass-Through Entity: None AL Numbers and Titles: 17.225 ? Unemployment Insurance 17.225 ? COVID-19 ? Unemployment Insurance Federal Award Number: UI325941955A13 (Year: 2019), UI340532055A13 (Year: 2020), UI344912060A13 (Year: 2020), UI347102055A13 (Year: 2020), UI356432155A13 (Year: 2021), UI356992155A13 (Year: 2021), UI359392160A13 (Year: 2021), UI370592155A13 (Year: 2021), UI372182255A13 (Year: 2022), UI372752255A13 (Year: 2022) Questioned Costs: None Identified Repeat of Prior Year Findings: 2021-038, 2020-038 Description: The Georgia Department of Labor did not maintain adequate controls over the identification, recording, and reporting of benefit overpayments associated with the Unemployment Insurance programs. Background Information: The Unemployment Insurance (UI) program, created by the Social Security Act (Pub. L. No. 74-271), provides Unemployment Compensation (UC) benefits to workers who are unemployed through no fault of their own and are seeking reemployment. To receive benefits, claimants must be able to work, available for work, and actively seeking work. On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law. The CARES Act was designed to mitigate the economic effects of the COVID-19 pandemic in a variety of ways, including providing additional UI provisions. Title II, Subtitle A of the CARES Act, authorizes the following temporary UI programs: ? Federal Pandemic Unemployment Compensation (FPUC) ? The FPUC program provides eligible individuals with $600 per week in addition to the weekly benefit amount they receive from certain other UC programs. ? Pandemic Emergency Unemployment Compensation (PEUC) ? The PEUC program provides up to 13 weeks of benefits to individuals who have exhausted all rights to regular compensation under State law or Federal law with respect to a benefit year that ended on or after July 1, 2019, have no rights to regular compensation with respect to a week under any other State or Federal UC law, are not receiving compensation with respect to such week under the UC law of Canada, and are able to work, available to work, and actively seeking work. ? Pandemic Unemployment Assistance (PUA) ? The PUA program provides up to 39 weeks of benefits to those individuals who are not eligible for regular UC or extended benefits under State or Federal law or PEUC, including those who have exhausted all rights to such benefits. In addition, the State Extended Benefits (SEB) program, which is an extension of UC benefits, becomes available for payment when the State?s 13-week insured unemployment rate (IUR) exceeds 5% and pays claimants up to an additional 13 weeks of compensation. Under the SEB program, the State is required to provide 50% of the amounts paid to the majority of eligible SEB claimants, which are those not covered by Federal law or special provisions of State law. However, under the CARES Act, the U.S. Department of Labor will reimburse the State at 100% of eligible costs for the SEB program. The State of Georgia became eligible to pay SEB May 10, 2020. However, the first payable weekending date (WED) was on July 4, 2020, as the first payable WED of PEUC was April 4, 2020. Further, the last payable WED for SEB was February 6, 2021. Criteria: As a recipient of federal awards, the Institution is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 ? Internal Controls. Title 34, Chapter 8, Article 9 of the Official Code of Georgia Annotated (OCGA) ?34-8-254 defines overpayments as the sum of benefits received by any person while any conditions for the receipt of benefits were not fulfilled or while the person was disqualified from receiving benefits. OCGA ?34-8-254 assigns legal responsibility and authority for the collection of overpayments to the Commissioner of the DOL. Additionally, per the UI Report Handbook No. 401, the ETA 227 and ETA 902P reports are required to be submitted to the U.S. Department of Labor in a timely and accurate manner. The ETA 227 reports are due quarterly on the first day of the second month after the quarter of reference, and all applicable data on the ETA 227 reports should be traceable to the data regarding overpayments and recoveries in the state?s financial accounting system. The ETA 902P report is due on the 30th of the month following the month to which data relate and should contain monthly data on PUA activities. Condition: In an effort to assess risk and plan audit procedures, auditors obtained an understanding of the internal controls over the processes for identifying and recording overpayments. In performing these procedures, the DOL stated that crossmatches used to identify possible overpayments were several quarters behind. Typically, the DOL runs crossmatches three to six months after a quarter?s benefits have been paid. However, the crossmatches for third quarter of 2021, which includes the months of July 2021 to September 2021, were not completed until September 15, 2022 and crossmatches for fourth quarter of 2021, which includes the months of October 2021 to December 2021, were not completed until November 15, 2022. Based upon this information, auditors requested a complete population of overpayment cases and a reconciliation of this population data to the financial statements. Auditors planned to select a sample of overpayment cases that the DOL had established during the fiscal year under review and verify that the DOL was properly identifying and processing overpayments. Although the DOL provided a listing of overpayment cases and a reconciliation two months after initially requested, the amounts reflected on the listing did not agree to amounts reported on the financial statements or reconciliation. Furthermore, auditors inquired if overpayment data in the system of record was reconciled to the billing system and the DOL stated they did not perform such reconciliation. While auditors were unable to verify that the population of overpayment cases was complete and accurate, auditors chose to test the overpayment data to gain a better understanding of and review controls and processes and follow up on the prior year findings. In doing so, no exceptions were noted, but auditors ultimately could not rely on the data provided by the DOL. Cause: The benefit system was unable to track and provide reporting related to the CARES Act UI programs. The DOL did not have the ability to easily run transaction-level or claimant-level queries for overpayments in their systems. Furthermore, the DOL did not reconcile overpayment data to subsystems, federal reports, or accounting records and was not able to do so in a timely manner when requested by the Department of Audits and Accounts and the State Accounting Office. The DOL dedicated its resources to higher priorities to support its mission-essential functions due to the COVID-19 pandemic. Effect: Due to the lack of controls, there is an increased risk that possible fraudulent claims and improper benefits paid during the fiscal year 2022 will not be identified and investigated. The deficiencies in the identification and recording of benefit overpayments resulted in noncompliance with federal and state regulations. Additionally, inaccurate reports were likely filed with the U.S. Department of Labor. Furthermore, the lack of accurate and complete data associated with benefit overpayments prevented auditors from testing compliance requirements associated with overpayments. These unknown factors, along with additional issues, are the basis for our adverse of opinion on the UI program. Recommendation: The DOL management should develop and implement procedures to identify and record benefit overpayments in a timely and accurate manner. These procedures should allow for the tracking of information by fiscal year and the periodic reconciliation of detail records to the general ledger and various required reports. In addition, the DOL should dedicate appropriate resources and develop a plan to complete any remaining system modifications necessary to support the identification, tracking and reporting of overpayments both internally and to the U.S. Department of Labor associated with the CARES Act UI programs. Views of Responsible Officials: We do not concur with this finding. The Georgia Department of Labor did not maintain adequate controls over the identification, recording, and reporting of benefit overpayments associated with the Unemployment Insurance programs. GDOL Response: The Georgia Department of Labor disagrees with this finding. USDOL provides guidance and recommended procedures for crossmatches but does not dictate a frequency or cadence for performing them. The crossmatch process is conducted using Onpoint BARTS software which runs a systematic check against weeks in a quarter for which benefits are paid and wages are reported during the same quarter. Although the program may detect weeks paid and wages reported, this alone is not indicative of an overpayment. Therefore, the process involves verification correspondence being sent to both the claimant and the employer, as applicable, to verify the status of employment, the wages earned as well as the weeks in which an individual worked and earned the wages. Based on responses, an assessment is made to determine if an overpayment exists and subsequent actions are taken accordingly. We are prohibited from assuming a match is an overpayment. It is not an overpayment until we have completed a full investigation and provided due process to all parties. The audit report indicates misinterpretation of the data reflected on the federal reports, specifically the ETA 227. The ETA 227 is for reporting of overpayment detection and recovery activities that the Agency performed in a quarter. It is not for reporting the amount of benefits overpaid for specific weeks during that quarter. A federal reporting team was created to accurately identify and track overpayments. The Department is taking necessary actions to complete the overpayment reconciliation for the ETA 227 and 902 reports. Federal regulations require an actual person to review and establish fraudulent overpayments. Due to the volume of claims and the number of cross matches to be performed on all state and federal pandemic programs, it would require multiple GDOL staffing levels to review all cross matches, requiring increased levels of state and federal funding. Summary GDOL has developed an aggressive plan to complete all remaining state and pandemic program cross matches. We have filled all of our budgeted positions for the Overpayment Unit and are utilizing non-overpayment staff to assist with identification and overpayment investigations. Additionally, we are utilizing temp agency staff to perform some clerical duties; however, federal regulations prohibit non-merit staff from adjudicating and releasing overpayment decisions. In early 2022, we started to freeze the overpayment data at the end of every month so that we can conduct periodic reconciliation of the overpayment records. GDOL is coordinating with USDOL to ensure the timely and accurate identification, tracking and reporting of overpayments. GDOL greatly appreciates the feedback and recommendations and will consider this information in future endeavors to modernize and update system and business processes. Auditor's Concluding Remarks: The Georgia Department of Audits and Accounts (DOAA) acknowledges the overwhelming burden placed on the DOL due to the effects of the COVID-19 pandemic and the urgency with which payments were made to the unemployed citizens of Georgia. However, as noted in the finding details above, it is clear that procedures associated with the identification, recording, and reporting of UI benefit overpayments were not performed in a timely and accurate manner. We reaffirm our finding and will review the status of the finding during our next audit.
2022-029 Improve Controls over the Identification, Recording, and Reporting of Overpayments Federal Agency: U.S. Department of Labor State Entity: Department of Labor (GDOL) Corrective Action Plans: The Georgia Department of Labor did not maintain adequate controls over the identification, recording, and reporting of benefit overpayments associated with the Unemployment Insurance programs. GDOL Response: The Georgia Department of Labor disagrees with this finding. USDOL provides guidance and recommended procedures for crossmatches but does not dictate a frequency or cadence for performing them. The crossmatch process is conducted using third party software which runs a systematic check against weeks in a quarter for which benefits are paid and wages are reported during the same quarter. Although the program may detect weeks paid and wages reported, this alone is not indicative of an overpayment. Therefore, the process involves verification correspondence being sent to both the claimant and the employer, as applicable, to verify the status of employment, the wages earned as well as the weeks in which an individual worked and earned the wages. Based on responses, an assessment is made to determine if an overpayment exists and subsequent actions are taken accordingly. We are prohibited from assuming a match is an overpayment. It is not an overpayment until we have completed a full investigation and provided due process to all parties. The audit report indicates misinterpretation of the data reflected on the federal reports, specifically the ETA 227. The ETA 227 is for reporting of overpayment detection and recovery activities that the Agency performed in a quarter. It is not for reporting the amount of benefits overpaid for specific weeks during that quarter. A federal reporting team was created to accurately identify and track overpayments. The Department is taking necessary actions to complete the overpayment reconciliation for the ETA 227 and 902 reports. Federal regulations require an actual person to review and establish fraudulent overpayments. Due to the volume of claims and the number of cross matches to be performed on all state and federal pandemic programs, it would require multiple GDOL staffing levels to review all cross matches, requiring increased levels of state and federal funding. Summary GDOL has developed an aggressive plan to complete all remaining state and pandemic program cross matches. We have filled all of our budgeted positions for the Overpayment Unit and are utilizing non-overpayment staff to assist with identification and overpayment investigations. Additionally, we are utilizing temp agency staff to perform some clerical duties; however, federal regulations prohibit non-merit staff from adjudicating and releasing overpayment decisions. In early 2022, we started to freeze the overpayment data at the end of every month so that we can conduct periodic reconciliation of the overpayment records. GDOL is coordinating with USDOL to ensure the timely and accurate identification, tracking and reporting of overpayments. GDOL greatly appreciates the feedback and recommendations and will consider this information in future endeavors to modernize and update system and business processes. Estimated Completion Date: January 1, 2022 Contact Person: Crystal Singleton, Policy and Procedure Manager Telephone: 404-232-3183; E-mail: Crystal.Singleton@gdol.ga.gov
2021-038
Management of the DOL indicated on the Summary Schedule of Prior Audit Findings for the year ended June 30, 2022 that the following prior audit findings had been fully corrected: ? 2020-036 ? Improve Controls over Eligibility Determinations ? 2021-036 ? Improve Controls over Employer-Filed Claims However, in performing follow-up and current period audit procedures associated with the Unemployment Insurance program, it was determined that these audit findings were unresolved and would be repeated in the current period as planned corrective actions had not been adequately implemented and current period deficiencies and/or questioned costs were identified. Cause: The DOL management believed that the prior period audit findings were resolved as the U.S. Department of Labor review of these audit findings was closed; however, given that repeat, current period audit findings were issued, these prior period audit findings were clearly unresolved. Effect: The Summary Schedule of Prior Audit Findings reflects the material misrepresentation of the status of two prior audit findings, and therefore, the DOL is not in compliance with provisions reflected within the Uniform Guidance. Additionally, incorrect information regarding the status of these audit findings will be reported to the U.S. Department of Labor through the Federal Audit Clearinghouse. Recommendation: The DOL management should develop and implement procedures to ensure that the status of each prior audit finding is reported in an accurate manner. In addition, the DOL should ensure that staff responsible for submitting the status of prior period audit findings are trained and understand their responsibilities associated with the Summary Schedule of Prior Audit Findings under the Uniform Guidance. Views of Responsible Officials: We do not concur with this finding. GDOL Response: As Georgia progressed towards addressing and pursuing efforts to resolve outstanding CARES Act matters, impediments such as limited workforce and system restrictions hindered progress. Such factors, imposed upon the intents to make system changes, corrections and enhancements. We have taken the following corrective actions in an ongoing effort to bring these findings to full resolution: 2020- 036 Improve Controls Over Eligibility Determinations In addition to steadily reviewing and determining eligibility of responses providing proof of PUA employment and wages, a task force has been established to assist with this effort. An ongoing campaign is in progress to onboard additional resources to increase the cadence of addressing these items. Claimants who fail to provide adequate proof are manually reconsidered and overpayments established appropriately. Since this process is manually reviewed by staff rather than by system automation, we anticipate this effort will take approximately 60 weeks to complete. When there are indications of potential fraud, additional investigation is pursued to determine if fraud penalties should be imposed. 2021-036 ? Improve Controls over Employer-Filed Claims Effective December 6, 2021, the EFC process was revised to require individuals (employees) to complete an EFC profile to include a real-time identity verification before payments can be made. Employers are responsible for submitting the request for the payment to certify to the individual?s employment status but the individuals must certify their identity and personal information for the claim to be processed. Employees are notified when a claim is filed on their behalf and provided instructions for their portion of completing the EFC process. The MyUI dashboard provides all the EFC correspondence sent to the individual as well as a status of the profile set up and identify verification. Summary We are currently seeking funding to modernize our UI benefits system which will incorporate and improve the controls cited. GDOL will develop and implement procedures to ensure the status of each prior audit finding is reported in an accurate manner. GDOL will ensure staff responsible for submitting the status of prior period audit findings are trained and understand their responsibilities associated with the Summary Schedule of Prior Audit Findings under the Uniform Guidance. Auditor's Concluding Remarks: As noted in the finding details above and given the DOL?s plans to ensure that the status of each prior year finding is reported accurately going forward, it is clear that the information reported by the DOL on the Summary Schedule of Prior Period Findings for the two findings in question is materially misrepresented. Therefore, we reaffirm our finding and will review the status of the finding during our next audit.
Show full finding ▾Hide full finding ▴2022-030 Strengthen Controls over the Summary Schedule of Prior Audit Findings Compliance Requirement: Other Internal Control Impact: Material Weakness Compliance Impact: Material Noncompliance Federal Awarding Agency: U.S. Department of Labor Pass-Through Entity: None AL Numbers and Titles: 17.225 ? Unemployment Insurance 17.225 ? COVID-19 ? Unemployment Insurance Federal Award Number: UI328881855A13 (Year: 2018), UI325941955A13 (Year: 2019), UI328341960A13 (Year: 2019), UI340532055A13 (Year: 2020), UI341592055A13 (Year: 2020), UI344912060A13 (Year: 2020), UI347102055A13 (Year: 2020), UI356432155A13 (Year: 2021), UI356992155A13 (Year: 2021), UI359392160A13 (Year: 2021) Questioned Costs: None Identified Description: The Georgia Department of Labor materially misrepresented the status of two prior period audit findings as reported on the Summary Schedule of Prior Audit Findings. Background Information: The State Accounting Office (SAO) is responsible for preparing the Summary Schedule of Prior Audit Findings for inclusion in the State of Georgia?s (State) Single Audit report. All prior audit findings that were not shown as being resolved in the State?s prior year Single Audit report are reflected within the current year Summary Schedule of Prior Audit Findings. The SAO requires each State agency to submit information associated with their individual prior audit findings, including the status and response. This information is, then, compiled to create the State?s final Summary Schedule of Prior Audit Findings each year. Criteria: As a recipient of federal awards, the Georgia Department of Labor (DOL) is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 ? Internal Controls. Provisions reflected within the Uniform Guidance, Section 200.511 ? Audit Findings Follow-Up state that ?The auditee is responsible for follow-up and corrective action on all audit findings. As part of this responsibility the auditee must prepare a summary schedule of prior audit findings? That summary schedule of prior audit findings must report the status of all audit findings included in the prior audit?s schedule of findings and questioned costs? When audit findings were not corrected or were only partially corrected, the summary schedule must describe the reasons for the finding?s recurrence and planned corrective action, and any partial corrective action taken?? Additionally, provisions reflected within the Uniform Guidance, Section 200.514 ? Scope of Audit explain the auditor?s responsibilities associated with audit follow-up and state, ?The auditor must follow-up on prior audit findings, perform procedures to assess the reasonableness of the summary schedule of prior audit findings prepared by the auditee? and report, as a current year audit finding, when the auditor concludes that the summary schedule of prior audit findings materiality misrepresents the status of any prior audit finding.? Condition: Management of the DOL indicated on the Summary Schedule of Prior Audit Findings for the year ended June 30, 2022 that the following prior audit findings had been fully corrected: ? 2020-036 ? Improve Controls over Eligibility Determinations ? 2021-036 ? Improve Controls over Employer-Filed Claims However, in performing follow-up and current period audit procedures associated with the Unemployment Insurance program, it was determined that these audit findings were unresolved and would be repeated in the current period as planned corrective actions had not been adequately implemented and current period deficiencies and/or questioned costs were identified. Cause: The DOL management believed that the prior period audit findings were resolved as the U.S. Department of Labor review of these audit findings was closed; however, given that repeat, current period audit findings were issued, these prior period audit findings were clearly unresolved. Effect: The Summary Schedule of Prior Audit Findings reflects the material misrepresentation of the status of two prior audit findings, and therefore, the DOL is not in compliance with provisions reflected within the Uniform Guidance. Additionally, incorrect information regarding the status of these audit findings will be reported to the U.S. Department of Labor through the Federal Audit Clearinghouse. Recommendation: The DOL management should develop and implement procedures to ensure that the status of each prior audit finding is reported in an accurate manner. In addition, the DOL should ensure that staff responsible for submitting the status of prior period audit findings are trained and understand their responsibilities associated with the Summary Schedule of Prior Audit Findings under the Uniform Guidance. Views of Responsible Officials: We do not concur with this finding. GDOL Response: As Georgia progressed towards addressing and pursuing efforts to resolve outstanding CARES Act matters, impediments such as limited workforce and system restrictions hindered progress. Such factors, imposed upon the intents to make system changes, corrections and enhancements. We have taken the following corrective actions in an ongoing effort to bring these findings to full resolution: 2020- 036 Improve Controls Over Eligibility Determinations In addition to steadily reviewing and determining eligibility of responses providing proof of PUA employment and wages, a task force has been established to assist with this effort. An ongoing campaign is in progress to onboard additional resources to increase the cadence of addressing these items. Claimants who fail to provide adequate proof are manually reconsidered and overpayments established appropriately. Since this process is manually reviewed by staff rather than by system automation, we anticipate this effort will take approximately 60 weeks to complete. When there are indications of potential fraud, additional investigation is pursued to determine if fraud penalties should be imposed. 2021-036 ? Improve Controls over Employer-Filed Claims Effective December 6, 2021, the EFC process was revised to require individuals (employees) to complete an EFC profile to include a real-time identity verification before payments can be made. Employers are responsible for submitting the request for the payment to certify to the individual?s employment status but the individuals must certify their identity and personal information for the claim to be processed. Employees are notified when a claim is filed on their behalf and provided instructions for their portion of completing the EFC process. The MyUI dashboard provides all the EFC correspondence sent to the individual as well as a status of the profile set up and identify verification. Summary We are currently seeking funding to modernize our UI benefits system which will incorporate and improve the controls cited. GDOL will develop and implement procedures to ensure the status of each prior audit finding is reported in an accurate manner. GDOL will ensure staff responsible for submitting the status of prior period audit findings are trained and understand their responsibilities associated with the Summary Schedule of Prior Audit Findings under the Uniform Guidance. Auditor's Concluding Remarks: As noted in the finding details above and given the DOL?s plans to ensure that the status of each prior year finding is reported accurately going forward, it is clear that the information reported by the DOL on the Summary Schedule of Prior Period Findings for the two findings in question is materially misrepresented. Therefore, we reaffirm our finding and will review the status of the finding during our next audit.
2022-030 Strengthen Controls over the Summary Schedule of Prior Audit Findings Federal Agency: U.S. Department of Labor State Entity: Department of Labor (GDOL) Corrective Action Plans: As Georgia progressed towards addressing and pursuing efforts to resolve outstanding Coronavirus Aid, Relief, and Economic Security Act (CARES Act) matters, impediments such as limited workforce and system restrictions hindered progress. Such factors, imposed upon the intents to make system changes, corrections and enhancements. We have taken the following corrective actions in an ongoing effort to bring these findings to full resolution: 2020- 036 Improve Controls Over Eligibility Determinations In addition to steadily reviewing and determining eligibility of responses providing proof of Pandemic Unemployment Assistance (PUA) employment and wages, a task force has been established to assist with this effort. An ongoing campaign is in progress to onboard additional resources to increase the cadence of addressing these items. Claimants who fail to provide adequate proof are manually reconsidered and overpayments established appropriately. Since this process is manually reviewed by staff rather than by system automation, we anticipate this effort will take approximately 60 weeks to complete. When there are indications of potential fraud, additional investigation is pursued to determine if fraud penalties should be imposed. 2021-036 ? Improve Controls over Employer-Filed Claims Effective December 6, 2021, the Employer-Filed Claims (EFC) process was revised to require individuals (employees) to complete an EFC profile to include a real-time identity verification before payments can be made. Employers are responsible for submitting the request for the payment to certify to the individual?s employment status but the individuals must certify their identity and personal information for the claim to be processed. Employees are notified when a claim is filed on their behalf and provided instructions for their portion of completing the EFC process. The MyUI dashboard provides all the EFC correspondence sent to the individual as well as a status of the profile set up and identify verification. Summary We are currently seeking funding to modernize our UI benefits system which will incorporate and improve the controls cited. GDOL will develop and implement procedures to ensure the status of each prior audit finding is reported in an accurate manner. GDOL will ensure staff responsible for submitting the status of prior period audit findings are trained and understand their responsibilities associated with the Summary Schedule of Prior Audit Findings under the Uniform Guidance. Estimated Completion Date: December 6, 2021 Contact Person: Racquel Robinson, Unemployment Policy and Procedures Chief Telephone: 404-232-3190; E-mail: Racquel.Robinson@gdol.ga.gov
Upon review of the Financial Progress Reports submitted throughout the fiscal year, it was noted that there was no documentation of review and approval of two of the four reports tested. As reported in previous audit periods, the auditors were able to review the Financial Progress Report reconciliations performed by the OPB and determine the reports were materially accurate; however, no evidence of a formal supervisory review and approval of the reconciliation was maintained on-file in these two instances. Cause: Due to the timing of the prior year audit results, the OPB did not implement its corrective action plan and maintain documentation of the review and approval of the Financial Progress Reports submitted until midway through the fiscal year under review. Effect: The lack of proper review and approval increases the risk that inappropriate information could be transmitted on the Financial Progress Report and published on the PRAC website. Recommendation: The OPB management should ensure that evidence of supervisory review and approval of the Financial Progress Report is maintained on-file for all reports submitted to the grantor. Views of Responsible Officials: OPB concurs that independent review of data entry prior to submission of official financial reports is essential to ensure that financial data of the state is presented accurately and remedy any potential misstatements prior to submission. OPB staff met to discuss and review the reports identified in this finding prior to submission; however, due to timing of the original finding, had not put in place a written documentation system to track those reviews. For all reports for the latter half of the year, OPB did document the entry, review, and submission on a separate report to be maintained for future audit review.
Show full finding ▾Hide full finding ▴2022-031 Continue to Improve Controls over Federal Financial Reporting Compliance Requirement: Reporting Internal Control Impact: Significant Deficiency Compliance Impact: Nonmaterial Noncompliance Federal Awarding Agency: U.S. Department of Treasury Pass-Through Entity: None AL Number and Title: COVID-19 ? 20.019 ? Coronavirus Relief Fund Federal Award Number: None Provided (Year:2020) Questioned Costs: None Identified Repeat of Prior Year Finding: 2021-040, 2020-040 Description: The Governor?s Office of Planning and Budget (OPB) should strengthen internal controls to ensure that appropriate reviews and approvals occur and adequate documentation is maintained for reporting related to the Coronavirus Relief Fund. Background Information: On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law. The CARES Act was designed to mitigate the economic effects of the COVID-19 pandemic in a variety of ways, including providing additional funding for State, Local, and Tribal governments navigating the impact of the COVID-19 outbreak. Title VI, Section 601 of the CARES Act appropriated $150 billion to States, Tribal governments and units of local government through the establishment of the Coronavirus Relief Fund (CRF). Of this funding, the State of Georgia received $3.5 billion. The Governor?s Office of Planning and Budget (OPB) was designated as the custodian of the CRF funds for the State of Georgia. In that capacity, the OPB was required to report details associated with CRF expenditures to the U.S. Department of Treasury?s Office of Inspector General. This expenditure information is submitted through the GrantSolutions portal and reflected on the quarterly Financial Progress Report. This data is provided to the Pandemic Response Accountability Committee (PRAC) and published on its website, as well. As part of our fiscal year 2022 audit, we followed up on the OPB?s efforts to implement corrective action plans for its prior year findings in which we reported that the OPB needed to strengthen internal controls to ensure that appropriate reviews and approvals occur and adequate documentation is maintained for expenditures and reporting related to the Coronavirus Relief Fund. Although the OPB was unable to fully implement their corrective action plan for all financial reports submitted during the period under review, we noted that significant progress was made with respect to expenditure and reporting documentation requirements. Criteria: As a recipient of federal awards, the OPB is required to establish and maintain effective internal controls over federal awards that provide reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal award pursuant to Title 2. U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) Section 200.303 ? Internal Controls. Additionally, the OPB?s corrective action plans related to the fiscal year 2021 finding 2021-040 and fiscal year 2020 finding 2020-040 states that the OPB will maintain evidence of supervisory review and approval of the Financial Progress Reports. Condition: Upon review of the Financial Progress Reports submitted throughout the fiscal year, it was noted that there was no documentation of review and approval of two of the four reports tested. As reported in previous audit periods, the auditors were able to review the Financial Progress Report reconciliations performed by the OPB and determine the reports were materially accurate; however, no evidence of a formal supervisory review and approval of the reconciliation was maintained on-file in these two instances. Cause: Due to the timing of the prior year audit results, the OPB did not implement its corrective action plan and maintain documentation of the review and approval of the Financial Progress Reports submitted until midway through the fiscal year under review. Effect: The lack of proper review and approval increases the risk that inappropriate information could be transmitted on the Financial Progress Report and published on the PRAC website. Recommendation: The OPB management should ensure that evidence of supervisory review and approval of the Financial Progress Report is maintained on-file for all reports submitted to the grantor. Views of Responsible Officials: OPB concurs that independent review of data entry prior to submission of official financial reports is essential to ensure that financial data of the state is presented accurately and remedy any potential misstatements prior to submission. OPB staff met to discuss and review the reports identified in this finding prior to submission; however, due to timing of the original finding, had not put in place a written documentation system to track those reviews. For all reports for the latter half of the year, OPB did document the entry, review, and submission on a separate report to be maintained for future audit review.
2022-031 Continue to Improve Internal Controls over Federal Financial Reporting Federal Agency: U.S. Department of the Treasury State Entity: Office of the Governor Corrective Action Plans: The Office of Planning and Budget shall maintain written documentation showing independent review and approval of data entered for reporting prior to submission of all federal reports. Estimated Completion Date: March 31, 2022 Contact Person: Stephanie Beck, Deputy Director Telephone: 678-245-0675; E-mail: stephanie.beck@opb.georgia.gov
2021-040
Upon review of the procedures that the DOL established to process partial claims submitted by employers, deficiencies were noted. The DOL did not require employees to self-certify that they were able to work, available for work, and actively seeking work each week they received benefits. Furthermore, the claimant was unable to self-report additional wages and income the employee may have received from sources other than the employer that initially filed the claim. In addition, when completing procedures over eligibility requirements for a sample of claimants, auditors noted that Employer-Filed Claim Fraud Stops had been internally identified and applied by the DOL for eight claimants and six employers. In these instances, the employer submitted a claim on behalf of the claimant for several weeks at one time and the claims were paid for those weekending dates. After several days, the DOL flagged the associated claimant and employer to prevent subsequent payments from being released. Based upon this information, auditors, then, reviewed the listing of benefit payments made during the fiscal year and determined that $14,659,724 in benefits were paid to 1,230 claimants by the six employers initially identified as having Employer-Filed Claim Fraud Stops. Furthermore, on November 30, 2022, the United States Department of Justice issued a press release detailing a $30 million UI fraud scheme in Georgia. The scheme involved bad actors creating fictitious employers and submitting employer-filed claims. Auditors requested information about the employers and claimants identified in the investigation, as well as basic information about when the investigation began and how the scheme was identified. However, the DOL would not provide the requested information to auditors. Moreover, our audit of the Unemployment Compensation Fund (UCF) included a review of benefit payments related to regular UC, State Extended Benefits (SEB), and CARES Act UI programs. Upon testing 244 benefit payment transactions processed by the DOL, it was noted that identity verification documentation was not maintained on-file for nine employer-filed claims. While auditors were unable to determine the total dollar amount of improper payments associated with these deficiencies, a review of all benefit payment transactions occurring during the fiscal year under review indicated that the following dollar amounts of benefit payments were submitted and certified by 5,609 employers for 56,922 individual claimants: ? Regular Unemployment Compensation (UC) ? $59,187,803 ? State Extended Benefits (SEB) ? $48,694 ? Reemployment Trade Adjustment Assistance (RTAA) ? $8,549 ? Federal Pandemic Unemployment Compensation (FPUC) ? $25,840,055 ? Pandemic Emergency Unemployment Compensation (PEUC) ? $6,579,945 ? Lost Wages Assistance (LWA) ? $2,189,100 ? Mixed Earner Unemployment Compensation (MEUC) ? $2,000 Questioned Costs: Though likely questioned costs may exist, these amounts are unknown as sufficient data to analyze benefit payment transactions associated with these employer-filed claims was not available. The following assistance listing numbers would be affected if questioned costs did exist: 17.225, 17.225 ? COVID-19, and 97.050. Cause: The DOL management implemented a flawed employer-filed claim process that did not allow for the monitoring of the employees? ability to work and wage verification requirements. In addition, internal controls were not implemented to identify potential fraud schemes prior to the initial benefit payment being disbursed. Effect: These deficiencies resulted in noncompliance with federal regulations and the Uniform Guidance. Due to the lack of controls over employer-filed claims, specifically the inability for claimants to self-certify, it is likely that claimants were paid benefits that they were not eligible to receive. Because eligibility for UC benefits is based on claimants demonstrating that they meet certain eligibility requirements on a weekly basis, the suspension of the requirement for claimants to certify eligibility on a weekly basis did not allow the DOL to determine whether continuing claimants remained eligible for benefits. The State?s failure to administer its UI program in conformity and substantial compliance with federal law can result in loss of the State?s certification and loss of its administrative grant to operate the UC program and/or its employers? tax credits under Federal Unemployment Tax Act (FUTA). Recommendation: We recommend that the DOL develop a process to notify an employee when an employer-filed claim is submitted and to require the employee to create an account with the DOL, verify information, and self-certify employment status for the week being claimed. We also recommend that the DOL develop controls to prevent the release of payment when identity and eligibility requirements have not been substantiated and verified. In addition, we recommend that the DOL develop analytical procedures and queries to identify payments that have been made to claimants without identity verification and/or were otherwise ineligible to receive such payments. Views of Responsible Officials: We do not concur with this finding. The Department of Labor should improve internal controls over employer-filed Unemployment Compensation claims. GDOL Response: The Georgia Department of Labor disagrees with this finding. The Employer Filed (Partial) Claims (EFC) program originated in the late 1960?s and was designed to allow employers with short term, temporary periods of lack of work for their employees to retain their workforce when work resumes. This is a program that many large manufacturers in Georgia rely on when they have temporary plant shutdowns and have for decades. When GDOL has attempted in the past to limit this program, we have met strong resistance from Georgia?s manufacturers. This program optimizes our ability to process and pay mass numbers of claims more quickly, such as what occurred at the beginning of the pandemic. EFCs may be filed by an employer with respect to any complete pay-period week during which an otherwise full-time employee works less than full-time, due to lack of work only, and earns an amount not exceeding his/her unemployment insurance weekly benefit amount. Such claims shall not be submitted or allowed for vacation days regardless of whether such vacation days were requested by the employee or established by the employer. Effective March 19, 2020, a temporary, Emergency Rule 300-2-4-05(1), containing Rule 300-2-4-.09(1) was signed which required employers to electronically submit EFCs on behalf of their employees whenever it is necessary to temporarily reduce work hours or there was no work available for a short period of time. Employers were allowed to file such claims for full and part time employees whose earnings had been reduced. In July 2020, the Rule was sunset and employers were no longer required to file EFCs. EFCs may be filed online by single entry or upload or paper. An employer may submit EFCs for regular state unemployment insurance programs including available extended benefits programs with the same eligibility requirements as regular UI, such as Pandemic Emergency Unemployment Compensation (PEUC) and State Extended Benefits (SEB), given all regular UI entitlement is exhausted. By electing to submit EFCs on behalf of the individuals, the employer is responsible for attesting to the employment status and weekly earnings of the individual for the EFC submitted. An affidavit certifying that the employer has obtained earnings from other employment as well as other requirements must be completed before EFCs can be entered or uploaded. Individuals for which EFCs are submitted are considered to be still attached to the employer and are exempt from the requirement to register for employment services per Georgia Employment Security Law Rules 300-2-4-.02. Such individuals are not required to be nor certify on a weekly basis to be able, available and actively seeking work. The GDOL disagrees that we would not provide the requested information to the auditors. The data requested relates to an ongoing federal criminal investigation. GDOL did not provide the data with concerns that dissemination of the data to a third party could jeopardize the ongoing criminal investigation and create legal risk for GDOL. GDOL stated that the auditors should obtain permission from the United States Department of Justice as a condition to dissemination of the data. GDOL did not receive any confirmation that the auditors had discussed the matter or coordinated with the US Department of Justice. Even though there have been some publicized indictments, the US Department of Justice has confirmed to GDOL that the investigation is ongoing and future indictments are anticipated. Notwithstanding, GDOL reiterates it would be happy to share the relevant data in its possession with assurances that the auditors will not publicize or disseminate any of the audit data without first consulting with the US Department of Justice. GDOL is also happy to cooperate with the auditors and provide information relating to how GDOL discovered the methods and schemes used by the fraudsters; however, GDOL has serious concerns about any publication of such information or of any other specific vulnerabilities in GDOL?s systems that would serve to encourage or perpetuate additional unemployment insurance fraud. Summary When we identified employer fraud schemes, we followed the guidance issued by United States Department of Labor (USDOL) and collaborated with the United States Department of Labor Office of Inspector General (OIG) to investigate these cases. Effective December 6, 2021, the EFC process was revised to require individuals (employees) to complete an EFC profile to include a real-time identity verification before payments can be made. Employers are responsible for submitting the request for the payment to certify to the individual?s employment status, but the individuals must certify their identity and personal information for the claim to be processed. Employees are notified when a claim is filed on their behalf and provided instructions for their portion of completing the EFC process. The MyUI Customer Portal dashboard provides all the EFC correspondence sent to the individual as well as a status of the profile set up and identify verification. Prior to the implementation of the EFC profile requirement, GDOL utilized the Social Security Administration (SSA) crossmatch and Systematic Alien Verification for Entitlement (SAVE) verification processes to verify the identity of claimants where employers submit claims on their behalf. GDOL has no plans to stop utilizing the EFC program as it is an effective and popular program among employers with a successful 60-year track record. GDOL greatly appreciates the feedback and recommendations and will consider this information in future endeavors to modernize and update system and business processes. Auditor's Concluding Remarks: The Georgia Department of Audits and Accounts (DOAA) acknowledges the overwhelming burden placed on the DOL due to the effects of the COVID-19 pandemic and the urgency with which payments were made to the unemployed citizens of Georgia. However, as noted in the finding details above, the DOAA has not suggested that the DOL discontinue the use of the employer-filed claims process but recommended that employee verification procedures be added to the process. Moreover, it was noted that the DOL implemented several recommended employee verification processes during the audit period. Additionally, as noted in the finding details above, auditors requested general information related to the press release issued by the United States Department of Justice on their public website. Auditors sought to determine the impact of this investigation on the current fiscal year?s audit; however, no information was provided to auditors. We reaffirm our finding and will review the status of the finding during our next audit.
Show full finding ▾Hide full finding ▴2022-032 Improve Controls over Employer Filed Claims Compliance Requirement: Eligibility Internal Control Impact: Material Weakness Compliance Impact: Material Noncompliance Federal Awarding Agency: U.S. Department of Labor U.S. Department of Homeland Security Pass-Through Entity: None AL Numbers and Titles: 17.225 ? Unemployment Insurance 17.225 ? COVID-19 ? Unemployment Insurance 97.050 ? Presidential Declared Disaster Assistance to Individuals and Households ? Other Needs Federal Award Number: UI325941955A13 (Year: 2019), UI340532055A13 (Year: 2020), UI344912060A13 (Year: 2020), UI347102055A13 (Year: 2020), 4501LOSTWAGESBENEFIT (Year: 2020), 4501LOSTWAGESADMIN (Year: 2020), UI356432155A13 (Year: 2021), UI356992155A13 (Year: 2021), UI359392160A13 (Year: 2021), UI370592155A13 (Year: 2021), UI372182255A13 (Year: 2022), UI372752255A13 (Year: 2022) Questioned Costs: Unknown Repeat of Prior Year Finding: 2021-036 Description: The Department of Labor should improve internal controls over employer-filed Unemployment Compensation claims. Background Information: The Unemployment Insurance (UI) program, created by the Social Security Act (Pub. L. No. 74-271), provides Unemployment Compensation (UC) benefits to workers who are unemployed through no fault of their own and are seeking reemployment. To receive benefits, claimants must be able to work, available for work, and actively seeking work. On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law. The CARES Act was designed to mitigate the economic effects of the COVID-19 pandemic in a variety of ways, including providing additional UI provisions. Additionally, in response to the COVID-19 public health emergency, the National Emergency declaration by the President on March 13, 2020, and the Public Health State of Emergency declared by Governor Brian Kemp on March 14, 2020, the Georgia Department of Labor (DOL) Commissioner enacted Emergency Rule 300-2-4-0.5, containing Rule 300-2-4-.09(l) Partial Unemployment on March 16, 2020. The emergency rule allowed employers to file claims online on-behalf of their full-time and part-time employees with respect to any week during which an employee worked less than full-time due to a partial or total company shutdown caused by the COVID-19 public health emergency. To file on-behalf of the employee, the employer must download and submit the DOL template, which requires the employer to input all the necessary identity, demographic, work, and wage information to establish a claim. After the employer has submitted the file, the DOL benefit payment system will automatically process the claim. A monetary determination will be made based on the wages the DOL has on-file. The DOL, then, sends the employee a Benefit Determination (Form DOL-411G), which reflects whether they met the wage requirements to establish a benefit year and a valid claim. If a valid claim is established, the determination lists the weekly benefit amount, maximum benefit amount, and maximum number of weeks. Criteria: As a recipient of federal awards, the DOL is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 ? Internal Controls. The Uniform Guidance, Section 200.53 - Improper Payment states, ?(a) Improper payment means any payment that should not have been made or that was made in an incorrect amount (including overpayments and underpayments) under statutory, contractual, administrative, or other legally applicable requirements; and (b) Improper payment includes any payment to an ineligible party, any payment for an ineligible good or service, any duplicate payment, any payment for a good or service not received (except for such payments where authorized by law), any payment that does not account for credit for applicable discounts, and any payment where insufficient or lack of documentation prevents a reviewer from discerning whether a payment was proper.? Additionally, provisions included in Title 20 CFR Section 604.3(a) states, ?A State may pay UC only to an individual who is able to work and available for work for the week for which UC is claimed.? Condition: Upon review of the procedures that the DOL established to process partial claims submitted by employers, deficiencies were noted. The DOL did not require employees to self-certify that they were able to work, available for work, and actively seeking work each week they received benefits. Furthermore, the claimant was unable to self-report additional wages and income the employee may have received from sources other than the employer that initially filed the claim. In addition, when completing procedures over eligibility requirements for a sample of claimants, auditors noted that Employer-Filed Claim Fraud Stops had been internally identified and applied by the DOL for eight claimants and six employers. In these instances, the employer submitted a claim on behalf of the claimant for several weeks at one time and the claims were paid for those weekending dates. After several days, the DOL flagged the associated claimant and employer to prevent subsequent payments from being released. Based upon this information, auditors, then, reviewed the listing of benefit payments made during the fiscal year and determined that $14,659,724 in benefits were paid to 1,230 claimants by the six employers initially identified as having Employer-Filed Claim Fraud Stops. Furthermore, on November 30, 2022, the United States Department of Justice issued a press release detailing a $30 million UI fraud scheme in Georgia. The scheme involved bad actors creating fictitious employers and submitting employer-filed claims. Auditors requested information about the employers and claimants identified in the investigation, as well as basic information about when the investigation began and how the scheme was identified. However, the DOL would not provide the requested information to auditors. Moreover, our audit of the Unemployment Compensation Fund (UCF) included a review of benefit payments related to regular UC, State Extended Benefits (SEB), and CARES Act UI programs. Upon testing 244 benefit payment transactions processed by the DOL, it was noted that identity verification documentation was not maintained on-file for nine employer-filed claims. While auditors were unable to determine the total dollar amount of improper payments associated with these deficiencies, a review of all benefit payment transactions occurring during the fiscal year under review indicated that the following dollar amounts of benefit payments were submitted and certified by 5,609 employers for 56,922 individual claimants: ? Regular Unemployment Compensation (UC) ? $59,187,803 ? State Extended Benefits (SEB) ? $48,694 ? Reemployment Trade Adjustment Assistance (RTAA) ? $8,549 ? Federal Pandemic Unemployment Compensation (FPUC) ? $25,840,055 ? Pandemic Emergency Unemployment Compensation (PEUC) ? $6,579,945 ? Lost Wages Assistance (LWA) ? $2,189,100 ? Mixed Earner Unemployment Compensation (MEUC) ? $2,000 Questioned Costs: Though likely questioned costs may exist, these amounts are unknown as sufficient data to analyze benefit payment transactions associated with these employer-filed claims was not available. The following assistance listing numbers would be affected if questioned costs did exist: 17.225, 17.225 ? COVID-19, and 97.050. Cause: The DOL management implemented a flawed employer-filed claim process that did not allow for the monitoring of the employees? ability to work and wage verification requirements. In addition, internal controls were not implemented to identify potential fraud schemes prior to the initial benefit payment being disbursed. Effect: These deficiencies resulted in noncompliance with federal regulations and the Uniform Guidance. Due to the lack of controls over employer-filed claims, specifically the inability for claimants to self-certify, it is likely that claimants were paid benefits that they were not eligible to receive. Because eligibility for UC benefits is based on claimants demonstrating that they meet certain eligibility requirements on a weekly basis, the suspension of the requirement for claimants to certify eligibility on a weekly basis did not allow the DOL to determine whether continuing claimants remained eligible for benefits. The State?s failure to administer its UI program in conformity and substantial compliance with federal law can result in loss of the State?s certification and loss of its administrative grant to operate the UC program and/or its employers? tax credits under Federal Unemployment Tax Act (FUTA). Recommendation: We recommend that the DOL develop a process to notify an employee when an employer-filed claim is submitted and to require the employee to create an account with the DOL, verify information, and self-certify employment status for the week being claimed. We also recommend that the DOL develop controls to prevent the release of payment when identity and eligibility requirements have not been substantiated and verified. In addition, we recommend that the DOL develop analytical procedures and queries to identify payments that have been made to claimants without identity verification and/or were otherwise ineligible to receive such payments. Views of Responsible Officials: We do not concur with this finding. The Department of Labor should improve internal controls over employer-filed Unemployment Compensation claims. GDOL Response: The Georgia Department of Labor disagrees with this finding. The Employer Filed (Partial) Claims (EFC) program originated in the late 1960?s and was designed to allow employers with short term, temporary periods of lack of work for their employees to retain their workforce when work resumes. This is a program that many large manufacturers in Georgia rely on when they have temporary plant shutdowns and have for decades. When GDOL has attempted in the past to limit this program, we have met strong resistance from Georgia?s manufacturers. This program optimizes our ability to process and pay mass numbers of claims more quickly, such as what occurred at the beginning of the pandemic. EFCs may be filed by an employer with respect to any complete pay-period week during which an otherwise full-time employee works less than full-time, due to lack of work only, and earns an amount not exceeding his/her unemployment insurance weekly benefit amount. Such claims shall not be submitted or allowed for vacation days regardless of whether such vacation days were requested by the employee or established by the employer. Effective March 19, 2020, a temporary, Emergency Rule 300-2-4-05(1), containing Rule 300-2-4-.09(1) was signed which required employers to electronically submit EFCs on behalf of their employees whenever it is necessary to temporarily reduce work hours or there was no work available for a short period of time. Employers were allowed to file such claims for full and part time employees whose earnings had been reduced. In July 2020, the Rule was sunset and employers were no longer required to file EFCs. EFCs may be filed online by single entry or upload or paper. An employer may submit EFCs for regular state unemployment insurance programs including available extended benefits programs with the same eligibility requirements as regular UI, such as Pandemic Emergency Unemployment Compensation (PEUC) and State Extended Benefits (SEB), given all regular UI entitlement is exhausted. By electing to submit EFCs on behalf of the individuals, the employer is responsible for attesting to the employment status and weekly earnings of the individual for the EFC submitted. An affidavit certifying that the employer has obtained earnings from other employment as well as other requirements must be completed before EFCs can be entered or uploaded. Individuals for which EFCs are submitted are considered to be still attached to the employer and are exempt from the requirement to register for employment services per Georgia Employment Security Law Rules 300-2-4-.02. Such individuals are not required to be nor certify on a weekly basis to be able, available and actively seeking work. The GDOL disagrees that we would not provide the requested information to the auditors. The data requested relates to an ongoing federal criminal investigation. GDOL did not provide the data with concerns that dissemination of the data to a third party could jeopardize the ongoing criminal investigation and create legal risk for GDOL. GDOL stated that the auditors should obtain permission from the United States Department of Justice as a condition to dissemination of the data. GDOL did not receive any confirmation that the auditors had discussed the matter or coordinated with the US Department of Justice. Even though there have been some publicized indictments, the US Department of Justice has confirmed to GDOL that the investigation is ongoing and future indictments are anticipated. Notwithstanding, GDOL reiterates it would be happy to share the relevant data in its possession with assurances that the auditors will not publicize or disseminate any of the audit data without first consulting with the US Department of Justice. GDOL is also happy to cooperate with the auditors and provide information relating to how GDOL discovered the methods and schemes used by the fraudsters; however, GDOL has serious concerns about any publication of such information or of any other specific vulnerabilities in GDOL?s systems that would serve to encourage or perpetuate additional unemployment insurance fraud. Summary When we identified employer fraud schemes, we followed the guidance issued by United States Department of Labor (USDOL) and collaborated with the United States Department of Labor Office of Inspector General (OIG) to investigate these cases. Effective December 6, 2021, the EFC process was revised to require individuals (employees) to complete an EFC profile to include a real-time identity verification before payments can be made. Employers are responsible for submitting the request for the payment to certify to the individual?s employment status, but the individuals must certify their identity and personal information for the claim to be processed. Employees are notified when a claim is filed on their behalf and provided instructions for their portion of completing the EFC process. The MyUI Customer Portal dashboard provides all the EFC correspondence sent to the individual as well as a status of the profile set up and identify verification. Prior to the implementation of the EFC profile requirement, GDOL utilized the Social Security Administration (SSA) crossmatch and Systematic Alien Verification for Entitlement (SAVE) verification processes to verify the identity of claimants where employers submit claims on their behalf. GDOL has no plans to stop utilizing the EFC program as it is an effective and popular program among employers with a successful 60-year track record. GDOL greatly appreciates the feedback and recommendations and will consider this information in future endeavors to modernize and update system and business processes. Auditor's Concluding Remarks: The Georgia Department of Audits and Accounts (DOAA) acknowledges the overwhelming burden placed on the DOL due to the effects of the COVID-19 pandemic and the urgency with which payments were made to the unemployed citizens of Georgia. However, as noted in the finding details above, the DOAA has not suggested that the DOL discontinue the use of the employer-filed claims process but recommended that employee verification procedures be added to the process. Moreover, it was noted that the DOL implemented several recommended employee verification processes during the audit period. Additionally, as noted in the finding details above, auditors requested general information related to the press release issued by the United States Department of Justice on their public website. Auditors sought to determine the impact of this investigation on the current fiscal year?s audit; however, no information was provided to auditors. We reaffirm our finding and will review the status of the finding during our next audit.
2022-032 Improve Controls over Employer-Filed Claims Federal Agency: Various Federal Agencies: U.S. Department of Homeland Security U.S. Department of Labor State Entity: Department of Labor (GDOL) Corrective Action Plans: The Georgia Department of Labor disagrees with this finding. The Employer Filed (Partial) Claims (EFC) program originated in the late 1960?s and was designed to allow employers with short term, temporary periods of lack of work for their employees to retain their workforce when work resumes. This is a program that many large manufacturers in Georgia rely on when they have temporary plant shutdowns and have for decades. When GDOL has attempted in the past to limit this program, we have met strong resistance from Georgia?s manufacturers. This program optimizes our ability to process and pay mass numbers of claims more quickly, such as what occurred at the beginning of the pandemic. EFCs may be filed by an employer with respect to any complete pay-period week during which an otherwise full-time employee works less than full-time, due to lack of work only, and earns an amount not exceeding his/her unemployment insurance weekly benefit amount. Such claims shall not be submitted or allowed for vacation days regardless of whether such vacation days were requested by the employee or established by the employer. Effective March 19, 2020, a temporary, Emergency Rule 300-2-4-05(1), containing Rule 300-2-4-.09(1) was signed which required employers to electronically submit EFCs on behalf of their employees whenever it is necessary to temporarily reduce work hours or there was no work available for a short period of time. Employers were allowed to file such claims for full and part time employees whose earnings had been reduced. In July 2020, the Rule was sunset and employers were no longer required to file EFCs. EFCs may be filed online by single entry or upload or paper. An employer may submit EFCs for regular state unemployment insurance programs including available extended benefits programs with the same eligibility requirements as regular UI, such as Pandemic Emergency Unemployment Compensation (PEUC) and State Extended Benefits (SEB), given all regular UI entitlement is exhausted. By electing to submit EFCs on behalf of the individuals, the employer is responsible for attesting to the employment status and weekly earnings of the individual for the EFC submitted. An affidavit certifying that the employer has obtained earnings from other employment as well as other requirements must be completed before EFCs can be entered or uploaded. Individuals for which EFCs are submitted are considered to be still attached to the employer and are exempt from the requirement to register for employment services per Georgia Employment Security Law Rules 300-2-4-.02. Such individuals are not required to be nor certify on a weekly basis to be able, available and actively seeking work. The GDOL disagrees that we would not provide the requested information to the auditors. The data requested relates to an ongoing federal criminal investigation. GDOL did not provide the data with concerns that dissemination of the data to a third party could jeopardize the ongoing criminal investigation and create legal risk for GDOL. GDOL stated that the auditors should obtain permission from the United States Department of Justice as a condition to dissemination of the data. GDOL did not receive any confirmation that the auditors had discussed the matter or coordinated with the US Department of Justice. Even though there have been some publicized indictments, the US Department of Justice has confirmed to GDOL that the investigation is ongoing and future indictments are anticipated. Notwithstanding, GDOL reiterates it would be happy to share the relevant data in its possession with assurances that the auditors will not publicize or disseminate any of the audit data without first consulting with the US Department of Justice. GDOL is also happy to cooperate with the auditors and provide information relating to how GDOL discovered the methods and schemes used by the fraudsters; however, GDOL has serious concerns about any publication of such information or of any other specific vulnerabilities in GDOL?s systems that would serve to encourage or perpetuate additional unemployment insurance fraud. Summary When we identified employer fraud schemes, we followed the guidance issued by United States Department of Labor (USDOL) and collaborated with the United States Department of Labor Office of Inspector General (OIG) to investigate these cases. Effective December 6, 2021, the EFC process was revised to require individuals (employees) to complete an EFC profile to include a real-time identity verification before payments can be made. Employers are responsible for submitting the request for the payment to certify to the individual?s employment status, but the individuals must certify their identity and personal information for the claim to be processed. Employees are notified when a claim is filed on their behalf and provided instructions for their portion of completing the EFC process. The MyUI Customer Portal dashboard provides all the EFC correspondence sent to the individual as well as a status of the profile set up and identify verification. Prior to the implementation of the EFC profile requirement, GDOL utilized the Social Security Administration (SSA) crossmatch and Systematic Alien Verification for Entitlement (SAVE) verification processes to verify the identity of claimants where employers submit claims on their behalf. GDOL has no plans to stop utilizing the EFC program as it is an effective and popular program among employers with a successful 60-year track record. GDOL greatly appreciates the feedback and recommendations and will consider this information in future endeavors to modernize and update system and business processes. Estimated Completion Date: December 6, 2021 Contact Person: Crystal Singleton, Policy and Procedure Manager Telephone: 404-232-3183; E-mail: Crystal.Singleton@gdol.ga.gov
2021-036
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