PENDER COUNTY, NORTH CAROLINALocal Government

U.S. Department of Health and Human Services Passed-through the N.C. Department of Health and Human Services Program Name: Medicaid Cluster AL # 93.778 Grant Number: 071-420 Finding: 2024-003 Significant Deficiency, Eligibility Nonmaterial Non-compliance Criteria: In accordance with 2 CFR 200, management should have an adequate system of internal control procedures in place to ensure that casefiles include all required documentation. In accordance with 45 CFR 435, documentation must be maintained to support eligibility determinations. Condition: The County Department of Social Services maintained inconsistent documentation for income and household membership. Context: Of the 484,970 benefit payments valued at $183,928,254, we examined 60 ($24,334 value) and determined that one casefile (2%) had inconsistent documentation supporting the eligibility determination in the case file. Upon further review, the recipient was deemed eligible. Effect: Casefile maintained inconsistent documentation, which could allow benefits to be provided to individuals who are not eligible. Cause: The caseworker did not verify updated documentation to the NCFAST system. Questioned Costs: None. The finding represents an internal control issue; therefore, no questioned costs are applicable. The County was able to substantiate that the recipients were eligible to receive benefits. Recommendation: Caseworkers should review their eligibility determinations and ensure that the correct information is included for proper documentation for eligibility. Views of Responsible Officials and Planned Corrective Actions: The County agrees with this finding. Please refer to the Corrective Action Plan section of this report

Criteria: In accordance with 2 CFR 200, management must have an adequate system of internal control procedures in place to properly review and assess the eligibility of individuals. In accordance with the Energy Programs Manual (EP-300 Energy Programs section 300.09), documentation must be maintained in order to ensure the accuracy of the benefits being provided within program requirements, the case file is complete and accurate, and evidence of review should be documented. Condition: The County Department of Social Services maintained inconsistent documentation for income and resources. Context: Of the 1035 participants during the current year valued at $335,908, we examined 60 (valued at $18,282) and determined that 10 (17%) had inconsistent documentation supporting the eligibility determination in the case file. Upon further review, these 10 participants were still eligible. We also determined that 1 participant (2% valued at $300) was not supported with case documentation to confirm eligibility. Effect: Casefile maintained inconsistent documentation, which could allow benefits to be provided to individuals who are not eligible. Cause: The caseworker did not verify updated documentation to the NCFAST system. Questioned Costs: In accordance with 2 CFR 200, auditors are required to report known questioned costs when likely questioned costs are greater than $25,000. Even though the sample results only identified $300 in questioned costs, if tests were extended to the entire population, questioned costs could exceed $25,000. Recommendation: Caseworkers should review their eligibility determinations and ensure that the correct information is included for proper documentation for eligibility. Views of Responsible Officials and Planned Corrective Actions: The County agrees with this finding. Please refer to the Corrective Action Plan section of this report.

U.S. Department of Health and Human Services Passed-through the N.C. Department of Health and Human Services Program Name: Medical Assistance Program AL # 93.778 Grant Number: 071-420, 071-375, 071-128, 071-480, 071-434 Finding: 2022-004 Material Weakness Criteria: In accordance with 2 CFR 200, management should have an adequate system of internal control procedures in place to ensure that casefiles include all required documentation. Condition: The County Department of Social Services maintained inconsistent documentation for household membership and countable resources. Context: Of the 430,010 benefit payments valued at $139,895,964, we examined 60 and determined that three (5%) had inconsistent documentation supporting the eligibility determination in the case file. Upon further review, the recipients were deemed eligible. Effect: Casefile maintained inconsistent documentation, which could allow benefits to be provided to individuals who are not eligible. Cause: The caseworker did not verify updated documentation to the NCFAST system. Questioned Costs: None. The finding represents an internal control issue; therefore, no questioned costs are applicable. The County was able to substantiate that the recipients were eligible to receive benefits. Recommendation: Caseworkers should review their eligibility determinations and ensure the correct information is included for proper documentation for eligibility. Views of Responsible Officials and Planned Corrective Actions: The County agrees with this finding. Please refer to the Corrective Action Plan section of this report.

U.S. Department of Health and Human Services Passed-through the N.C. Department of Health and Human Services Program Name: Medical Assistance Program AL # 93.778 Grant Number: 071-420, 071-375, 071-128, 071-480, 071-434 Finding: 2022-005 Material Weakness Criteria: In accordance with 2 CFR 200, management should have an adequate system of internal control procedures in place to ensure that salaries and fringe reported on Part I Statement of Administrative Costs for the 1571 crosscutting monthly report is correct. Condition: Due to formula errors in the spreadsheet used to upload the information into the NC CORELS template salary and fringe benefits were incorrectly reported on the Part I Statement of Administrative Costs for the 1571. Context: Of the total 377 Medicaid salaries and benefits amounts uploaded into NC CORELS, we examined 25 and determined that 3 or (12%) had salary and fringe benefits that were incorrectly reported on the Part I Statement of Administrative Costs. Effect: Salary and fringe benefits not being correctly reported could cause the State to reimburse the incorrect amount to the County. Cause: The spreadsheet used to calculate salaries and fringe had a formula issue causing the salary information to be pulled for the wrong employee names. The report was subsequently corrected, and the proper adjustment was made. Questioned Costs: None. The finding represents an internal control issue; therefore, no questioned costs are applicable. Recommendation: Management should implement internal controls to ensure accuracy of the 1571 crosscutting monthly submission. Views of Responsible Officials and Planned Corrective Actions: The County agrees with this finding. Please refer to the Corrective Action Plan section of this report.

U.S. Department of Health and Human Services Passed-through the N.C. Department of Health and Human Services Program Name: Supplemental Nutrition Assistance Program (SNAP) Cluster AL # 10.561 Grant Number: 071-417 Finding: 2022-006 Material Weakness Criteria: The NC Food and Nutrition Services Manual section FNS 135 requires counties to conduct second-party reviews as part of the system of quality control. Management should have adequate second-party review procedures in place to properly review and assess the eligibility of individuals in order to ensure that the benefits being provided are within program requirements, and documentation in the case file is complete and accurate, and evidence of review should be documented. Condition: The County Department of Social Services did not have a system in place the entire year to perform second party reviews for the SNAP program. Context: While performing tests of internal control over compliance on the program above, we noted the above condition. Effect: The County?s second-party review process is not effective at ensuring that case files are complete and accurate. Errors could exist that go uncorrected. Cause: Due to staff turnover, second-party reviews were not completed for the entire year. Questioned Costs: None. The finding represents an internal control issue; therefore, no questioned costs are applicable. Recommendation: The County should ensure that the second-party review process is being followed and reviews are being completed for all months of the year. Views of Responsible Officials and Planned Corrective Actions: The County agrees with this finding. Please refer to the Corrective Action Plan section of this report.

U.S. Department of Health and Human Services Passed-through the N.C. Department of Health and Human Services Program Name: Low-Income Home Energy Assistance AL # 93.568 Grant Number: 071-406, 071-372 Finding: 2022-007 Material Weakness Criteria: In accordance with 2 CFR 200, management must have an adequate system of internal control procedures in place to properly review and assess the eligibility of individuals to ensure the accuracy of the benefits being provided in within program requirements and documentation in the case file is complete and accurate, and evidence of review should be documented. Condition: The County Department of Social Services did not have a system in place the entire year to perform second party reviews for the energy programs. Context: While performing tests of internal control over compliance on the program above, we noted the above condition. Effect: The County?s second-party review process is not effective at ensuring that case files are complete and accurate. Errors could exist that go uncorrected. Cause: Due to staff turnover, second-party reviews were not completed for the entire year. Questioned Costs: None. The finding represents an internal control issue; therefore, no questioned costs are applicable. Recommendation: The County should ensure that the second-party review process is being followed and reviews are being completed for all months of the year. Views of Responsible Officials and Planned Corrective Actions: The County agrees with this finding. Please refer to the Corrective Action Plan section of this report

U.S. Department of Treasury Passed-through the Office of State Budget and Management N.C. Pandemic Recovery Office (NCPRO) Program Name: COVID-19 ? Coronavirus Relief Fund CFDA # 21.019 Grant Number: 02-69 Finding: 2021-004 Significant Deficiency Non-material, Non-compliance ? Reporting Criteria: In accordance with the federal Single Audit Act and guidelines for the Coronavirus Relief Fund, management should have an adequate system of internal control procedures in place to ensure that any required reporting under the program is completed timely and accurately. Condition: During our testing, we noted that the monthly performance reports and the final closeout reporting were not submitted in a timely manner as required by the program. In addition, reports were not maintained on file to provide proper documentation. Context: During testing of the program, we noted the above condition. Effect: Reports were not maintained on file and submitted to NCPRO in a timely manner. Cause: Lack of controls and review over the reporting requirements process. Reports were submitted to the NCPRO; however, they were not submitted timely. Questioned Costs: None. Recommendation: Implement stronger controls over the reporting requirements. Submit reports timely and maintain proper documentation of required reports. Views of Responsible Officials and Planned Corrective Actions: The County agrees with this finding. Please refer to the Corrective Action Plan section of this report.

US Department of Health and Human Services Passed through the NC Department of Health and Human Services (NC DHHS) Program Name: Medicaid Cluster - Medical Assistance Program (Medicaid; Title XIX) CFDA # 93.778 Award Year: 2020 Criteria: Per the NC Department of Health and Human Services-Division of Health Benefits, the County Department of Social Services Agency is responsible to determine client eligibility in accordance with eligibility requirements defined in the approved State Plan (42 CFR Section 431.10). Condition and Context: Of the 60 claims tested, we noted 2 errors which resulted in ineligible benefits and 3 additional errors, identified in connection with the testing performed on those 60 claims, that also resulted in ineligible benefits. Therefore, a total of 5 eligibility errors were identified in an ultimate sample of 63 individual recipients tested. 1 case (included in original sample) in which claim recipient's mother timely notified the agency's Food & Nutrition Services (FNS) caseworker that the entire household had moved out of the state. FNS caseworker closed the FNS case and completed and submitted DSS Form 8194 (Income Maintenance Transmittal Form) to the agency's applicable Family & Children's' (F&C) Medicaid caseworker and supervisor for appropriate disposition. F&C caseworker failed to react timely to a reported change in client's situation until error was identified at auditor's testing 11/04/2020, therefore the entire case households' full Medicaid benefits continued in Pender County. The claim recipient, mother and 2 siblings were therefore not eligible for any Medicaid benefits for the periods: 10/01/2019 - 06/30/2020 resulting in a total of 4 individual eligibility errors. 1 case (included in original sample) in which claim recipient was receiving full Medicaid (MAF-C) benefits as a parent caretaker, of his daughter who was not receiving benefits in his case and had actually been removed from the home and placed with a relative in another county. This information was documented by a FNS caseworker in case notes, however there is no evidence that the FNS caseworker notified the F&C's Medicaid caseworker or supervisor of the change. FNS caseworker failed to report a change in client's situation and notify all applicable programs until error was identified at auditor's testing 11/10/2020, therefore, claim recipient received full Medicaid benefits in error. The claim recipient was not eligible for full MAF-C benefits for the periods: 04/01/2019 - 01/31/2020 and continues due to the COVID-19 emergency provisions. Although recipient was not eligible for MAF-C he may have been eligible for MAF-D benefits for the same periods. Of the 60 claims tested, we noted 6 instances which included incorrect countable and/or non-countable income resulting in incorrect budget calculations; 7 instances which included incorrect MAGI tax household or member relationship status which is required under the Modified Adjusted Gross Income (MAGI) for proper eligibility determinations for Family and Children's' Medicaid; 2 instances where agency caseworkers failed to react timely to a change in client's situation; 1 instance which included incorrect countable resources and incorrect budget calculations; 10 instances in which the local agency failed to prepare a child support referral when there was not absent parent documentation and the parent/caretaker was receiving benefits in the case; 5 instances where agency caseworkers failed to run online verification matches (OVS) and / or (AVS) in NC FAST for all applicable members of the household; and 4 instances where agency caseworker failed to obtain, update and verify a beneficiary's social security number and therefore failed to verify citizenship. Effect: Ineligible persons received benefits. Additionally, there is significant potential for additional ineligible persons to receive benefits. Cause: Insufficient training and review of client eligibility files. Questioned Costs: None at local level. Identification of a Repeat Finding: This is a repeat of finding 2019-004 from the immediate previous audit. Recommendation: We recommend the County continue to implement training to ensure that all County staff are properly informed of applicable program requirements. Management's Response: See corrective action plan.

US Department of Health and Human Services Passed through the North Carolina Department of Health and Human Services (NC DHHS) Program Name: Medical Assistance Program (MA) CFDA # 93.778 Criteria: Per NCDHHS-Division of Health Benefits, the County Department of Social Services Agency is responsible to determine client eligibility in accordance with eligibility requirements defined in the approved State Plan (42 CFR Section 431.10). Condition and Context: Of the original 77 claims tested, we noted 3 errors which resulted in ineligible benefits and 1 additional error, identified in connection with the testing performed on those 77 claims, that also resulted in ineligible benefits. Therefore, a total of 4 eligibility errors identified in a sample of 78 individual recipients tested. 1 case (included in the original sample) in which the claim recipient had SSA disability income which was unaddressed by the local agency and exceeded the limit for MAF-C, full Medicaid benefits based on the recipient's tax household status. Re-determination at testing determined that had the recipient not been receiving full Medicaid benefits, they would have been able to meet a deductible for various periods of time during the ineligible period and therefore would have be eligible for benefits under a different program MAF-M. The recipient was therefore not eligible for any Medicaid benefits for the periods: 10/01/2017 - 03/31/2018; 04/01/2018 - 04/04/2018; 10/01/2018 - 10/07/2018 & 04/01/2019 - 04/11/2019. 1 case (included in the original sample) in which the local DSS agency failed to react to a "critical age of 19" change in recipient's status and perform a required exparte recertification to determine availability of ongoing benefits. Recipient continued to receive MAF-N, with full Medicaid benefits instead of applicable MAF-D, family planning benefits only for the period 09/01/2018 - 07/31/2019. 1 case (included in the original sample) in which the local agency failed to react to a change in recipient's status when the agency was notified that the recipient had moved out of state and was applying for benefits there. The agency closed the case in NCFAST, however failed to properly end-date the certification period timely resulting in benefits continuing through the end of the original certification period in error. The recipient was therefore not eligible for any Medicaid benefits for the period: 01/01/2019 - 07/31/2019. 1 case (not included in original sample) in which a sibling of the claim recipient, who had turned 19 "critical age change" and therefore should have become a tax household of 1 prior to the certification period, had countable income that exceeded the limit for MAF-C for a household of 1 and therefore was not eligible for full Medicaid benefits for the period 09/01/2018 - 12/31/2019. Based on the countable income, the recipient would have only been eligible for MAF-D family planning benefits only for the same period. Additionally, of the 78 total claims tested, we noted 13 cases which included incorrect countable and/or non-countable income resulting in incorrect budget calculations; 14 cases which included incorrect MAGI tax household or member relationship status which are required under the Modified Adjusted Gross Income (MAGI) for proper eligibility determinations for Family and Children?s' Medicaid; 1 case in which the local agency failed to react timely to a change in a claim recipient or recipient's parent/caretaker's situation; 2 cases which included incorrect countable resources; 10 cases in which the local agency failed to prepare a child support referral when there was no absent parent documentation and the parent/caretaker was receiving benefits in the case; 4 cases in which the agency failed to run required online verification search (OVS) in the NC FAST system for all applicable case participants; 20 cases in which the agency failed to obtain, update and verify a recipient's social security number in order to complete eligibility verifications and verify citizenship. Effect: Ineligible persons received benefits. Additionally there is significant potential for additional ineligible persons to receive benefits. Cause: Administrative oversight. Questioned Costs: None noted at local level.

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