STATE OF HAWAII DEPARTMENT OF HEALTH

Condition During our testing of the Department’s cash management procedures, we could not verify whether the State of Hawaii, Department of Accounting and General Services (“DAGS”) disbursed funds from federal sources as close as administratively feasible for federal expenditures after the Department drew down the funds. Criteria The programs are subject to 2 CFR 200.305 and 31 CFR 205 Subpart B for federal assistance programs not listed in the State of Hawaii’s Treasury-State Agreement. Per 31 CFR 205.33, the timing and amount of advance payments must be as close as is administratively feasible to the actual disbursements by the recipient or subrecipient for direct program or project costs and the proportionate share of any allowable indirect costs. Effect The Department does not have policies and procedures in place over cash management and may not be in compliance with federal requirements. Cause and View of Responsible Officials There are no policies and procedures in place to ensure compliance with 2 CFR 200.305 and 31 CFR 205 Subpart B. The State has been dealing with this issue for multiple audit years and it affects multiple State agencies in the Executive Branch that receive federal funds. The Department intends to review their options and potentially develop policies and procedures to address the systematic issue going forward. Recommendation We recommend that the Department work with DAGS and the Department of Budget and Finance to ensure timely disbursement of federal funds in accordance with 2 CFR 200.305 and 31 CFR 205 Subpart B. In addition, the Department should develop policies and procedures to adequately track the disbursement of federal cash drawdowns to ensure compliance with timeliness standards.

Condition During our audit, we examined 11 haphazardly selected drawdowns and identified two instances totaling approximately $216,000 in which the time elapsing between the receipt of federal award and the disbursement was greater than 21 days, ranging from 22 to 28 days. While the expenditures were allowable costs under the grant, it does not appear the Department disbursed these federal advances as soon as administratively feasible. Criteria 31 CFR 205.33 requires the Department to minimize the time between the receipt of federal funds from the federal government and the disbursement of the funds for federal program purposes. Therefore, the timing and amount of funds being requested and received must be as close as administratively feasible to the Department’s actual cash outlay for direct program costs and the proportionate share of any allowable indirect costs. The State of Hawaii, Department of Budget and Finance has determined and communicated in Finance Memorandum 20-02 that their standard for an “administratively feasible time period” was 21 calendar days for Summary Warrant Voucher (“SWV”) transactions. Effect Without minimizing time between the drawdown and disbursement of federal funds, the Department is not in compliance with federal requirements. Cause and View of Responsible Officials The drawdown requests were submitted by the program in a timely manner; however, the funds were not disbursed timely by DAGS. Recommendation We recommend that the Department work with DAGS to ensure timely disbursement of federal funds in accordance with 310 CFR 205.33 and Finance Memorandum 20-02.

Condition During our audit, we tested a non statistical sample of four contract procurements. While we noted through our testing that the contractors were not suspended or debarred, we found no evidence indicating that program personnel verified whether any of the contractors were federally suspended or debarred. Criteria Per 2 CFR 180.300, before entering into a covered transaction, the non federal entity must verify that the entity is not debarred, suspended or otherwise excluded from participating in federal programs. Effect Failure to review the vendor’s debarment and suspension status may result in entering a covered transaction with excluded vendors. Cause and View of Responsible Officials The noncompliance was caused by a lack of state-wide policies and procedures covering the exclusion check requirement for all procurement types. Recommendation All personnel involved in the procurements of contracts should receive adequate training about federal compliance requirements related to such program. In addition, an individual should be assigned the responsibility to determine whether the vendor is not debarred or suspended from entering the transaction.

Condition During our audit, we tested a non statistical sample of one contract procurement. While we noted through our testing that the contractor was not suspended or debarred, we found no evidence indicating that program personnel verified whether the contractor was federally suspended or debarred. Criteria Per 2 CFR 180.300, before entering into a covered transaction, the non federal entity must verify that the entity is not debarred, suspended or otherwise excluded from participating in federal programs. Effect Failure to review the vendor’s debarment and suspension status may result in entering a transaction with excluded vendors. Cause and View of Responsible Officials The Drinking Water Treatment Revolving Loan Fund did not perform the debarment and suspension verification via SAM.gov due to misinterpretation of the control policy. Recommendation All personnel involved in the procurements of contracts should receive adequate training about federal compliance requirements related to such program. In addition, an individual should be assigned the responsibility to determine whether the vendor is not debarred or suspended from entering the transaction.

Condition During our audit, we tested a non-statistical sample of three contract procurements. While we noted through our testing that the contractors were not suspended or debarred, for two of the procurements, we found no evidence indicating that program personnel verified whether any of the contractors were federally suspended or debarred. Criteria Per 2 CFR 180.300, before entering into a covered transaction, the non federal entity must verify that the entity is not debarred, suspended or otherwise excluded from participating in federal programs. Effect Failure to review the vendor’s debarment and suspension status may result in entering a covered transaction with excluded vendors. Cause and View of Responsible Officials The noncompliance was caused by a lack of state-wide policies and procedures covering the exclusion check requirement for all procurement types. Recommendation All personnel involved in the procurements of contracts should receive adequate training about federal compliance requirements related to such program. In addition, an individual should be assigned the responsibility to determine whether the vendor is not debarred or suspended from entering the transaction.

Condition During our audit, we tested a non statistical sample of two subawards and found that the reporting required by Section 2, Full Disclosure of Entities Receiving Federal Funding, of the Federal Funding Accountability and Transparency Act (“FFATA”) was not completed. Criteria Section 2, Full Disclosure of Entities Receiving Federal Funding, of the FFATA requires an entity to report subcontracts made under federally‐awarded contracts by the end of the month following the month in which the prime recipient awards any subgrant greater than or equal to $30,000. Effect Failure to file required reports reduces transparency on the use of program funds and represents noncompliance with the requirements of 2 CFR Part 200. Cause and View of Responsible Officials The noncompliance was caused by both the lack of time allotted to the program personnel to complete the reporting and the change in FFATA reporting procedures due to the transition to SAM.gov from FSRS. Recommendation We recommend that the Department develop procedures to ensure that FFATA reports are submitted in a timely manner.

Condition During our audit, we tested a non statistical sample of one annual financial report and found that the report was submitted 286 calendar days after the conclusion of the reporting period. Criteria Per 2 CFR 200.328 and terms of the federal award, financial reports submitted annually by the recipient or subrecipient are due no later than 90 calendar days after the conclusion of the reporting period. Effect Failure to submit the report in a timely manner may result in noncompliance with financial reporting requirements and limits the transparency of the program’s operations. Cause and View of Responsible Officials The noncompliance was due to lag caused by the completion of close out procedures. Recommendation We recommend that the Department establish policies and procedures to ensure that the required reports are submitted timely, including consideration of the time necessary to perform award close out procedures.

Condition During our audit, we tested a non statistical sample of two subawards and found that the reporting required by Section 2, Full Disclosure of Entities Receiving Federal Funding, of FFATA was not completed. Criteria Section 2, Full Disclosure of Entities Receiving Federal Funding, of the FFATA requires an entity to report subcontracts made under federally‐awarded contracts by the end of the month following the month in which the prime recipient awards any subgrant greater than or equal to $30,000. Effect Failure to file required reports reduces transparency on the use of program funds and represents noncompliance with the requirements of 2 CFR Part 200. Cause and View of Responsible Officials The noncompliance was caused by both the lack of time allotted to the program personnel to complete the reporting and the change in FFATA reporting procedures due to the transition to SAM.gov from FSRS. Recommendation We recommend that the Department develop procedures to ensure that FFATA reports are submitted in a timely manner.

Condition During our audit, we tested a non statistical sample of two contract procurements. While we noted through our testing that the contractors were not suspended or debarred, we found no evidence indicating that program personnel verified whether any of the contractors were federally suspended or debarred. Criteria Per 2 CFR 180.300, before entering into a covered transaction, the non federal entity must verify that the entity is not debarred, suspended or otherwise excluded from participating in federal programs. Effect Failure to review the vendor’s debarment and suspension status may result in entering a covered transaction with excluded vendors. Cause and View of Responsible Officials The noncompliance was caused by a lack of state-wide policies and procedures covering the exclusion check requirement for all procurement types. Recommendation All personnel involved in the procurements of contracts should receive adequate training about federal compliance requirements related to such program. In addition, an individual should be assigned the responsibility to determine whether the vendor is not debarred or suspended from entering the transaction.

Condition During our audit, we tested a non statistical sample of three subawards and were unable to verify that the reporting required by Section 2, Full Disclosure of Entities Receiving Federal Funding, of FFATA was completed timely. Criteria Section 2, Full Disclosure of Entities Receiving Federal Funding, of the FFATA requires an entity to report subcontracts made under federally‐awarded contracts by the end of the month following the month in which the prime recipient awards any subgrant greater than or equal to $30,000. Effect Failure to file required reports timely reduces transparency on the use of program funds and represents noncompliance with the requirements of 2 CFR Part 200. Cause and View of Responsible Officials The subawards were reported in a timely manner but the program did not retain evidence of the submission dates. Recommendation We recommend that program management retain evidence that FFATA reports were submitted timely.

Condition During our audit, we tested a non statistical sample of six subawards and found that the reporting required by Section 2, Full Disclosure of Entities Receiving Federal Funding, of FFATA was not completed timely. Criteria Section 2, Full Disclosure of Entities Receiving Federal Funding, of the FFATA requires an entity to report subcontracts made under federally‐awarded contracts by the end of the month following the month in which the prime recipient awards any subgrant greater than or equal to $30,000. Effect Failure to file required reports reduces transparency on the use of program funds and represents an instance of noncompliance with the requirements of 2 CFR Part 200. Cause and View of Responsible Officials The noncompliance was caused by the lack of time allotted to the program personnel to complete the reporting due to the change from FSRS to SAM.gov and lack of system access until August 2025. Recommendation We recommend that the Department develop procedures to ensure that FFATA reports are submitted in a timely manner.

Condition During our audit, we examined a non statistical sample of three subawards and noted no evidence of the pass through entity verifying that subrecipients are audited as required by 2 CFR Section 200, Subpart F. Criteria 2 CFR Section 200.332(f) requires a pass through entity to verify that every subrecipient is audited as required by 2 CFR Section 200, Subpart F, when it is expected that the subrecipient’s expenditures exceed applicable thresholds. Effect By not verifying whether the subrecipient is audited, the Department may not be providing the appropriate level of monitoring over its subrecipients. Cause and View of Responsible Officials The noncompliance was caused by the lack of internal controls in place to ensure monitoring procedures are performed for applicable subrecipients. Recommendation We recommend that the Department establish policies and procedures to ensure that the required subrecipient Single Audit reports are obtained and reviewed.

Condition During our audit, we tested a non statistical sample of seven subawards and found that the reporting required by Section 2, Full Disclosure of Entities Receiving Federal Funding, of FFATA was not completed. Criteria Section 2, Full Disclosure of Entities Receiving Federal Funding, of the FFATA requires an entity to report subcontracts made under federally‐awarded contracts by the end of the month following the month in which the prime recipient awards any subgrant greater than or equal to $30,000. Effect Failure to file required reports reduces transparency on the use of program funds and represents noncompliance with the requirements of 2 CFR Part 200. Cause and View of Responsible Officials The noncompliance was caused by both the lack of time allotted to the program personnel to complete the reporting and the change in FFATA reporting procedures due to the transition to SAM.gov from FSRS. Recommendation We recommend that the Department develop procedures to ensure that FFATA reports are submitted in a timely manner.

Condition During our audit, we tested a non statistical sample of one final financial report and found that the report was submitted 128 calendar days after the conclusion of the period of performance. Criteria Per 2 CFR 200.328 and terms of the federal award, the final financial report submitted by the recipient is due no later than 120 calendar days after the conclusion of the period of performance. Effect Failure to submit the report in a timely manner may result in noncompliance with financial reporting requirements and limits the transparency of the program’s operations. Cause and View of Responsible Officials The noncompliance was due to a lag caused by the completion of close out procedures. Recommendation We recommend that the Department establish policies and procedures to ensure that the required reports are submitted timely, including consideration of the time necessary to perform award close out procedures.

Criteria: The federal award program noted above is not subject to the Treasury-State Cash Management Improvement Act agreement and, as such, is subject to 2 CFR 200.305(b), which states: “The timing and amount of advance payments must be as close as is administratively feasible to the actual disbursements by the non-Federal entity for direct program or project costs and the proportionate share of any allowable indirect costs. The non-Federal entity must make timely payment to contractors in accordance with the contract provisions.” 2 CFR section 200.303 requires that non-federal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the non-federal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. The State of Hawaii, Department of Budget and Finance has determined and communicated in Finance Memorandum 20-02 that their standard for an “administratively feasible time period” was 21 calendar days. Condition: During the testing of the Department’s cash management procedures, it was determined that eight out of sixty payments tested were not distributed within 21 days of the draw down of funds. For the items tested, the time elapsed between draw down and payment ranged from 22 to 44 days. Context: During the fiscal year ended June 30, 2024, the program expended $9,608,301 (excluding food expenditures). Cause: The Department draws down federal funds that will be needed based on the expenditures that must be paid. However, since deposits must be posted prior to the processing of payments or disbursing of the funds, it is difficult for the Department to disburse federal funds in accordance with 2 CFR 200.305 (b). Also, the State’s payment process requires all State departments to process payments through DAGS resulting in processing delays. Effect: Noncompliance with federal regulations could result in a loss of funding that may jeopardize the operations of the Department’s federally funded programs. Questioned Costs: None Identification as a Repeat Finding, if applicable: See finding 2023-011 included in the Summary Schedule of Prior Audit Findings. Recommendation: We recommend that the Department work with DAGS and the Department of Budget and Finance to ensure compliance with established standard and timely disbursement of federal funds in accordance with 2 CFR 200.305(b). Views of Responsible Officials: Client agrees with finding, and the unabridged version of their response can be found in the Corrective Action Plan issued by the Department.

Criteria: Under 2 CFR Appendix A to Part 170, recipients (i.e., direct recipients) of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). For subaward information, recipients of grants or cooperative agreements are required to report no later than the end of the month following the month in which the obligation was made. Condition: We noted the program did not report first-tier subawards of $30,000 or more to FSRS. Context: During the audit, we were informed by Department personnel that required information on first-tier subawards of $30,000 or more were not reported to FSRS, a requirement that is included in the program’s notice of awards. The following table summarizes our findings: Cause: Due to the timing of when the program was made aware of the prior year finding and the fiscal year end, there was insufficient time to properly implement corrective action. Based on inquiry with Department personnel, we noted that the failure to report first-tier subawards to FSRS was caused by a lack of time and inadequate understanding of FSRS due dates and reporting requirements. Effect: Failure to report first-tier subawards of $30,000 or more to FSRS results in noncompliance with the reporting requirement. Questioned Costs: None Identification as a Repeat Finding, if applicable: See finding 2023-005 included in the Summary Schedule of Prior Audit Findings. Recommendation: We recommend program management complete the implementation of the policies and procedures related to reporting subawards to FSRS to ensure compliance with Federal requirements. Views of Responsible Officials: Client agrees with finding, and the unabridged version of their response can be found in the Corrective Action Plan issued by the Department.

Criteria: Under 2 CFR Appendix A to Part 170, recipients (i.e., direct recipients) of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). For subaward information, recipients of grants or cooperative agreements are required to report no later than the end of the month following the month in which the obligation was made. 2 CFR Section 200.327 states that “(financial) information must be collected with the frequency required by the terms and conditions of the Federal award, but no less frequently than annually nor more frequently than quarterly except in unusual circumstances.” Under this reporting requirement, the program must submit a Federal Financial Report (FFR) within 90 days after the close of the statutory grant period. Condition: We noted the program did not report first-tier subawards of $30,000 or more to FSRS. We further noted that one FFR was not timely submitted. Context: During the audit, we were informed by Department personnel that required information on first-tier subawards of $30,000 or more were not reported to FSRS, a requirement that is included in the program’s notice of awards. The following table summarizes our findings: The program was required to submit one FFR during the year. During the audit, we noted that the FFR was submitted 138 days after the close of the statutory grant period. Cause: Due to the timing of when the program was made aware of the prior year finding and the fiscal year end, there was insufficient time to properly implement corrective action. Based on inquiry with Department personnel, we noted that the failure to report first-tier subawards to FSRS was caused by a lack of time and inadequate understanding of FSRS due dates and reporting requirements. In addition, we noted that the delay in submitting the FFRs was caused by a lack of personnel available to monitor reporting requirements and complete reporting requirements timely. Effect: Failure to report first-tier subawards of $30,000 or more and failure to timely submit FFRs results in noncompliance with the reporting requirement. Questioned Costs: None Identification as a Repeat Finding, if applicable: See finding 2023-007 included in the Summary Schedule of Prior Audit Findings. Recommendation: We recommend program management be more diligent in following Federal deadlines and grant agreements in order to ensure compliance with Federal requirements. We also recommend program management complete the implementation of the policies and procedures related to reporting subawards to FSRS to ensure compliance with Federal requirements. Views of Responsible Officials: Client agrees with finding, and the unabridged version of their response can be found in the Corrective Action Plan issued by the Department.

Criteria: 42 USC 300x-9c states that “a state shall expend not less than 10 percent of grant funds for carrying out evidence-based programs that address the needs of individuals with early serious mental illness, including psychotic disorders, regardless of the age of the individual at onset.” 42 USC 300x states that “a state shall expend at least 5 percent of grant funds to support evidence-based programs that address the crisis care needs of individuals with serious mental illnesses (SMI) and children with serious emotional disturbances (SED), which may include individuals experiencing mental health crises demonstrating serious mental illness or serious emotional disturbance, as applicable. Condition: We noted that the earmarking requirement was not met. Context: The State shall expend not less than 10 percent of grant funds for carrying out evidence-based programs that address the needs of individuals with early serious mental illness, including psychotic disorders, regardless of the age of the individual at onset. Evidence-based programs are interventions that are guided by the best research evidence with practice-based expertise, cultural competence, and the values of the persons receiving the services that promote individual-level or population-level outcomes. Instead of expending 10 percent of the amount received for a fiscal year, a state may elect to expend not less than 20 percent of such amount by the end of the succeeding fiscal year. During the audit, we noted that the program expended $145,953 of grant funds for carrying out evidence-based programs, which was $629,057 less than the required amount. Cause: Based on further inquiry with Department personnel, we noted that the failure to meet earmarking requirements is due to the lack of adequate personnel. Effect: Failure to meet the required earmarking results in noncompliance with the Earmarking requirement. Questioned Costs: None Identification as a Repeat Finding, if applicable: Not applicable Recommendation: We recommend program management be more diligent in monitoring earmarking requirements. Views of Responsible Officials: Client agrees with finding, and the unabridged version of their response can be found in the Corrective Action Plan issued by the Department.

Criteria: In accordance with 2 CFR section 200.331, all pass-through entities must monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward; and that subaward performance goals are achieved. In addition, all pass-through entities must evaluate each subrecipient’s risk of noncompliance with Federal statutes, regulations, and the terms and conditions of the subaward for purposes of determining the appropriate subrecipient monitoring. To ensure compliance with the Federal requirements, the program has documented monitoring policies and procedures. Condition: The program did not comply with its documented monitoring procedures, which includes performing on-site visits, desk reviews and/or conducting monthly progress meetings and obtaining and reviewing single audit reports for subrecipients that expend more than $750,000 of Federal funds. Context: Of a total 10 subrecipient contracts, we selected three contracts based on a non-statistical sample. We noted that for one of the three contracts selected, the required monitoring procedures were not performed. Of the 10 subrecipient contracts, the program was required to obtain and review a single audit report for one subrecipient that expended more than $750,000 during the year. We noted that the program did not obtain and review a single audit report for the subrecipient. Cause: Based on further inquiry with Department personnel, we noted that there was a lack of diligence in following the documented monitoring procedures. Effect: Failure to follow a subrecipient monitoring policy that meets the requirements in 2 CFR section 200.331 results in noncompliance with the subrecipient monitoring requirement. Questioned Costs: None Identification as a Repeat Finding, if applicable: Not applicable Recommendation: We recommend that program management follow its documented monitoring procedures for all subrecipient contracts. Views of Responsible Officials: Client agrees with finding, and the unabridged version of their response can be found in the Corrective Action Plan issued by the Department.

Criteria: Under 2 CFR Appendix A to Part 170, recipients (i.e., direct recipients) of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). For subaward information, recipients of grants or cooperative agreements are required to report no later than the end of the month following the month in which the obligation was made. Condition: We noted the program did not report first-tier subawards of $30,000 or more to FSRS. Context: During the audit, we were informed by Department personnel that required information on first-tier subawards of $30,000 or more were not reported to FSRS, a requirement that is included in the program’s notice of awards. The following table summarizes our findings: Cause: Due to the timing of when the program was made aware of the prior year finding and the fiscal year end, there was insufficient time to properly implement corrective action. Based on inquiry with Department personnel, we noted that the failure to report first-tier subawards to FSRS was caused by a lack of time and inadequate understanding of FSRS due dates and reporting requirements. Effect: Failure to report first-tier subawards of $30,000 or more to FSRS results in noncompliance with the reporting requirement. Questioned Costs: None Identification as a Repeat Finding, if applicable: See finding 2023-010 included in the Summary Schedule of Prior Audit Findings. Recommendation: We recommend program management complete the implementation of the policies and procedures related to reporting subawards to FSRS to ensure compliance with Federal requirements. Views of Responsible Officials: Client agrees with finding, and the unabridged version of their response can be found in the Corrective Action Plan issued by the Department.

Criteria: Under 2 CFR Appendix A to Part 170, recipients (i.e., direct recipients) of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). For subaward information, recipients of grants or cooperative agreements are required to report no later than the end of the month following the month in which the obligation was made. Condition: While the program properly reported first-tier subawards of $30,000 or more to FSRS, we noted that the first-tier subawards were not timely submitted and key data elements did not agree to the source documents provided. Context: The program was required to report information on 10 first-tier subawards of $30,000 or more. During the audit, we selected four first-tier subawards for testing, noting the following: The key data elements that did not agree to the supporting documentation included the Amount of Subaward and Subaward Obligation/Action Date. Cause: Based on further inquiry with Department personnel, we noted that the failure to timely report firsttier subawards to FSRS was caused by a lack of awareness of the FSRS reporting requirement in prior years. The failure to accurately report first-tier subawards to FSRS was caused by a lack of diligence. Effect: Failure to accurately and timely report first-tier subawards of $30,000 or more to FSRS results in noncompliance with the reporting requirement. Questioned Costs: None Identification as a Repeat Finding, if applicable: See finding 2022-008 included in the Summary Schedule of Prior Audit Findings. Recommendation: We recommend program management be more diligent in following Federal deadlines and grant agreements in order to ensure compliance with Federal requirements. We also recommend program management be more diligent in understanding all requirements of grant agreements to ensure compliance with Federal requirements. Views of Responsible Officials and Planned Corrective Action: See Part VI Corrective Action Plan.

Criteria: 2 CFR Section 200.327 states that “(financial) information must be collected with the frequency required by the terms and conditions of the Federal award, but no less frequently than annually nor more frequently than quarterly except in unusual circumstances.” Under this reporting requirement, the program must submit a Federal Financial Report (FFR) within 90 days after the close of the statutory grant period. Condition: We noted four FFRs were not timely submitted. Context: The program was required to submit eight FFRs during the year. During the audit, we noted that four FFRs selected for testing were submitted between 92 and 117 days after the close of the statutory grant period. Cause: Based on further inquiry with Department personnel, we noted that the delay in submitting the FFRs was caused by a lack of personnel available to monitor reporting requirements and complete reporting requirements timely. Effect: Failure to timely submit FFRs results in noncompliance with the reporting requirement. Questioned Costs: None Identification as a Repeat Finding, if applicable: Not applicable Recommendation: We recommend that management be more diligent in following Federal deadlines in order to ensure compliance with Federal requirements. Views of Responsible Officials and Planned Corrective Action: See Part VI Corrective Action Plan.

Criteria: Under 2 CFR Appendix A to Part 170, recipients (i.e., direct recipients) of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). For subaward information, recipients of grants or cooperative agreements are required to report no later than the end of the month following the month in which the obligation was made. Condition: While the program properly reported first-tier subawards of $30,000 or more to FSRS, we noted that the first-tier subawards were not timely submitted and key data elements did not agree to the source documents provided. Context: The program was required to report information on nine first-tier subawards of $30,000 or more. During the audit, we selected four first-tier subawards for testing, noting the following: The key data elements that did not agree to the supporting documentation included the Amount of Subaward and Subaward Obligation/Action Date. Cause: Based on further inquiry with Department personnel, we noted that the failure to timely report firsttier subawards to FSRS was caused by a lack of awareness of the FSRS reporting requirement in prior years. The failure to accurately report first-tier subawards to FSRS was caused by a lack of diligence. Effect: Failure to accurately and timely report first-tier subawards of $30,000 or more to FSRS results in noncompliance with the reporting requirement. Questioned Costs: None Identification as a Repeat Finding, if applicable: Not applicable Recommendation: We recommend program management be more diligent in following Federal deadlines and grant agreements in order to ensure compliance with Federal requirements. We also recommend program management be more diligent in understanding all requirements of grant agreements to ensure compliance with Federal requirements. Views of Responsible Officials and Planned Corrective Action: See Part VI Corrective Action Plan.

Criteria: 42 USC 300x-4(b) states that “a funding agreement for a grant under section 300x of this title is that the State involved will maintain State expenditures for community mental health services at a level that is not less than the average level of such expenditures maintained by the State for the 2-year period preceding the fiscal year for which the State is applying for the grant.” Condition: We noted that the level of effort – maintenance of effort requirement was not met. Context: The State shall for each fiscal year maintain aggregate state expenditures for community mental health services at a level that is not less than the average level of such expenditures maintained by the State for the two state fiscal years preceding the fiscal year of the grant. Expenditures for the two previous fiscal years are reported in the State plan. The Secretary of Health and Human Services may exclude from the aggregate State expenditures funds appropriated to the principal agency for authorized activities which are of non-recurring nature and for a specific purpose. Last year, the program applied for and received a waiver for the level of effort – maintenance of effort requirement. At the time of this report, the program is in the process of applying for but has not yet received a waiver. During the audit, we noted that the average level of State expenditures for the two previous fiscal years was $134,321,769 and State expenditures for FY2023 was $121,675,108, which is $12,646,661 less than the required amount. Cause: Based on further inquiry with Department personnel, we noted that the failure to meet the level of effort – maintenance of effort requirement is due to higher State expenditures in FY2021 due to the coronavirus pandemic. Effect: Failure to meet the required level of State expenditures results in noncompliance with the Level of Effort – Maintenance of Effort requirement. Questioned Costs: None Identification as a Repeat Finding, if applicable: Not applicable Recommendation: We recommend program management be more diligent in monitoring State expenditures and request a waiver for the Level of Effort – Maintenance of Effort requirement in a timely manner. Views of Responsible Officials and Planned Corrective Action: See Part VI Corrective Action Plan.

Criteria: Under 2 CFR Appendix A to Part 170, recipients (i.e., direct recipients) of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). For subaward information, recipients of grants or cooperative agreements are required to report no later than the end of the month following the month in which the obligation was made. Condition: While the program properly reported first-tier subawards of $30,000 or more to FSRS, we noted that the first-tier subawards were not timely submitted and key data elements did not agree to the source documents provided. Context: The program was required to report information on eight first-tier subawards of $30,000 or more. During the audit, we selected three first-tier subawards for testing, noting the following: Cause: Based on further inquiry with Department personnel, we noted that the failure to timely report firsttier subawards to FSRS was caused by a lack of awareness of the FSRS reporting requirement in prior years. Effect: Failure to timely report first-tier subawards of $30,000 or more to FSRS results in noncompliance with the reporting requirement. Questioned Costs: None Identification as a Repeat Finding, if applicable: See finding 2022-003 included in the Summary Schedule of Prior Audit Findings. Recommendation: We recommend program management be more diligent in following Federal deadlines and grant agreements in order to ensure compliance with Federal requirements. We also recommend program management be more diligent in understanding all requirements of grant agreements to ensure compliance with Federal requirements. Views of Responsible Officials and Planned Corrective Action: See Part VI Corrective Action Plan.

Criteria: Under 2 CFR Appendix A to Part 170, recipients (i.e., direct recipients) of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). For subaward information, recipients of grants or cooperative agreements are required to report no later than the end of the month following the month in which the obligation was made. Condition: While the program properly reported first-tier subawards of $30,000 or more to FSRS, we noted that the first-tier subawards were not timely submitted and key data elements did not agree to the source documents provided. Context: The program was required to report information on nine first-tier subawards of $30,000 or more. During the audit, we selected four first-tier subawards for testing, noting the following: The key data elements that did not agree to the supporting documentation included the Amount of Subaward and Subaward Obligation/Action Date. Cause: Based on further inquiry with Department personnel, we noted that the failure to timely report firsttier subawards to FSRS was caused by a lack of awareness of the FSRS reporting requirement in prior years. The failure to accurately report first-tier subawards to FSRS was caused by a lack of diligence. Effect: Failure to accurately and timely report first-tier subawards of $30,000 or more to FSRS results in noncompliance with the reporting requirement. Questioned Costs: None Identification as a Repeat Finding, if applicable: Not applicable Recommendation: We recommend program management be more diligent in following Federal deadlines and grant agreements in order to ensure compliance with Federal requirements. We also recommend program management be more diligent in understanding all requirements of grant agreements to ensure compliance with Federal requirements. Views of Responsible Officials and Planned Corrective Action: See Part VI Corrective Action Plan.

Criteria: The federal award program noted above is not subject to the Treasury-State Cash Management Improvement Act agreement and, as such, is subject to 2 CFR 200.305(b), which states: “The timing and amount of advance payments must be as close as is administratively feasible to the actual disbursements by the non-Federal entity for direct program or project costs and the proportionate share of any allowable indirect costs. The non-Federal entity must make timely payment to contractors in accordance with the contract provisions.” 2 CFR section 200.303 requires that non-federal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the non-federal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. The State of Hawaii, Department of Budget and Finance has determined and communicated in Finance Memorandum 20-02 that their standard for an “administratively feasible time period” was 21 calendar days. Condition: During the testing of the Department’s cash management procedures, it was determined that two out of sixty payments tested were not distributed within 21 days of the draw down of funds. For the items tested, the time elapsed between draw down and payment ranged to 28 to 57 days. Context: During the fiscal year ended June 30, 2023, the Department expended $8,398,791 (excluding food expenditures). Cause: The Department draws down federal funds that will be needed based on the expenditures that must be paid. However, since deposits must be posted prior to the processing of payments or disbursing of the funds, it is difficult for the Department to disburse federal funds in accordance with 2 CFR 200.305 (b). Also, the State’s payment process requires all State departments to process payments through DAGS resulting in processing delays. Effect: Noncompliance with federal regulations could result in a loss of funding that may jeopardize the operations of the Department’s federally funded programs. Questioned Costs: None Identification as a Repeat Finding, if applicable: See finding 2022-005 included in the Summary Schedule of Prior Audit Findings. Recommendation: We recommend that the Department work with DAGS and the Department of Budget and Finance to ensure compliance with established standard and timely disbursement of federal funds in accordance with 2 CFR 200.305(b). Views of Responsible Officials and Planned Corrective Action: See Part VI Correction Action Plan.

Finding No.: 2022-003 Reporting Federal Agency: Department of Health and Human Services (DHHS) Assistance Listing No.: 93.958 Requirement: Reporting Type of Finding: Material Noncompliance and Material Weakness Program: Block Grants for Community Mental Health Services Federal award no. and year: 1B09SM082596-01 10/01/19 ? 09/30/21 1B09SM083798-01 10/01/20 ? 09/30/22 1B09SM083952-01 03/15/21 ? 03/14/23 1B09SM085353-01 03/01/21 ? 09/30/25 1B09SM085881-01 09/01/21 ? 09/30/25 Criteria: 2 CFR Section 200.327 states that "(financial) information must be collected with the frequency required by the terms and conditions of the Federal award, but no less frequently than annually nor more frequently than quarterly except in unusual circumstances." Under this reporting requirement, the program must submit a Federal Financial Report (FFR) within 90 days after the close of the statutory grant period. Under 2 CFR Appendix A to Part 170, recipients (i.e., direct recipients) of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Condition: We noted one FFR was not timely submitted and the program did not report first-tier subawards of $30,000 or more to FSRS. Context: The program was required to submit one FFR during FY2022. During the audit, we noted that the FFR was submitted 133 days after the close of the statutory grant period. During the audit, we were also informed by Department personnel that required information on first-tier subawards of $30,000 or more were not reported to FSRS, a requirement that is included in the programs notice of awards. The following table summarizes our findings: See Schedule of Findings and Questioned Costs for table. We tested all first-tier subawards that amounted to $30,000 or more during FY2022. Cause: Based on further inquiry with Department personnel, we noted that the delay in submitting the FFR and failure to report first-tier subawards to FSRS was caused by a lack of personnel available to monitor reporting requirements and complete reporting requirements timely. Effect: Failure to timely submit reports and report first-tier subawards of $30,000 or more to FSRS results in noncompliance with the reporting requirement. Questioned Costs: None Identification as a Repeat Finding, if applicable: See finding 2021-004 included in the Summary Schedule of Prior Audit Findings. Recommendation: We recommend program management be more diligent in following Federal deadlines in order to ensure compliance with Federal requirements. We also recommend program management be more diligent in understanding all requirements of grant agreements to ensure compliance with Federal requirements. Views of Responsible Officials and Planned Corrective Action: See Part VI Corrective Action Plan.

Finding No.: 2022-004 Monitoring Procedures and Risk Assessment Process Federal Agency: Department of Health and Human Services (DHHS) Assistance Listing No.: 93.958 Requirement: Subrecipient Monitoring Type of Finding: Material Weakness Program: Block Grants for Community Mental Health Services Federal award no. and year: 1B09SM082596-01 10/01/19 ? 09/30/21 1B09SM083798-01 10/01/20 ? 09/30/22 1B09SM083952-01 03/15/21 ? 03/14/23 1B09SM085353-01 03/01/21 ? 09/30/25 1B09SM085881-01 09/01/21 ? 09/30/25 Criteria: In accordance with 2 CFR section 200.331, all pass-through entities must monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward; and that subaward performance goals are achieved. In addition, all pass-through entities must evaluate each subrecipient?s risk of noncompliance with Federal statutes, regulations, and the terms and conditions of the subaward for purposes of determining the appropriate subrecipient monitoring. Condition: Although the program did not have any subrecipients that required a single audit report to be obtained during the fiscal year, we were informed by program personnel that the program was unable to fill vacant positions that would monitor this compliance requirement. As a result, the control over this compliance requirement was not in place during the current fiscal year. Context: The program had six subrecipients in FY2022, none of which expended more than $750,000 during the year. However, the program did not have any personnel monitoring subrecipient expenditures and reviewing single audit reports as applicable. Cause: According to management, the program did not have sufficient staff available who are qualified to conduct subrecipient monitoring. Effect: Failure to properly monitor subrecipients could lead to noncompliance with the subrecipient monitoring requirement. Questioned Costs: None Identification as a Repeat Finding, if applicable: See finding 2021-005 included in the Summary Schedule of Prior Audit Findings. Recommendation: We recommend the Department hire adequate staff resources to follow its procedures and internal controls to ensure compliance with Federal requirements. Views of Responsible Officials and Planned Corrective Action: See Part VI Correction Action Plan.

Finding No.: 2022-005 Cash Management Federal Agency: Department of Agriculture Assistance Listing No.: 10.557 Requirement: Cash Management Type of Finding: Significant Deficiency Program: Special Supplemental Nutrition Program for Woman, Infants, and Children Federal award no. and year: 7HI700HI7 10/01/2020 ? 09/30/2021 10/01/2021 ? 09/30/2022 7HI700HI1 10/01/2019 ? 09/30/2021 10/01/2020 ? 09/30/2022 Criteria: The federal award program noted above is not subject to the Treasury-State Cash Management Improvement Act agreement and, as such, is subject to 2 CFR 200.305(b), which states: ?The timing and amount of advance payments must be as close as is administratively feasible to the actual disbursements by the non-Federal entity for direct program or project costs and the proportionate share of any allowable indirect costs. The non-Federal entity must make timely payment to contractors in accordance with the contract provisions.? The State of Hawaii, Department of Budget and Finance has determined that the ?Administratively feasible time period? was 21 calendar days. Condition: During the testing of the Department?s cash management procedures, it was determined that three out of sixty payments tested were not distributed within 21 days of the draw down of funds. For the items tested, the time elapsed between draw down and payment ranged to 22 to 27 days. Context: During the fiscal year ended June 30, 2022, the Department expended $8,398,791 (excluding food expenditures). Cause: The Department draws down federal funds that it estimates will be needed based on the expenditures that must be paid. However, since deposits must be posted prior to the processing of payments or disbursing of the funds, it is difficult for the Department to disburse federal funds in accordance with 2 CFR 200.305 (b). Also, the State?s payment process requires all State departments to process payments through DAGS resulting in processing delays. Effect: Noncompliance with federal regulations could result in a loss of funding that may jeopardize the operations of the Department?s federally funded programs. Questioned Costs: None Identification as a Repeat Finding, if applicable: See finding 2021-006 included in the Summary Schedule of Prior Audit Findings. Recommendation: We recommend that the Department work with DAGS and the Department of Budget and Finance to ensure compliance with established standard and timely disbursement of federal funds in accordance with 2 CFR 200.305(b). Views of Responsible Officials and Planned Corrective Action: See Part VI Correction Action Plan.

Finding No.: 2022-006 Reporting Federal Agency: Department of Health and Human Services (DHHS) Assistance Listing No.: 93.155 Requirement: Reporting Type of Finding: Material Noncompliance and Material Weakness Program: Rural Health Research Centers Federal award no. and year: 1 H3LRH42223-01-00 07/01/21 ? 12/31/22 Criteria: Under 2 CFR Appendix A to Part 170, recipients (i.e., direct recipients) of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Condition: We noted the program did not report first-tier subawards of $30,000 or more to FSRS. Context: During the audit, we were informed by Department personnel that required information on first-tier subawards of $30,000 or more were not reported to FSRS, a requirement that is included in the programs notice of awards. The following table summarizes our findings: See Schedule of Findings and Questioned Costs for table. We tested all first-tier subawards that amounted to $30,000 or more during FY2022. Cause: Based on further inquiry with Department personnel, we noted that the failure to report first-tier subawards to FSRS was caused by a lack of awareness of the FSRS reporting requirement. Effect: Failure to report first-tier subawards of $30,000 or more to FSRS results in noncompliance with the reporting requirement. Questioned Costs: None Identification as a Repeat Finding, if applicable: Not applicable Recommendation: We recommend program management be more diligent in understanding all requirements of grant agreements to ensure compliance with Federal requirements. Views of Responsible Officials and Planned Corrective Action: See Part VI Corrective Action Plan.

Finding No.: 2022-007 Reporting Federal Agency: Department of Health and Human Services (DHHS) Assistance Listing No.: 93.982 Requirement: Reporting Type of Finding: Material Noncompliance and Material Weakness Program: Mental Health Disaster Assistance and Emergency Mental Health Federal award no. and year: 1H79FG000623-01 09/30/20 ? 09/29/21 Criteria: 2 CFR Section 200.327 states that "(financial) information must be collected with the frequency required by the terms and conditions of the Federal award, but no less frequently than annually nor more frequently than quarterly except in unusual circumstances." Under this reporting requirement, the program must submit a Federal Financial Report (FFR) within 90 days after the close of the statutory grant period. Under 2 CFR Appendix A to Part 170, recipients (i.e., direct recipients) of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Condition: We noted one FFR was not timely submitted and the program did not report first-tier subawards of $30,000 or more to FSRS. Context: The program was required to submit one FFR during FY2022. During the audit, we noted that the FFR was submitted 126 days after the close of the statutory grant period. During the audit, we were also informed by Department personnel that required information on first-tier subawards of $30,000 or more were not reported to FSRS, a requirement that is included in the programs notice of awards. The following table summarizes our findings: See Schedule of Findings and Questioned Costs for table. We tested all first-tier subawards that amounted to $30,000 or more during FY2022. Cause: Based on further inquiry with Department personnel, we noted that the delay in submitting the FFR was caused by a lack of communication between ASO and program management. We further noted that the failure to report first-tier subawards to FSRS was caused by a lack of awareness of the FSRS reporting requirement. Effect: Failure to timely submit reports and report first-tier subawards of $30,000 or more to FSRS results in noncompliance with the reporting requirement. Questioned Costs: None Identification as a Repeat Finding, if applicable: Not applicable Recommendation: We recommend program management be more diligent in following Federal deadlines in order to ensure compliance with Federal requirements. We also recommend program management be more diligent in understanding all requirements of grant agreements to ensure compliance with Federal requirements. Views of Responsible Officials and Planned Corrective Action: See Part VI Corrective Action Plan.

Finding No.: 2022-008 Reporting Federal Agency: Department of Health and Human Services (DHHS) Assistance Listing No.: 93.243 Requirement: Reporting Type of Finding: Material Noncompliance and Material Weakness Program: Substance Abuse and Mental Health Services Federal award no. and year: 5H79SP081001-03 09/30/20 ? 09/29/21 5H79SP081001-04 09/30/21 ? 09/29/22 5H79TI026663-05 09/30/20 ? 09/29/21 5H79TI080196-04 09/30/20 ? 09/29/21 Criteria: Under 2 CFR Appendix A to Part 170, recipients (i.e., direct recipients) of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Condition: We noted the program did not report first-tier subawards of $30,000 or more to FSRS. Context: During the audit, we were also informed by Department personnel that required information on first-tier subawards of $30,000 or more were not reported to FSRS, a requirement that is included in the programs notice of awards. The following table summarizes our findings: See Schedule of Findings and Questioned Costs for table. We tested all first-tier subawards that amounted to $30,000 or more during FY2022. Cause: Based on further inquiry with Department personnel, we noted that the failure to report first-tier subawards to FSRS was caused by a lack of awareness of the FSRS reporting requirement. Effect: Failure to report first-tier subawards of $30,000 or more to FSRS results in noncompliance with the reporting requirement. Questioned Costs: None Identification as a Repeat Finding, if applicable: Not applicable Recommendation: We recommend program management be more diligent in following Federal grant agreements in order to ensure compliance with Federal requirements. We also recommend program management be more diligent in understanding all requirements of grant agreements to ensure compliance with Federal requirements. Views of Responsible Officials and Planned Corrective Action: See Part VI Corrective Action Plan.

Finding No.: 2022-009 Subrecipient Monitoring Federal Agency: Department of Health and Human Services (DHHS) Assistance Listing No.: 93.243 Requirement: Subrecipient Monitoring Type of Finding: Material Noncompliance and Material Weakness Program: Substance Abuse and Mental Health Services Federal award no. and year: 5H79SP081001-03 09/30/20 ? 09/29/21 5H79SP081001-04 09/30/21 ? 09/29/22 5H79TI026663-05 09/30/20 ? 09/29/21 5H79TI080196-04 09/30/20 ? 09/29/21 Criteria: In accordance with 2 CFR section 200.331, all pass-through entities must monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward; and that subaward performance goals are achieved. In addition, all pass-through entities must evaluate each subrecipient?s risk of noncompliance with Federal statutes, regulations, and the terms and conditions of the subaward for purposes of determining the appropriate subrecipient monitoring. Condition: The program did not comply with its documented monitoring procedures consistently. Context: Of a total 19 contracts, we selected three contracts based on a non-statistical sample. We noted that for one of the three contracts selected, the required monitoring procedures were not performed based on the program?s documented procedures. Cause: There was a lack of diligence in following documented monitoring procedures. Effect: Failure to follow a subrecipient monitoring policy that meets the requirements in 2 CFR section 200.331 results in noncompliance with the subrecipient monitoring requirement. Questioned Costs: None Identification as a Repeat Finding, if applicable: Not applicable Recommendation: We recommend that management follow its documented monitoring procedures for all subrecipient contracts. Views of Responsible Officials and Planned Corrective Action: See Part VI Corrective Action Plan.

Finding No.: 2021-004 Reporting Federal Agency: Department of Health and Human Services (DHHS) Assistance Listing No.: 93.958 Requirement: Reporting Type of Finding: Material Noncompliance and Material Weakness Program: Block Grants for Community Mental Health Services Federal award no. and year: 2B09SM010015-19 10/01/18 ? 09/30/20 Criteria: 2 CFR Section 200.327 states that "(financial) information must be collected with the frequency required by the terms and conditions of the Federal award, but no less frequently than annually nor more frequently than quarterly except in unusual circumstances." Under this reporting requirement, the program must submit a Federal Financial Report (FFR) within 90 days after the close of the statutory grant period. Under 2 CFR Appendix A to Part 170, recipients (i.e., direct recipients) of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Condition: We noted one FFR was timely submitted and the program did not report first-tier subawards of $30,000 or more to FSRS. Context: The program was required to submit one FFR during FY2021. During the audit, we noted that the FFR was submitted 211 days after the close of the statutory grant period. During the audit, we were also informed by Department personnel that required information on first-tier subawards of $30,000 or more were not reported to FSRS. The following table summarizes our findings: Transactions Tested: 5 Subaward not Reported: 5 Report not Timely: 5 Subaward Amount Incorrect: - Subaward Missing Key Elements: - Dollar Amount of Tested Transactions: $943,068 Subaward not Reported: $943,068 Report not Timely: $943,068 Subaward Amount Incorrect: - Subaward Missing Key Elements: - We tested all first-tier subawards that amounted to $30,000 or more during FY2021. Cause: Based on further inquiry with Department personnel, we noted that the delay in submitting the FFR and failure to report first-tier subawards to FSRS was caused by a lack of personnel available to monitor reporting requirements and complete reporting requirements timely. Effect: Failure to timely submit reports and report first-tier subawards of $30,000 or more to FSRS results in noncompliance with the reporting requirement. Questioned Costs: None Identification as a Repeat Finding, if applicable: See finding 2020-003 included in the Summary Schedule of Prior Audit Findings. Recommendation: We recommend program management be more diligent in following Federal deadlines in order to ensure compliance with Federal requirements. Views of Responsible Officials and Planned Corrective Action: See Part VI Corrective Action Plan.

Finding No.: 2021-005 Monitoring Procedures and Risk Assessment Process Federal Agency: Department of Health and Human Services (DHHS) Assistance Listing No.: 93.958 Requirement: Subrecipient Monitoring Type of Finding: Material Weakness Program: Block Grants for Community Mental Health Services Federal award no. and year: 2B09SM010015-19 10/01/18 ? 09/30/20 Criteria: In accordance with 2 CFR section 200.331, all pass-through entities must monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward; and that subaward performance goals are achieved. In addition, all pass-through entities must evaluate each subrecipient?s risk of noncompliance with Federal statutes, regulations, and the terms and conditions of the subaward for purposes of determining the appropriate subrecipient monitoring. Condition: Although the program did not have any subrecipients that required a single audit report to be obtained during the fiscal year, we were informed by program personnel that the program was unable to fill vacant positions that would monitor this compliance requirement. As a result, the control over this compliance requirement was not in place during the current fiscal year. Context: The program had nine subrecipients in FY2021, none of which expended more than $750,000 during the year. However, the program did not have any personnel monitoring subrecipient expenditures and reviewing single audit reports as applicable. Cause: According to management, due to a hiring freeze, the program was unable to hire staff who are qualified to conduct subrecipient monitoring. Effect: Failure to properly monitor subrecipients could lead to noncompliance with the subrecipient monitoring requirement. Questioned Costs: None Identification as a Repeat Finding, if applicable: See finding 2020-004 included in the Summary Schedule of Prior Audit Findings Recommendation: We recommend the Department allocate adequate resources to follow its procedures and internal controls to ensure compliance with Federal requirements. Views of Responsible Officials and Planned Corrective Action: See Part VI Correction Action Plan.

Finding No.: 2021-006 Cash Management Federal Agency: Department of Agriculture Assistance Listing No.: 10.557 Requirement: Cash Management Type of Finding: Material Noncompliance and Material Weakness Program: Special Supplemental Nutrition Program for Woman, Infants, and Children Federal award no. and year: 7HI700HI7 10/01/2019 ? 09/30/2020 10/01/2020 ? 09/30/2021 7HI700HI1 10/01/2019 ? 09/30/2021 Criteria: In accordance with 2 CFR section 200.305(a), for states, payments are governed by Treasury-State Cash Management Improvement Act (CMIA) agreement, for programs specified in the agreement. The federal program noted above, was subject the agreement. The CMIA agreement provides guidance on funding techniques that are required to be utilized by the program. In accordance with the CMIA agreement, for Direct Administrative and Payroll costs, a pre-issuance technique, which requires payments to be distributed within three business days of draw down of funds. Condition: During the testing of the Department?s cash management procedures, it was determined that payments were not distributed within three business days of the draw down of funds, as required by the CMIA agreement. For the items tested, the time elapsed between draw down and payment ranged to 5 to 71 days. Context: During the fiscal year ended June 30, 2021, the Department expended $8,319,102 (excluding food expenditures). Cause: The Department draws down federal funds that it estimates will be needed based on the expenditures that must be paid. However, since deposits must be posted prior to the processing of payments or disbursing of the funds, it is difficult for the Department to disburse federal funds in accordance with the CMIA Agreement. Also, the State?s payment process requires all State departments to process payments through DAGS resulting in processing delays. Effect: Noncompliance with federal regulations could result in a loss of funding that may jeopardize the operations of the Department?s federally funded programs. Questioned Costs: None Identification as a Repeat Finding, if applicable: See finding 2020-005 included in the Summary Schedule of Prior Audit Findings. Recommendation: We recommend that the Department work with DAGS and the Department of Budget and Finance to ensure compliance with established standard and timely disbursement of federal funds in accordance with CMIA Agreement. Views of Responsible Officials and Planned Corrective Action: See Part VI Correction Action Plan.

Finding No.: 2021-007 Monitoring Procedures and Risk Assessment Process Federal Agency: Department of Health and Human Services (DHHS) Assistance Listing No.: 93.136 Requirement: Subrecipient Monitoring Type of Finding: Material Weakness Program: Injury Prevention and Control Research and State and Community Based Programs Federal award no. and year: NU17CE925009-01 09/01/19 ? 08/31/20 Criteria: In accordance with 2 CFR section 200.331, all pass-through entities must monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward; and that subaward performance goals are achieved. In addition, all pass-through entities must evaluate each subrecipient?s risk of noncompliance with Federal statutes, regulations, and the terms and conditions of the subaward for purposes of determining the appropriate subrecipient monitoring. In accordance with 2 CFR sections 200.332(d) through (f), all pass-through entities must perform monitoring that includes reviewing financial and programmatic reports; following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the federal award detected through audits, on-site reviews, and other means; and issuing a management decision for audit findings pertaining to the federal award provided to the subrecipient. Condition: Although the program obtained the required single audit report from the subrecipient, during our audit management was not able to provide documentation that the review and evaluation of the report was performed. Context: The program had seven subrecipients in FY 2021, including one subrecipient that expended more than $750,000 during the year. Cause: According to management, the review and evaluation of the single audit report was not completed due to a lack of personnel. Effect: Failure to properly monitor subrecipients may result in noncompliance with the subrecipient monitoring requirement. Questioned Costs: None Identification as a Repeat Finding, if applicable: Not applicable Recommendation: We recommend the Department be more diligent in following its procedures and internal controls to ensure compliance with Federal requirements. Views of Responsible Officials and Planned Corrective Action: See Part VI Correction Action Plan.

Finding No.: 2020-003 Reporting Federal Agency: Department of Health and Human Services (DHHS) CFDA No.: 93.958 Requirement: Reporting Type of Finding: Material Noncompliance and Material Weakness Program: Block Grants for Community Mental Health Services Federal award no. and year: 2B09SM010015-18 10/01/17 ? 09/30/19 Criteria: 2 CFR Section 200.327 states that "(financial) information must be collected with the frequency required by the terms and conditions of the Federal award, but no less frequently than annually nor more frequently than quarterly except in unusual circumstances." Under this reporting requirement, the program must submit a Federal Financial Report (FFR) within 90 days after the close of the statutory grant period. Condition: Reporting requirements for one FFR was not met. Context: The program was required to submit one FFR during FY2020. During the audit, we noted that the FFR was submitted 438 days after the end of the award period. Cause: Based on further inquiry with Department personnel, we noted that the delay in submission was caused by a lack of personnel available to monitor reporting requirements and complete reporting requirements timely. Effect: Failure to timely submit reports results in noncompliance with the reporting requirement. Questioned Costs: None Identification as a Repeat Finding, if applicable: Not applicable Recommendation: We recommend program management be more diligent in following Federal deadlines in order to ensure compliance with Federal requirements. Views of Responsible Officials and Planned Corrective Action: See Part VI Corrective Action Plan.

Finding No.: 2020-004 Monitoring Procedures and Risk Assessment Process Federal Agency: Department of Health and Human Services (DHHS) CFDA No.: 93.958 Requirement: Subrecipient Monitoring Type of Finding: Material Noncompliance and Material Weakness Program: Block Grants for Community Mental Health Services Federal award no. and year: 2B09SM010015-18 10/01/17 ? 09/30/19 Criteria: In accordance with 2 CFR section 200.331, all pass-through entities must monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward; and that subaward performance goals are achieved. In addition, all pass-through entities must evaluate each subrecipient?s risk of noncompliance with Federal statutes, regulations, and the terms and conditions of the subaward for purposes of determining the appropriate subrecipient monitoring. Condition: Although the program complied with its monitoring procedures by obtaining the required single audit report of its subrecipient who expended more than $750,000 during the year, it did not complete its review and evaluation of the report in a timely manner. As a result, the subrecipient did not complete and submit a single audit report timely (i.e. within 9 months of year-end). Context: The program had two subrecipients in FY2020, including one subrecipient that expended more than $750,000 during the year. This subrecipient was not adequately monitored during FY2020 and as a result, did not complete a single audit report within nine months of its year-end. Cause: According to management, the monitoring and evaluation of the single audit reports were not completed in a reasonably timely manner due to a lack of personnel. Effect: Failure to properly monitor subrecipients has led to noncompliance with the subrecipient monitoring requirement. Questioned Costs: None Identification as a Repeat Finding, if applicable: Not applicable Recommendation: We recommend the Department be more diligent in following its procedures and internal controls to ensure compliance with Federal requirements. Views of Responsible Officials and Planned Corrective Action: See Part VI Correction Action Plan.

Finding No.: 2020-005 Cash Management Federal Agency: Department of Health and Human Services (DHHS) CFDA No.: 10.557 Requirement: Cash Management Type of Finding: Material Noncompliance and Material Weakness Program: Special Supplemental Nutrition Program for Woman, Infants, and Children Federal award no. and year: 7HI700HI7 10/01/2018 ? 09/30/2019 10/01/2019 ? 09/30/2020 Criteria: In accordance with 2 CFR section 200.305(a), for states, payments are governed by Treasury-State Cash Management Improvement Act (CMIA) agreement, for programs specified in the agreement. The federal program noted above, was subjected to the agreement. The CMIA agreement provides guidance on funding techniques that are required to be utilized by the program. In accordance with the CMIA agreement, for Direct Administrative and Payroll costs, a pre-issuance technique, which requires payments to be distributed within three business days of draw down of funds. Condition: During the testing of the Department?s cash management procedures, it was determined that payments were not distributed within three business days of the draw down of funds, as required by the CMIA agreement. Also, the related control, which required the draw down to be reviewed, was not operating effectively. Context: During the fiscal year ended June 30, 2020, the Department expended $10,295,506 (excluding food expenditures). Cause: The Department draws down federal funds that it estimates will be needed based on the expenditures that must be paid. However, since deposits must be posted prior to the processing of payments or disbursing of the funds, it is difficult for the Department to disburse federal funds in accordance with the CMIA Agreement. Effect: Noncompliance with federal regulations could result in a loss of funding that may jeopardize the operations of the Department?s federally funded programs. Questioned Costs: None Identification as a Repeat Finding, if applicable: See finding 2019-004 included in the Summary Schedule of Prior Audit Findings. Recommendation: We recommend that the Department work with DAGS and the Department of Budget and Finance to ensure compliance with established standard and timely disbursement of federal funds in accordance with CMIA Agreement. Views of Responsible Officials and Planned Corrective Action: See Part VI Correction Action Plan.

Finding No.: 2019-003 Monitoring Procedures and Risk Assessment Process Federal Agency: Department of Health and Human Services (DHHS) CFDA No.: 93.959 Requirement: Subrecipient Monitoring Type of Finding: Material Weakness Program: Block Grants for Prevention and Treatment of Substance Abuse Federal award no. and year: 3B08TI010015-17 3B08TI010015-18 10/01/2016 ? 09/30/2018 10/01/2017 ? 09/30/2019 Criteria: In accordance with 2 CFR section 200.331, all pass-through entities must monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward; and that subaward performance goals are achieved. In addition, all pass-through entities must evaluate each subrecipient's risk of noncompliance with Federal statutes, regulations, and the terms and conditions of the subaward for purposes of determining the appropriate subrecipient monitoring. Condition: Although the program complied with its documented monitoring procedures by obtaining the required single audit reports of subrecipients who expended more than $750,000 during the year, it did not complete its review and evaluation of the reports in reasonably timely manner. The program also does not have a formal, documented risk assessment policy. Context: The program had two subrecipients who expended more than $750,000 during the year. As such, single audit reports as of and for the year ended June 30, 2018 for these subrecipients were obtained by the program by March 31, 2019. However, the program did not complete its review and evaluation of the single audit reports until February 2020. Cause: Management has indicated that the review and evaluation of the single audit reports were not completed in a reasonably timely manner due to a lack of personnel resources. Effect: Failure to follow a subrecipient monitoring policy in a timely manner could lead to noncompliance with the subrecipient monitoring requirement. Questioned Costs: None Identification as a Repeat Finding, if applicable: Partially applicable. See finding 2018-004 included in the Summary Schedule of Prior Audit Findings. Recommendation: We recommend that management revise its documented monitoring procedures to include a timeframe specifying the number of months after receiving the audited single audit reports that the review and evaluation procedures should be completed by. We also recommend that management establish a formal, documented risk assessment policy in order to support which subrecipients are chosen and how they are monitored. Views of Responsible Officials and Planned Corrective Action: See Part VI Corrective Action Plan.

Finding No.: 2019-004 Cash Management Federal Agency: Department of Health and Human Services (DHHS) CFDA No.: 93.268, 93.757, and 93.959 Requirement: Cash Management Type of Finding: Material Noncompliance and Material Weakness Program: Immunization Cooperative Agreements State and Local Public Health Actions to Prevent Obesity, Diabetes, Heart Disease and Stroke Block Grants for Prevention and Treatment of Substance Abuse Federal award no. 6NH23IP000721-05 04/01/2017 - 06/30/2019 and year: NU58DP005502 09/30/2017 ? 09/29/2018 3B08TI010015-17 10/01/2016 ? 09/30/2018 3B08TI010015-18 10/01/2017 ? 09/30/2019 Criteria: The federal award programs noted above are not subject to the Treasury-State Agreement and, as such, are subject to 2 CFR 200.305(b), which states: ?The timing and amount of advance payments must be as close as is administratively feasible to the actual disbursements by the non-Federal entity for direct program or project costs and the proportionate share of any allowable indirect costs. The non-Federal entity must make timely payment to contractors in accordance with the contract provisions...? Condition: Systemic problem. During our testing of the Department?s cash management procedures, we could not verify whether the State of Hawaii, Department of Accounting and General Services (DAGS) disbursed funds from federal sources as close as administratively feasible to the Department?s disbursements for the federal award programs identified above after the Department drew down the funds, in accordance with 2 CFR 200.305(b) Context: During the fiscal year ended June 30, 2019, the Department expended the following amounts under the following major programs as reported in the schedule of expenditures on pages 77 ? 81: CFDA 93.268 (excluding non-cash expenditures) $ 2,864,576 CFDA 93.757 2,269,173 CFDA 93.959 8,121,347 $ 13,255,096 Cause: The Department draws down federal funds that it estimates will be needed based on the vouchers processed daily. However, since deposits must be posted prior to the processing of payments or disbursing of the funds, it is difficult for the Department to disburse federal funds in accordance with 2 CFR 200.305(b), and we could not verify compliance with 2 CFR 200.305(b). Effect: Noncompliance with federal regulations could result in a loss of funding that may jeopardize the operations of the Department?s federally funded programs. Questioned Costs: None Identification as a Repeat Finding, if applicable: See finding 2018-005 included in the Summary Schedule of Prior Audit Findings. Recommendation: In January 2020, the Department of Budget and Finance issued a memo to the departments to establish a standard for the State?s administratively feasible time period terminology. We recommend that the Department work with DAGS and the Department of Budget and Finance to ensure compliance with established standard and timely disbursement of federal funds in accordance with 2 CFR 200.305(b). Views of Responsible Officials and Planned Corrective Action: See Part VI Correction Action Plan.

Finding No.: 2019-005 Monitoring Procedures and Risk Assessment Process Federal Agency: Department of Health and Human Services (DHHS) CFDA No.: 93.757 Requirement: Subrecipient Monitoring Type of Finding: Material Weakness Program: State and Local Public Health Actions to Prevent Obesity, Diabetes, Heart Disease and Stroke Federal award no. and year: NU58DP005502 09/30/2014 ? 09/30/2018 Criteria: In accordance with 2 CFR section 200.331, all pass-through entities must monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward; and that subaward performance goals are achieved. In addition, all pass-through entities must evaluate each subrecipient?s risk of noncompliance with Federal statutes, regulations, and the terms and conditions of the subaward for purposes of determining the appropriate subrecipient monitoring. Condition: The program does not have documented monitoring procedures or a formal, documented risk assessment policy. Context: Through discussions with program management, we noted that the program does not have documented monitoring procedures or a formal, documented risk assessment policy. In addition, we noted that the program has had significant turnover in personnel, which has prolonged the completion of documented policies and procedures. Cause: Lack of documented policies and procedures and a formal, documented risk assessment policy. Effect: Lack of documented policies and procedures and a formal, documented risk assessment policy could lead to non-compliance with the subrecipient monitoring requirement. Questioned Costs: None Identification as a Repeat Finding, if applicable: See finding 2018-006 included in the Summary Schedule of Prior Audit Findings. Recommendation: We recommend program management develop formal policies and procedures to ensure compliance with Federal requirements. Views of Responsible Officials and Planned Corrective Action: See Part VI Correction Action Plan.

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