Report No. 2007-09

March 2007

The United States Congress passed the Single Audit Act of 1996 to establish uniform requirements for audits of federal awards administered by states, local governments, and non-profit organizations.  The Single Audit includes the federal awards expended by all state agencies, except for the public universities and various financing authorities that provide their financial information directly to the federal government.  State agencies expended $8.65 billion of federal grant funds during the year ended June 30, 2006.  Expenditures of federal awards have increased significantly over the past five years.  Although nineteen state departments and other state offices expended federal awards, six state departments expended the bulk of the federal awards (95 percent).  These six departments are: Social Services, Transportation, Labor and Industrial Relations, Elementary and Secondary Education, Health and Senior Services, and Public Safety.  Overall, the state expended federal awards in 318 different programs.

The Department of Social Services (DSS) does not perform any analysis of the expenditures of Temporary Assistance for Needy Families (TANF) funds transferred to the Social Services Block Grant (SSBG) to ensure the funds are used for programs and services to children or their families whose income is less than 200 percent of the official poverty guideline.  Since we could not determine the amount of funds that may have been improperly used, our office questions the total $21,705,174 transferred.

The State Emergency Management Agency (SEMA) does not have written policies and procedures for on-site monitoring of subrecipients to ensure federal Homeland Security Grant monies are expended for allowable activities and costs.  As a result, we question costs totaling $588,035 for expenditures in Miller and DeKalb counties.

The Department of Mental Health has also not adequately monitored all subrecipients to ensure an A-133 audit has been performed and submitted on a timely basis, or that problems reported in previous audits have been addressed. 

The Department of Natural Resources also does not sufficiently monitor and ensure program subrecipients obtain and submit audits when applicable.  In addition, the department has not established adequate procedures to ensure that required quarterly construction site inspections are performed. 

A Department of Health and Senior Services internal review is currently underway to investigate concerns regarding how federal funds may have been improperly charged for services of the Information Technology Support Division.  According to the review team, some possible discrepancies have been identified where federal grants may have been improperly charged.  Further review of these discrepancies is ongoing and formal findings, if any, have not yet been finalized. 

Eligibility and payment documentation could not be located for some childcare cases at the Department of Social Services (DSS).  Overpayments were made to some providers and management of case records and monitoring of providers are not adequate.  We questioned a total of $31,683 in federal childcare payments. 

In addition, the DSS does not ensure entities paid more than $25,000 are not suspended or debarred, or otherwise excluded from receiving federal funds.  Also, certifications of salaries of employees working solely on a single federal program are not always prepared.  We questioned $63,887 in salaries and fringe benefits charged to various federal programs. 

The DSS – Division of Budget and Finance (DBF) prepared a schedule of expenditures of federal awards (SEFA) which showed expenditures overstated by a net amount of approximately $56 million.  The majority of the errors resulted from the incorrect compilation of data from the programs' federal reports.  In addition,  expenditures to several entities from the SSBG, Child Care and Development Block Grant (CCDF), and Child Care Mandatory and Matching Funds of the CCDF programs appear to be to subrecipients.  However, the SEFA prepared by the DBF did not report any amounts provided to subrecipients for these programs.  In addition, it appears the DSS monitors these entities as if they were subrecipients.  A similar condition was also noted in our prior report. 

Eligibility documentation could not be located for some Temporary Assistance for Needy Families (TANF) cases reviewed.  We questioned $13,542 paid on these cases. 

Auditors also identified expenditures totaling $12,811 charged to the child support grant that were either unallowable or unnecessary, including attorney fees, judgments, and interest.

Also, included in the single audit report are recommendations related to the DSS- Children’s Division Integrated Payment System, the Office of Attorney General’s billing of Child Support Enforcement and Medical Assistance Program costs, and the DSS - Children’s Division Random Moment Time Study.

Complete Audit Report