Institutional Federal Compliance Report 2021

STATE OF NEW YORK

Schedule of Findings and Questioned Costs

Year ended March 31, 2018

Additionally, 2 CFR 200.303(a) states the non-Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition The Department of Health (the Department) did not have adequate annual management review controls in place at a level of precision necessary to ensure proper classification of the amount of expenditures passed through to subrecipients on the State of New York Schedule of Expenditures of Federal Awards (SEFA). The Department inappropriately classified $8,096,631 of passed-through expenditures, incurred during the fiscal year end March 31, 2018, as non-personnel service expenditures on the State’s draft SEFA. As a result, the Department reported passed-through expenditures on the draft SEFA as $102,786,618 as of March 31, 2018, instead of the actual passed through expenditures of $110,883,249. Additionally, during the period under audit, the Department distributed $370,274,816 of food instruments to beneficiaries that had been provided through the Department’s local agencies. The draft schedule of expenditures of the federal awards did not recognize these amounts as being passed-through to subrecipients. Cause The condition results from the Department’s annual management review controls not being performed at a level of precision necessary to ensure proper classification of the amount of expenditures passed through to subrecipients was complete and accurate. The Department performed the management review control in place and identified program codes to be adjusted; however, the control was not a precision level needed to ensure all adjustments were made correctly. Additionally, the U.S. Department of Agriculture (USDA) had provided a letter dated August 24, 2001, titled “Subrecipients Single Audit Requirements NESF-044-1” which states that the amount provided under food instruments should be considered local agency expenditures for SEFA reporting purposes. The Department properly notified the local agencies of this requirement; however, the Department did not identify or record the food instrument amounts as passed-through to subrecipients in accordance with USDA requirements. Possible Asserted Effect Failure to appropriately ensure the completeness and accuracy of the expenditure amounts or properly instruct subrecipients on the classification of amounts to be reported as federal expenditures on the SEFA may result in inaccurate reporting to USDA and may inhibit its ability to effectively monitor and evaluate the State’s performance relative to the Special Supplemental Nutrition Program for Women, Infants, and Children. Statistical Sampling The sample was not intended to be, and was not, a statistically valid sample.

109

(Continued)