10 Program, Fiscal Monitoring, and Audit, 2605(b)(10) - Assurance 10

10.1. How do you ensure good fiscal accounting and tracking of funds? The Arkansas Energy Office (AEO) is required to follow the Arkansas Department of Finance and Administration (DFA) fiscal policies and procedures, which are in compliance with federal fiscal regulations. AEO also adheres to LIHEAP federal regulations. Community-Based Organizations' (CBOs) requests for funds and reimbursements are submitted with supporting documentation, which are then compared to approved budgets and weekly cumulative reports that show applications received, approved, and expenditures made to utilities. At least monthly, the CBOs submit canceled checks paid to energy suppliers. Each CBO is responsible for using its own respective software program(s) to track expenditures, including benefit payments, and report expenditures to AEO. AEO's Fiscal Coordinator tracks and maintains a 'live' spreadsheet of all invoices and reimbursement requests and provides detailed spenddown of each agency allocation throughout each fiscal year. This includes all grant funding sources. The Arkansas Department of Energy and Environment's Fiscal Division tracks all grant spending via the Arkansas Administrative Statewide Information System (AASIS) which complies with and supports policies and procedures promulgated by the DFA Offices of Budget, Personnel Management, Accounting, State Procurement, and the Division of Employee Benefits. Based on federal requirements to have an annual single agency audit, AEO requires a copy of each CBO's audit report when it becomes available and reviews the findings for any needed follow-up. LIHEAP funds are utilitized to operate the Arkansas Weatherization Program. However, both the LIHEAP and Weatherization programs are operated by the Arkansas Energy Office, and there is no transfer of funds to a second state agency. Supplier Agreements are obtained annually from each energy service provider that accepts payment from the LIHEAP program. By signing these agreements, the supplier is agreeing to return any unused benefit dollars to the CBO from which the benefit dollars were issued, per Section IV of the Supplier Agreement. The CBO will then return the funds to AEO with the following information: Case Name, Case Number, Date of Check, Reason for refund, and Amount of refund. 10.1a Provide your definitions of the following: Obligation Obligation – An agreement the Subgrantee obtains from the energy supplier guaranteeing that the household’s services will be continued, restored, or delivered in return for payment within the policy timeframes by the Subgrantee on the household’s behalf. Fiscal Obligation – an action that commits the funds; for example, through the issuance of a pledge on behalf of a household or through a contract or subgrant for the purchase of services. Expenditures The payment of funds to a third party as a result of an obligation. Expenditure timeframe Grant funds can be spent from October 1, 2025, to September 30, 2026, with ten percent (10%) allowable to be carried over and spent during October 1, 2026, to September 30, 2027. Administrative costs Those Subgrantee costs that canot be identified with any single program (block grant), but are indispensable to the conduct of agency activities and to the organization's survival. Audit Process 10.2. Is your LIHEAP program audited annually under the Single Audit Act and OMB Circular A - 133? Yes No 10.2a - if yes, describe your auditor selection process. The Arkansas Energy Office, as a part of the Arkansas Department of Energy and Environment, is audited annually by legislative auditors. Community-Based Organizations select their auditors based on their agency's procurement policy. 10.3. Describe any audit findings of the grant recipient (i.e. State/Tribe/Territory) rising to the level of material weakness or reportable condition cited in the single audits, inspector general reviews, or other government agency reviews from the most recently audited fiscal year. No Findings Finding Type Brief Summary Resolved? Action Taken 1 reporting See attached: State of Arkansas Summary Schedule of Prior Year Findings For the Year Ended June 30, 2025 Yes procedure/policy changes 10.4. Audits of Local Administering Agencies What types of annual audit requirements do you have in place for local administering agencies/district offices? Select all that apply. Local agencies/district offices are required to have an annual audit in compliance with Single Audit Act and OMB Circular A-133 Local agencies/district offices are required to have an annual audit (other than A-133) Local agencies/district offices' A-133 or other independent audits are reviewed by Grant recipient as part of compliance process. Grant recipient conducts fiscal and program monitoring of local agencies/district offices Local agencies and district offices are required to have an annual audit in compliance with Single Audit Act and OMB Circular A-133 Compliance Monitoring 10.5. Describe your monitoring process for compliance at each level below. Check all that apply. Grant recipients have a policy in place for appropriate separation of duties and internal controls. Internal program review Departmental oversight Secondary review of invoices and payments Other program review mechanisms are in place. Describe: Local Administering Agencies/District Offices: On - site evaluation Annual program review Monitoring through central database Desk reviews Client File Testing/Sampling Other program review mechanisms are in place. Describe: AEO is developing a fiscal assessment monitoring tool to measure the performance of LIHEAP CBOs. The tool will have a scorecard to measure the best financial practices for operating the LIHEAP program. The on-site evaluation tool will include reviewing policies such as procurement, internal controls, and personnel. 10.6 Explain, or attach a copy of your local agency monitoring schedule and protocol. The Arkansas Energy Office (AEO) is working to develop a secure system where AEO has access to client files to enable desk reviews by AEO LIHEAP staff. Program evaluations, including results of client file sampling and reviews may be conducted via Zoom or other remote means. Until the system is fully developed, the LIHEAP team will conduct in-person monitoring visits to evaluate compliance. A tentative schedule is attached. 10.7. Describe how you select local agencies for monitoring reviews. Attach a risk assessment if subrecipients are utilized. Site Visits: AEO developed a tentative monitoring schedule which is attached. Desk Reviews: Potential problems or complaints will be reviewed. Upon request from AEO, Community-Based Organizations send redacted client files if there is a problem or complaint. Desk reviews cover application, documentation, determination of eligibility and amount of benefit, notification to client, and payment to energy supplier as well as overall adherence to LIHEAP policies and procedures. Each CBO has the option of administering the program using software of their choice. Some of the CBOs have made data available to AEO electronically, which will allow for remote monitoring of some applicant files. 10.8. How often is each local agency monitored? Please attach a monitoring schedule if one has been developed. Triannually 10.9. How many local agencies are currently on corrective action plans? 1 If any of the above questions require further explanation or clarification that could not be made in the fields provided, attach a document with said explanation here.