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

10.1. How do you ensure good fiscal accounting and tracking of funds? All fiscal monitoring is currently conducted by an IHCDA employee (although we have used external contractors in the past). To ensure good fiscal accounting and tracking of Liheap funds, IHCDA does the following: 1. Every three years the IHCDA monitor conducts a programmatic and financial monitoring review for the CSBG Comprehensive Administrative Review (CAR). The CAR is relevant as an indicator of the LSP’s general strength in terms of fiscal accounting procedures, especially since all of our LSPs except for one are Community Action Agencies who receive CSBG funds. The monitoring includes, but is not limited to, the following: Balance sheet • Income statement • Bank reconciliation for financial statements • Accounts payable • Accounts receivable • Claims • Audit files • Aging payables and receivables • Fiscal year end or interim balance sheets • A review of each subrecipient's policies and procedure manuals related financial practices, such as the Cost Allocation Plan, Inventory List, Fraud, Internal Controls, Disposition and Procurement Procedures. • 2. IHCDA's monitor reviews LSPs claims and transmittals to assess compliance with time limits for submission and accuracy of amounts claimed. 3. The IHCDA Internal Auditor and the Director of Community Programs reviews each sub-grantee's most recent single or programspecific audit required by the Single Audit Act Amendment of 1966, (U.S.C. 7501-7507) previously prescribed as an A-133 Audit. IHCDA may review and document any unresolved findings from other funding sources in the most recent financial audit. 4. LSP subgrantee agreements and budgets: When an allocation is made to an agency, an agreement is created along with a budget form. Each LSP fills out the budget adhering to the percentages allowed for each line item. Each line item is entered separately into the claims and payment system and the budget is line-item enforced so that the agency cannot overspend in any line. During Close Out of the federal year, LSPs provide their close out documentation to make sure their budget, their expenditures and their percentages are in line with what IHCDA shows. IHCDA tracks funds regularly during the year to compare LSP spending to benchmarks that they must meet. This allows IHCDA to make sure that all LSPs are receiving the funds they need to best serve their clients. For example, funds can be reallocated among agencies if some agencies are running low on funds. 5. Documentation: LSPs may claim reimbursement for LIHEAP-obligated funds from IHCDA. LSPs must submit documentation for all claims. There is no minimum threshold for reimbursements of assistance payments made directly by the LSP, such as crisis benefits or Emergency Repair and Replace services. For reimbursements of purchases made using the administrative budget, there is a $1,000 threshhold for detailed documentation. 6. Vendor Refunds: IHCDA policies and procedures require that when a utility vendor sends back a refund for an unused portion of a LIHEAP benefit, the vendor is to include the following information with their remittance of payment: the name of the LSP that provided the benefit, the client's name, the client's account number, and the internal transmittal number on which the benefit had been paid out. This allows IHCDA to properly track and account for the benefit refund and to apply the correct amount to the client's new utility if the client properly completes the benefit transfer form. Any refunds for which the client does not request a benefit transfer are reinvested into the statewide program. IHCDA has introduced a register sheet for vendors to include with refund and overpayment checks in order to more consistently gather the relevant information and encourage better reporting from the vendors. 7. Subgrantee budgets are reviewed by the Community Programs Manager or Community Programs Analyst prior to being approved in order to ensure compliance with line item caps. Subgrantee obligation is reviewed weekly by analyzing both benefit obligation levels being entered into the statewide database and subgrantee claims for admin and program costs being submitted to our fiscal department for reimbursement - these claims are required to be submitted on at least a monthly basis. IHCDA has established benchmarks three times during the year, at which point an intensive review of obligation will be conducted, and all subgrantees who have failed to reach the specified obligation level are eligible to be partially deobligated in order to bring them to the specified obligation level, and the funds redistributed to other subgrantees according to need. At the end of the program year, any agencies who have overobligated their allowable caps on the admin and program costs line items will be required to pay back the difference between their allowable cap and their actual obligation from unrestricted funds. 8. IHCDA maintains separation of different funding sources (e.g., regular block grant awards and supplemental awards) by issuing separate awards to its subgrantees - as well as to itself for administrative expenses - for each federal award and federal program year; that is to say, IHCDA and each subgrantee are provided separate awards for, say, the 2024 appropriations award and the IIJA award, and carryover from the previous year is also handled as a separate award. This ensures that the funds are separated in our financial accounting system and the the funds are drawn down from the correct source. 9. To separate obligation of funds by program component, because IHCDA handles all payments centrally, we make payments based on claims submitted by the subgrantees. These claims are generated within our application database system and generates based on the claims entered. When awarding claims, subgrantees must award regular, crisis, and emergency services claims separately, and the datbase has logic rules built in to validate that the awards are being entered under the correct line (e.g., funding source maximum benefits for regular and crisis claim types). 10.1a Provide your definitions of the following: Obligation At a state level, funds are obligated once they have been included in a professional services contract or a subaward (including IHCDA admin subawards). Expenditures Funds are considered expended at the state level when charges have been incurred an are visible to IHCDA's office as a result of a benefit being recorded in the statewide database or a grantee claim being submitted for payment. Expenditure timeframe The expenditure timeframe is by the end of the federal liquidation deadline for a given award. Administrative costs Administrative Costs will cover overall administration and operation of the program. Administrative costs are defined as the LSP costs related to program operations, planning, development, and implementation. EAP administrative functions, including but not necessarily limited to: program planning, management, supervision, conducting staff training, reporting, and the EAP portion of costs such as rent, utilities, maintenance and general supplies. • LSP organizational functions, including fiscal, executive, supervisory, human resources, IT, and other support operations. • Any other allocated costs. • Administrative Costs may also be used to pay for any expense that is eligible to be paid for from Program Costs. 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. While LIHEAP is not specifically audited annually, IHCDA as a whole does comply with Single Audit Act and OMB Circular A-133 requirements and submits itself to a single audit every year. Since IHCDA has about 35 programs in total - 25 of them with more than $3,000,000 in annual federal funding - our independent auditor currently conducts program-specific auditing on a three-year cycle. LIHEAP was audited in fiscal years 2018 and 2021; it is expected to be selected again in 2024. Our independent auditor is currently FORVIS. We select our auditors according to our established procurement policies. 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 monitoring IHCDA was monitored by HHS in April 2017 and received the monitoring letter in February 2018. All findings and concerns have been addressed and resolved at this time. Yes procedure/policy changes 2 monitoring IHCDA was monitored by OCS in June 2025. We are still awaiting the initial report in order to take action on any findings. In Progress 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: The program monitor reviews how the LSP has executed the guidelines established in the EAP Program Manual. The objectives for monitoring are to ensure: The LSP has properly followed written procedures, applicable laws, regulations and contract terms. 1. The LSP has administered the program according to established time frames. 2. Calculation of household income is correct. 3. EAP benefits are correctly applied to the clients. 4. Energy Benefit Transfer Requests are documented in the EAP statewide database. 5. Eligible costs are charged to administer the program (e.g. claims review) 6. Internal procedures and controls are in place to minimize the opportunity for fraud, waste, abuse, and mismanagement. 7. The LSP has the capacity to carry out the program’s goals and objectives. 8. The LSP has and implements sufficient and updated staff training plans. 9. The LSP has corrected any deficiencies addressed with previous Quality Improvement Plans. 10. Additionally, the State completes a risk assessment on each LSP every year. The risk assessment includes risk categories that generally cover use of funds, claims and transmittal compliance, and findings and concerns from monitoring. 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: IHCDA performs a risk assessment on every agency each year. Additional monitoring may be done on higher risk agencies. 10.6 Explain, or attach a copy of your local agency monitoring schedule and protocol. For each agency during its monitoring period: IHCDA will monitor up to 3% of the agency's client eligibility files. • IHCDA reserves the right to monitor additional files if the agency is assessed to be at high risk, was recently on a quality improvement plan (QIP) or modified quality improvement plan (MQIP), or if there is a reason that IHCDA feels that additional monitoring is necessary. • IHCDA will ensure that a review of incomplete files, denied files, files for agency staff or relatives receiving benefits, and Emergency Services recipients represent a small part of the overall review. • Notification of desktop monitoring will be sent at least 30 calendar days before the monitoring will begin. The review will begin with an entrance conference held between the IHCDA monitor(s) and the LSP’s EAP management team (or other point of contact as applicable). The entrance conference will familiarize the agency with the review process and allow the monitor to become familiar with specific details unique to each organization. Currently all EAP client file reviews are conducted remotely by desktop. EAP Fiscal Review may be conducted onsite if part of another IHCDA monitoring. During the desktop review, the EAP Monitor will provide ongoing communication of the findings to the LSP and allow for constant feedback so an accurate and complete picture is obtained of the monitored activity. When the monitoring session is complete, an exit conference will be conducted to provide the LSP with a preliminary report of the results. After the monitoring review, the IHCDA monitor will send the LSP a letter outlining the monitoring findings or concerns. LSPs are given an opportunity to appeal the findings once to the EAP monitor and then, if necessary to the Division Director. Agencies will be given an overall performance score. Agencies with Overall Performance Scores below 87% may be put on a corrective action improvement plan. Improvement plans are tailored to improving the performance of the agency and may include additional training, peer consuling, additional review by IHCDA to understand problematic trends, etc.. After the LSP has either accepted the findings or completed the appeal process, the LSP will take Corrective Action to address the findings identified during the monitoring review. The LSP will have thirty (30) calendar days to provide to IHCDA any payments and supporting documentation agreed upon in the report. The corrective action may include, but is not limited to: crediting funds to a client’s account, paying funds to IHCDA because of an overpayment, or reviewing an application to verify that portions of the application were properly processed. The LSP will receive a Monitoring Completion Letter once all completed corrective actions have been accepted, documentation of credits to clients, and copies of checks paid to IHCDA have been submitted. For Weatherization, 5% of completed DOE client files are reviewed (10% for agencies that have an in-house Energy Auditor and Quality Control Inspector). The monitor is advised to give preference to files that include both DOE base and LIHEAP funding. The monitor reviews program administration, procurement, training and licensing, data base input, fiscal information, client file review and field inspections. Monitoring of Emergency Repair and Replacement benefit administration is being aligned with the Weatherization monitoring process this year to better utilize the expertise of that team. 10.7. Describe how you select local agencies for monitoring reviews. Attach a risk assessment if subrecipients are utilized. Site Visits: IHCDA may conduct site visits to high risk agencies and agencies who are put on a quality improvement plant (QIP) or modified quality improvement plan (MQIP). Desk Reviews: LIHEAP files are uploaded into a the EAP statewide database and IHCDA monitors conduct the desk review monitoring. Agencies are expected to ensure all files are uploaded accurately to the statewide database within 45 days of eligibility determination. 10.8. How often is each local agency monitored? Please attach a monitoring schedule if one has been developed. Annually 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.