Of the 12 States Monitored by USDOE in 2023, Only Indiana was Found to be in Compliance.

Harsh words and troubling findings for Arkansas, Florida, Georgia, Louisiana, Nevada, North Carolina, Ohio, Oklahoma, Tennessee, Texas, and Puerto Rico.

But what is the Biden Administration, specifically what is USDOE Secretary Miguel Cardona and Deputy Commissioner Carol Dobak, planning to do about the prevalence of programmatic, fiscal, and administrative failures?

#disabilityrights #civilrights #equity #inclusion

Arkansas Conclusion: RSA has determined that ARS does not have accurate application procedures, does not determine eligibility within 60 days from the date the application was submitted, or make its application widely available in the State in accordance with the regulations in 34 C.F.R. 24 § 361.41(b). ARS must revise language on the VR application to clarify that an individual is considered an applicant once the application form is completed and submitted to the VR agency and must make eligibility determination within 60 days from the application submission date. ARS must remove the application requirement for the individual to make an intake appointment or complete the intake questionnaire or provide documentation of the individual’s disability or assist ARS in obtaining documentation of the disability, and ARS must make its application widely available throughout the State, particularly in the one-stop centers as specified in the regulations. Revising these application procedures to align with the Federal regulations could help to increase the number of VR applicants, reduce attrition, and assist ARS in maximizing the use of Federal VR funds to improve employment outcomes for individuals with disabilities in Arkansas.

ARS was not able to demonstrate that VR funds have been used in accordance with Federal requirements, including Federal reporting requirements of the RSA-17 and SF-425 reports, as explained above in the requirements section of the finding. Therefore, ARS was not able to ensure accurate, complete, and timely submission of its RSA-17 and SF-425 financial reports for the period covered by RSA’s review in FFY 2023 for the VR program (program income, administrative costs, and cash management). Without the reconciliation of these RSA-17 reports to adequate supporting documentation from the accounting system, RSA cannot determine, with certainty, whether the State has met its reporting requirements.

Florida (Blind Services) Conclusion: RSA determined at the time of the monitoring review DBS had not established and maintained effective internal controls over its Federal award that provided reasonable assurance that the non-Federal entity was managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. As a result of the analysis RSA determined that DBS’ internal controls did not ensure that requirements at 34 C.F.R. §§ 361.47(a), 361.48(a) and (b), and 361.50 have been met. DBS must develop and implement internal controls that ensure the proper and efficient administration of the VR program, including those necessary to submit accurate and reliable data reports with required documentation to verify its data for the VR and Supported Employment programs. In addition, DBS must develop a system of internal controls to evaluate and monitor its performance for continuous improvement and compliance.

Based on RSA’s analysis, DBS is not in compliance with the Federal requirements in 34 C.F.R. § 361.12, 34 C.F.R. § 76.702, and 2 C.F.R. § 200.302 to ensure non-Federal and Federal obligations and expenditures are assigned, tracked, paid, and reported from the correct Federal award. The agency did not have sufficient internal controls to ensure that— 1) A comprehensive written policy regarding period of performance has been developed to outline the steps and procedures to assign, track and report obligations and expenditures in systems for all cost categories identified in EDGAR 34 C.F.R. § 76.707, to ensure they are for allowable costs under the agency’s approved State Plan during the period of performance of the award; and 2) All non-Federal and Federal obligations and expenditures are accurately assigned to specific fund sources, and tracked, paid and reported on the appropriate Federal Financial Reports for the appropriate awards. In FFY 2016, RSA published a Frequently Asked Questions document clarifying the period of performance requirements for RSA formula awards. Since that time, RSA has held numerous trainings and provided technical assistance to VR agencies related to this requirement. It is concerning that DBS’ financial processes fail to meet the Federal requirements given the emphasis RSA has placed on helping to ensure agencies meet this requirement. DBS is unable to ensure— • Accurate fiscal data collection and financial accountability, as required by 34 C.F.R. § 361.12; • The proper disbursement of and accounting for Federal funds, as required by 34 C.F.R. § 76.702; and • Non-Federal and Federal obligations and expenditures are assigned and liquidated within the period of performance of the Federal award in accordance with the award’s terms and conditions, as required by 34 C.F.R. § 76.707 and 2 C.F.R. § 200.302. As a recipient of Federal VR program funds, DBS must have procedures in place.

Georgia Conclusion: As a result of the analysis, RSA determined that GVRA did not maintain written policies covering the nature and scope of each of the VR services, in accordance with 34 C.F.R. § 361.50, and the criteria under which VR services are provided, as specified in 34 C.F.R. § 361.48.

In accordance with 34 C.F.R. § 361.12, GVRA must implement policies and procedures that ensure the proper and efficient administration of the VR program, including those necessary to carry out all functions for which the VR agency is responsible. GVRA must develop and implement policies and procedures for collecting accurate data and for verifying the accuracy and reliability of the data through the required supporting documentation. In addition, GVRA must monitor and evaluate performance through the agency’s internal controls, in accordance with 2 C.F.R. § 200.303. The RSA review team determined that GVRA has not implemented effective written policies, procedures, or internal controls that ensure the accurate reporting of information related to the performance accountability guidelines required to be developed under WIOA Section 116; and ensure case files and supporting documentation adhere to the record of service requirements in 34 C.F.R. § 361.47.

GVRA does not maintain effective internal controls over the Federal awards necessary to provide reasonable assurances that it is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the award, as required by the statute and regulations cited in the “Requirements” section of this finding. Specifically, GVRA does not have sufficient written policies, procedures and internal controls to support compliance with rules pertaining to Contract monitoring, facilities management and fraud reporting.

Indiana Conclusion: RSA’s review of the performance of BRS did not identify findings or required corrective actions regarding inconsistencies and areas of non-compliance with Federal requirements within the scope of this targeted focus area. RSA did not conduct an exhaustive review of all potential areas of non-compliance outside the scope of this focused review.

Louisiana Conclusion: RSA determined that LRS had not established and maintained effective internal control over its Federal award that provided reasonable assurance that the non-Federal entity was managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. RSA determined that LRS’ internal controls did not ensure the reporting requirements specified in 34 C.F.R. § 361.40, which requires the VR agency to submit reports, including reports required under sections 13, 14, and 101(a)(10) of the Rehabilitation Act, in the form and level of detail and at the time required by the Secretary regarding applicants for and eligible individuals receiving services in a manner that provides a complete count (other than the information obtained through sampling consistent with Section 101(a)(10)(E) of the Rehabilitation Act) of the applicants and eligible individuals. In addition, LRS must comply with any requirements necessary to ensure the accuracy and verification of those reports, pursuant to the requirements described at RSA PD-19-03. Because LRS did not accurately collect or report its data, including data elements related to measurable skill gains and credentials, and underreported services delivered through comparable benefits, supported employment outcomes, job search assistance, benefits counseling, customized training, among other data, LRS has not met the requirements set forth in 34 C.F.R. § 361.40 and is not in compliance with the requirements at 2 C.F.R. § 200.303. 39 LRS must document efforts to undertake, at minimum, annual internal audits of supporting documentation and other aspects of case work relevant to WIOA performance reporting. These targeted reviews should include final reconciliation between the case record and what was reported on the RSA-911. Such reviews may serve as a source of feedback for process improvement and staff training. Further, LRS should conduct regular training for its staff that is routinely updated based on the nature of the agency's progress and ability to better document skill gains, credentials, and service provision.

Based on RSA’s analysis, it has determined that LRS is not in compliance with the Federal requirements in 34 C.F.R. § 361.12, 34 C.F.R. § 76.702, and 2 C.F.R. § 200.302 to ensure non-Federal and Federal obligations and expenditures are assigned, tracked, paid, and reported from the correct Federal award based on fund source. RSA is concerned that the LRS financial management system does not meet the following Federal requirements: • LRS does not ensure all Federal obligations are assigned to a specific Federal Award Identification Number (FAIN), or other fund source, and LRS does not reconcile all expenditures and make appropriate accounting adjustments to identify the source of funds used to account for all obligations and Federal expenditure transactions after the fact, resulting in an internal control deficit for accounting support documentation; • LRS’ financial management system prevents the agency from tracing funds to a level of expenditures at the transactional level necessary to establish that such funds have been used in accordance with Federal requirements, as required by 2 C.F.R. §§ 200.302, 200.303, and 200.328, including Federal reporting requirements of the RSA-17 report; and • LRS’ written policies regarding period of performance have not been fully developed to ensure procedures result in its ability to accurately assign, track, and report obligations and expenditures in systems for all cost categories identified in EDGAR 34 C.F.R. § 76.707, based on fund source. Without such detailed procedures, as required by 34 C.F.R. § 361.12 and 2 C.F.R. §§ 200.302, 200.303, and 200.328, LRS is unable to submit accurate financial reports (i.e., RSA-17 and SF-425 reports) that will permit RSA to accurately assess match, MOE and carryover eligibility of VR and Supported Employment awards. As a recipient of Federal VR program funds, LRS must have internal controls and written procedures in place that ensure proper and efficient administration of its VR program, and that enable LRS to carry out all required functions. The methods of administration must ensure 52 accurate data collection and financial accountability (34 C.F.R. § 361.12 and 2 C.F.R. §§ 200.302 and 200.303).

Nevada Conclusion: In accordance with 34 C.F.R. § 361.12, VRD must implement policies and procedures that ensure the proper and efficient administration of the VR program, including those necessary to carry out all functions for which the VR agency is responsible. VRD must also monitor and evaluate performance through the agency’s internal controls, in accordance with 2 C.F.R. § 200.303. Based on the review of VRD’s existing policies, procedures, and internal controls related to pre-employment transition services, the RSA review team determined that VRD was not in compliance with the requirements in 34 C.F.R. § 361.12 or 2 C.F.R. § 200.303.

As a result of the analysis, RSA determined that VRD was not maintaining written policies covering the nature and scope of each of the VR services, in accordance with 34 C.F.R. § 361.50, and the criteria under which VR services are provided, as specified in 34 C.F.R. § 361.48. VRD must update its policy manual and VR desk guide to ensure compliance with applicable Federal requirements.

In accordance with 34 C.F.R. § 361.12, VRD must implement policies and procedures that ensure the proper and efficient administration of the VR program, including those necessary to carry out all functions for which the VR agency is responsible. VRD must develop and implement policies and procedures for collecting accurate data and for verifying the accuracy and reliability of the data through the required supporting documentation. In addition, VRD must monitor and evaluate performance through the agency’s internal controls, in accordance with 2 C.F.R. § 200.303. The RSA review team determined that VRD has not implemented effective written policies, procedures, or internal controls that ensure the accurate reporting of information related to the performance accountability guidelines required to be developed under WIOA Section 116; and ensure case files and supporting documentation adhere to the record of service requirements in 34 C.F.R. § 361.47.

VRD does not maintain effective internal controls over the Federal awards necessary to provide reasonable assurances that it is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the award, as required by the statute and regulations cited in the “Requirements” section of this finding. Specifically, VRD does not have sufficient written policies, procedures and internal controls to support compliance with rules pertaining to its payments to vendors, MOE, advance rent payment, and fraud reporting.

North Carolina Conclusion: RSA determined that DVRS did not accurately report VR services, supported employment services, and pre-employment transition services, and did not have a system in place to correct data it knew was not valid. In addition, DVRS did not maintain effective internal controls over the Federal award that would provide a reasonable assurance that DVRS is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the award in accordance with 2 C.F.R. § 200.303. Furthermore, RSA determined that DVRS has not implemented internal controls, policies, or procedures for tracking and reporting pre-employment transition services that ensure the verification, validation, and accurate reporting of pre-employment transition services provided to reportable students, VR program recipients, and participants. 20 RSA also determined that DVRS did not submit accurate reports substantiated by required supporting documentation, as required by 34 C.F.R. § 361.40, or ensure accuracy and verification of performance measure data collected, as required in Section 116 of WIOA and the implementing joint regulations in 20 C.F.R. part 677 and 34 C.F.R. parts 361 and 363, RSATAC-17-01, Performance Accountability Guidance for Workforce Innovation and Opportunity Act (WIOA) Title I, Title II, Title III, and Title IV Core Programs (issued August 17, 2017), and RSA-911 MSG Reporting FAQs (issued August 2020). As a result of the reporting deficiencies noted above, RSA was unable to verify the accuracy of services, or the expenditure of funds reported by DVRS. DVRS has had nearly a decade since the implementation of the pre-employment transition services requirement to ensure accurate reporting of data. The agency’s inability to identify and correct these issues in a timely manner represents a system weakness and a management concern. DVRS has been aware of its data management concerns for several years and has repeatedly used the lack of a compliant data system as a reason for submission of inaccurate and unreliable performance data. DVRS assured through the VR portion of its Unified or Combined State plan that it would comply with the terms and conditions of the Federal award that include accurate, reliable, and timely reporting. DVRS has spent a significant amount of Federal funding to develop a new data system and it remains unclear whether the new system will be able to adequately correct all the identified data issues. To the extent that DVRS’ data system does not capture and report the data required, DVRS must develop other processes, to ensure the required data are reported accurately. DVRS’ ongoing submission of inaccurate and unreliable data results in the inability to track the use of Federal VR and Supported Employment funds used to serve individuals with disabilities in North Carolina. DVRS must take immediate actions to remedy this continued non-compliance either through its data system or the use of manual data collection processes.

RSA was unable to determine whether DVRS has met or failed to meet the requirement at 34 C.F.R. § 361.48(a)(1) to make pre-employment transition services available statewide because the data was incomplete and inconsistent. In combination with finding 2.1, this represents a systemic failure of DVRS internal control processes for accurately reporting the data required as a condition of DVRS’s Federal funding. As such, DVRS must correct these data reporting deficiencies and demonstrate that it has made these services available statewide to potentially eligible and eligible students in all 100 counties and 642 public high schools either through VR agency-provided or purchased services.

Based on the information provided and documentation reviewed, RSA concluded that DVRS is non-compliant with the standards cited in the “Requirements” section of this finding. As described above, DVRS cannot assure that it is administering the VR and Supported employment programs in a proper and efficient manner and ensuring financial accountability. This is evidenced by DVRS’ inaccurate and untimely reporting. For these reasons DVRS has not complied with the VR program provisions and internal control requirements set forth in 34 C.F.R. §§ 361.3(a) and 361.12, and 2 C.F.R. §§ 200.302(a) and (b)(4), and 200.303; and the terms and conditions of the award.

DVRS is not ensuring the accuracy of expenditures charged to the Supported Employment program. The SF-425 reports submitted by DVRS for award H187B210050 do not reconcile with the information contained in NCAS. Thus, RSA is unable to rely on the accuracy of the financial data reported. Additionally, DVRS failed to ensure the drawdown requirements related to meeting the non-Federal share and proportionality requirements were met prior to drawing down and expending Supported Employment funds. If DVRS’ electronic data systems are unable to accurately track and report Supported Employment expenditures, DVRS must either cease drawing down and expending Supported Employment funds or develop manual tracking and reporting systems that meet Federal requirements.

RSA’s review of the contracts and monitoring reports disclosed non-compliance with the regulations cited in the “Requirements” section of this finding. Following the monitoring visit, DVRS submitted a contractor registration/validation form which addresses the following: debarment and suspension as cited at SAM.gov; the State’s debarment database; Appendix II to 2 C.F.R. § 200; and the North Carolina Department of Administration’s procurement manual. RSA reviewed it and found it acceptable. However, DVRS did not disclose when use of the form was implemented. In addition, the contracts RSA reviewed did not contain performance standards that clearly described the benefit to the students and did not demonstrate how the benefit was objectively measurable.

Ohio Conclusion: RSA determined that, at the time of the review, OOD had not established and maintained effective internal control over its Federal award that provided reasonable assurance that the non-Federal entity was managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. RSA determined that OOD’s internal controls did not ensure the reporting requirements specified in 34 C.F.R. § 361.40, which requires the VR agency to submit reports, including reports required under sections 13, 14, and 101(a)(10) of the Rehabilitation Act, in the form and level of detail and at the time required by the Secretary regarding applicants for and eligible individuals receiving services in a manner that provides a complete count (other than the information obtained through sampling consistent with Section 101(a)(10)(E) of the Rehabilitation Act) of the applicants and eligible individuals to permit the greatest possible cross-classification of data; and protect the confidentiality of the identity of each individual. In addition, the designated State agency must 31 comply with any requirements necessary to ensure the accuracy and verification of those reports, pursuant to the requirements described at RSA PD-19-03. Because OOD is not accurately collecting or reporting data related to measurable skill gains and credentials, and under-reporting counseling and guidance, information and referral, and services delivered through comparable benefits, OOD has not met the requirements set forth in 34 C.F.R. § 361.40 and is not in compliance with the requirements at 2 C.F.R. § 200.303.

Based on RSA’s analysis, it has determined that OOD is not in compliance with the Federal requirements in 34 C.F.R. § 361.12, 34 C.F.R. § 76.702, and 2 C.F.R. § 200.302 to ensure non-Federal and Federal obligations and expenditures are assigned, tracked, paid, and reported from the correct Federal award. The agency did not have sufficient internal controls to ensure that 1) A comprehensive written policy regarding period of performance has been developed to outline the steps and procedures to assign, track, and report obligations and expenditures in systems for all cost categories identified in EDGAR 34 C.F.R. § 76.707, to ensure they are for allowable costs under the agency’s approved State Plan during the period of performance of the award; and 2) All non-Federal and Federal obligations and expenditures are accurately assigned to specific fund sources, and tracked, paid and reported on the appropriate Federal Financial Reports for the appropriate awards. RSA is concerned that the OOD financial management system does not meet Federal requirements because the agency is not able to ensure— • Accurate fiscal data collection and financial accountability, as required by 34 C.F.R. § 361.12; • The proper disbursement of and accounting for Federal funds, as required by 34 C.F.R. § 76.702; and • Non-Federal and Federal obligations and expenditures are assigned and liquidated within the period of performance of the Federal award in accordance with the award’s terms and conditions, as required by 34 C.F.R. § 76.707 and 2 C.F.R. § 200.302. 42 As a recipient of Federal VR program funds, OOD must have procedures in place that ensure proper and efficient administration of its VR program, and that enable OOD to carry out all required functions. The methods of administration must ensure accurate data collection and financial accountability (34 C.F.R. § 361.12 and 2 C.F.R. § 200.302).

As a result, OOD’s financial and accounting system fails to satisfy the following Federal requirements: • OOD’s financial management system prevents the agency from tracing funds to a level of expenditures at the transactional level necessary to establish that such funds have been used in accordance with Federal requirements, as required by 2 C.F.R. §§ 200.302, 200.303, and 200.328, including Federal reporting requirements of the RSA-17 report; and • OOD does not ensure all non-Federal and Federal obligations are assigned to a nonFederal, Federal FAIN, or other fund source—without the ability to reconcile all expenditures and make appropriate accounting adjustments to identify the source of funds used to account for all obligations and Federal expenditure transactions after the fact— resulting in an internal control deficit for accounting support documentation. OOD is unable to use OAKS accounting system data to run reports that demonstrate which expenditure transactions were paid with Federal year of appropriation or carryover year funds. OOD is unable to submit accurate financial reports (i.e., RSA-17 reports), as required by 34 C.F.R. § 361.12 and 2 C.F.R. §§ 200.302, 200.303, and 200.328. OOD has not been processing all refunds including Federal and non-Federal refunds, in accordance with Uniform Guidance and RSA requirements to credit the fund source(s) that initially paid for an expenditure. RSA must have accurate financial data submitted on RSA-17 reports, supported by accounting system documentation, to identify the total amount of Federal and non-Federal expenditures incurred under the VR program, including the level of specificity to the Federal award number (FAIN) identified on the report and from which funds were drawn down from in G5, to calculate whether VR awards qualify for carryover, in accordance with 34 C.F.R. §§ 361.60 and 361.64. Lastly, without accurate financial data reported on the RSA-17 reports, RSA also cannot be certain whether OOD has satisfied other recordkeeping and drawdown requirements set forth in 2 C.F.R. part 200. Therefore, RSA cannot be certain that financial data submitted by OOD on its RSA-17 reports for the period covered by RSA’s review in FFY 2023 are accurate because of the underlying deficiencies of OOD’s financial management and data systems. Without the reconciliation of these RSA-17 reports to adequate supporting documentation from the accounting system, RSA cannot determine, with certainty, whether the State has met its reporting requirements. 49 To the extent that OOD uses the accounting processes described above with its Supported Employment award funds, RSA would note similar concerns related to the SF-425 reports by OOD.

OOD does not maintain effective internal controls over the Federal awards necessary to provide reasonable assurances that it is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the award, as required by 34 C.F.R. §§ 361.3(a) and 361.12, and 2 C.F.R. §§ 200.302 and 200.303. OOD did not satisfy the requirements in 34 C.F.R. §§ 361.3 and 361.12, and 2 C.F.R. § 200.303 that require the VR agency to 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. Internal control deficiencies exist for developing and maintaining written policies and procedures to ensure that OOD’s administration of the VR and Supported Employment programs is aligned with VR and Uniform Guidance requirements. Specifically, the following internal controls are needed— • Rates of payment governing all purchased VR services; • Federal reporting including the RSA-17 and SF-425; and • Period of performance policies and procedures (also referenced in Finding 3.1).

Oklahoma Conclusion: RSA determined at the time of the monitoring review DRS neither established nor maintained effective internal control over its Federal award that provided reasonable assurance that the non-Federal entity was managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. As a result of the analysis, RSA determined that DRS’ internal controls did not ensure that requirements described in 34 C.F.R. §§ 361.47(a), 361.50 and 361.48(a) have been met. DRS must develop and implement internal controls that ensure the proper and efficient administration of the VR program, including those necessary to submit accurate and reliable data reports with required documentation to verify its data for the VR and Supported Employment programs. In addition, DRS must develop a system of internal controls to evaluate and monitor its performance for continuous improvement and compliance. To the extent DRS’ case management system or other data systems do not support the collection of required data, DRS must develop other data tracking processes, including manual tracking, as needed to ensure the required data are reported to RSA and that the data are accurate and reliable.

As a result of an analysis of this contract and discussion with DRS management, RSA has determined that these JOBS services, when not identified as services needed to meet the employment goal identified on a participant’s IPE but rather to meet financial needs of the individual, are not in line with the requirements for an IPE within the VR program as they are unrelated to those services needed to achieve the participant’s identified employment goal.

RSA has determined through a review of the OU contract that DRS has insufficient internal controls for contract development and monitoring. While discussed in this finding, it is further explored in Section 3: Focus Area – Financial Management of The State Vocational Rehabilitation Services and State Supported Employment Services Programs, Findings and Corrective Actions section, Finding 3.3 Internal Control Deficiencies for Policies – Vendor 30 Monitoring. DRS has insufficient administrative controls within contracts and is unable to ensure compliance with requirements under 2 C.F.R. § 200.329. DRS is responsible for oversight of the operations of the Federal award supported activities and must monitor its activities under Federal awards to assure compliance with applicable Federal requirements and performance expectations are being achieved. The OU contract contains unallowable and non-compliant costs as well as administrative type costs included as line-item expenses incurred through the performance of administrative functions. RSA considers the unallowable costs identified to be questioned costs. DRS is unable to accurately report costs associated with the required pre-employment transition services provided to students with disabilities. Therefore, RSA was unable to determine the extent to which DRS may have complied with the pre-employment transition service expenditure requirements. This represents a systemic failure of DRS management to identify and address a critical compliance requirement prior to RSA’s review. DRS has no internal controls to follow up with OU and the entities with which it maintains separate service agreements to ensure that remedies are in place for any identified deficiencies. In performing its oversight responsibilities of OU and its other grant supported activities, DRS must evaluate them to ensure they are operating in compliance with Federal requirements and that performance expectations are being achieved. By not ensuring proper internal controls are in place and performing proper oversight of the OU contract, DRS put the Federal interest at risk by having VR program funds (both Federal and non-Federal funds used for match purposes) spent on questioned costs. The number of issues identified related to the contract give rise to concerns related to contract development. Fundamental issues related to budget oversight and controls should have been identified and addressed by DRS as part of its contract review processes prior to implementation.

Based on RSA’s analysis, it has determined that DRS is not in compliance with the Federal requirements in 34 C.F.R. § 361.12, 34 C.F.R. § 76.702, and 2 C.F.R. § 200.302 to ensure non-Federal and Federal obligations and expenditures are assigned, tracked, paid, and reported from the correct Federal award. The agency did not have sufficient internal controls to ensure that – 1) A comprehensive written policy regarding period of performance has been 39 developed to outline the steps and procedures to assign, track and report obligations and expenditures in systems for all cost categories identified in EDGAR 34 C.F.R. § 76.707 to ensure they are for allowable costs under the agency’s approved State Plan during the period of performance of the award; and 2) All non-Federal and Federal obligations and expenditures are accurately assigned to specific fund sources, and tracked, paid and reported on the appropriate Federal Financial Reports for the appropriate awards. RSA is concerned that the DRS financial management system does not meet Federal requirements because the agency is not able to ensure— • Accurate fiscal data collection and financial accountability, as required by 34 C.F.R. § 361.12; • The proper disbursement of and accounting for Federal funds, as required by 34 C.F.R. § 76.702; and • Non-Federal and Federal obligations and expenditures are assigned and liquidated within the period of performance of the Federal award in accordance with the award’s terms and conditions, as required by 34 C.F.R. § 76.707 and 2 C.F.R. § 200.302. As a recipient of Federal VR program funds, DRS must have procedures in place that ensure proper and efficient administration of its VR program, and that enable DRS to carry out all required functions. The methods of administration must ensure accurate data collection and financial accountability (34 C.F.R. § 361.12 and 2 C.F.R. § 200.302).

As a result, DRS’ financial and accounting system does not satisfy the following Federal requirements: • DRS’ financial management system prevents the agency from tracing funds to a level of expenditures at the transactional level necessary to establish that such funds have been used in accordance with Federal requirements, as required by 2 C.F.R. §§ 200.302, 200.303, and 200.328, including Federal reporting requirements of the RSA-17 and SF425 reports; and • RSA must have accurate financial data submitted on RSA-17 and SF-425 reports, supported by accounting system documentation, to identify the total amount of Federal and non-Federal expenditures incurred (including the non-Federal share) under the VR and Supported Employment program, including the level of specificity to the Federal award number (FAIN) identified on the report and from which funds were drawn down from in G5, to calculate whether VR awards qualify for carryover, in accordance with 34 44 C.F.R. §§ 361.60 and 361.64. Lastly, without accurate financial data reported on the RSA-17 and SF-425 reports, RSA cannot be certain whether DRS has satisfied other recordkeeping and drawdown requirements set forth in 2 C.F.R. part 200. Therefore, RSA cannot be certain that financial data submitted by DRS on its RSA-17 and SF425 reports for the period covered by RSA’s review in FFY 2023 are accurate because of the underlying deficiencies of DRS’ financial management and data systems. Without the reconciliation of these RSA-17 reports to adequate supporting documentation from the accounting system, RSA cannot determine, with certainty, whether the State has met its reporting requirements. To the extent that DRS uses the accounting processes described above with its Supported Employment award funds, RSA notes similar concerns related to the SF-425 reports by DRS. If DRS’ data systems do not support the collection and reporting of the required data, DRS must implement alternative processes that will ensure the accurate and timely reporting of the data.

RSA’s analysis found that DRS did not have sufficient internal controls to ensure compliance with the prior approval requirements pursuant to the Uniform Guidance (2 C.F.R. § 200.407) to accurately account for all Federal and non-Federal funds spent in the VR program as it is required to do by 2 C.F.R. § 200.328.

Tennessee Conclusion: RSA determined that TNDRS is not maintaining effective internal controls over the Federal award that would provide a reasonable assurance that TNDRS is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the award in accordance with 2 C.F.R. § 200.303. Furthermore, RSA determined that TNDRS has not implemented internal controls, policies, or procedures that ensure the verification, validation, and the accurate reporting of services provided to reportable students and participants. RSA also determined that TNDRS did not submit accurate reports substantiated by required supporting documentation, as required by 34 C.F.R. § 361.40, nor ensure accuracy and verification of performance measure data collected, as required in section 116 of WIOA and the implementing joint regulations in 20 C.F.R. part 677 and 34 C.F.R. parts 361 and 463, RSA-TAC-17-01, Performance Accountability Guidance for Workforce Innovation and Opportunity Act (WIOA) Title I, Title II, Title III, and Title IV Core Programs (issued August 17, 2017), and RSA-911 MSG Reporting FAQs (issued August 2020). As a result of the reporting deficiencies noted above, RSA was unable to verify the accuracy of the funds TNDRS reported spending on preemployment transition services. TNDRS has had approximately nine years since the implementation of the pre-employment transition services requirement to ensure accurate reporting of data. During those years, RSA provided significant technical assistance and guidance to VR agencies to ensure the accurate collection and submission of required data. The agency’s inability to self-identify and correct these issues in a timely manner represents a system weakness and a management concern.

Based on the information and documentation provided during the monitoring process, RSA concludes that TNDRS failed to satisfy Federal requirements governing TPCAs in four different ways pursuant to 34 C.F.R. § 361.28. TNDRS must revise the written TPCA agreements and seek a waiver of statewideness to ensure the agency satisfies all Federal requirements governing TPCAs. In addition to the revisions that must be made to ensure compliance, TNDRS should make other revisions to the TPCA agreements as described above to ensure accuracy.

Texas Conclusion: VRD does not maintain effective internal controls over the Federal awards necessary to provide reasonable assurances that it is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the award, as required by the statute and regulations cited in the “Requirements” section of this finding. Specifically, VRD does not have sufficient written policies, procedures and internal controls to support compliance with rules pertaining to period of performance and financial reporting.

Puerto Rico Conclusion: RSA determined that VRA is not maintaining effective internal controls over the Federal award that would provide a reasonable assurance that VRA is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the award in accordance with 2 C.F.R. § 200.303. Furthermore, RSA determined that VRA has not implemented internal controls, policies, or procedures that ensure the verification, validation, and the accurate reporting of services provided to reportable students and participants. As such, RSA was unable to verify that VRA is submitting reports in a manner that provides a complete count of individuals in receipt of services, including students with disabilities in receipt of pre-employment transition services, as required by Sections 13, 14, and 101(a)(10) of the Rehabilitation Act, and 34 C.F.R. § 361.40(a). VRA must comply with all requirements necessary to ensure the accuracy and verification of its reports.

VRA does not maintain effective internal controls over the Federal awards necessary to provide reasonable assurances that it is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the award, as required. Specifically, VRA does not have sufficient written policies, procedures, and internal controls by accurately tracking and reporting pre-employment transition services.

Based on the information provided and documentation reviewed, RSA concludes that VRA is non-compliant with the requirements to take prompt action to close audit findings (2 C.F.R. §§ 200.508(c) and 511(a)). In addition, RSA concurs with the auditor’s conclusions on findings 2018-004 and 2018-005. RSA notes that although auditors relied upon, in part, outdated regulations (34 C.F.R. § 361.88 (c)) in finding 2018-005, it still supports this finding.

Based on the information provided and documentation reviewed, RSA concludes that VRA is non-compliant with the requirements to take prompt action to close audit findings (2 C.F.R. §§ 200.508(c) and 511(a)). In addition, RSA concurs with the auditor’s conclusions on findings 2018-004 and 2018-005. RSA notes that although auditors relied upon, in part, outdated regulations (34 C.F.R. § 361.88 (c)) in finding 2018-005, it still supports this finding.

RSA determined that VRA is not maintaining effective internal controls over the Federal award that would provide a reasonable assurance that VRA is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the award, thereby, ensuring contract costs are reasonable, necessary, and allowable, and that contracts contain the required Federal clauses.