Fy 2021 Single Audit Report PDF

Document type: Opinion
Date: 2021-06-30
Full text

State of
 Mississippi
Single Audit for Year Ending June 30, 2021
Mississippi Office of the State Auditor
Shad White

POST OFFICE BOX 956 • JACKSON, MISSISSIPPI 39205 • (601) 576-2800 • FAX (601) 576-2650
i
November 11, 2022
The Governor, Members of the Legislature
and Citizens of the State of Mississippi
I am pleased to finally submit the Single Audit Report of the State of Mississippi for the fiscal year ended June
20, 2021.  Our audit was conducted in accordance with the requirements of the Single Audit Act Amendments
of 1996, the provisions of the Office of Management and Budget (OMB) Uniform Administrative Requirements,
Cost Principles, and Audit Requirements for Federal Awards (contained in Title 2 of the U.S. Code of Federal
Regulations Part 200), and the State of Mississippi's audit requirements.
The Single Audit process requires the coordination and cooperation of many state government entities.  We are
particularly grateful for the efforts of the Mississippi Department of Finance and Administration in compiling
data.
While I am pleased to report that, for the thirty-third consecutive year, DFA was awarded the Government
Finance Officers Association of the United States and Canada’s Certificate of Achievement for Excellence in
Financial Reporting, it is important to note that this award is bestowed on DFA for its adherence to standards
when compiling the report, and does not consider the actual financial condition of the state.
Additionally, it is important to note that my office issued an unmodified opinion on those financials, but that in
order to do so, multiple significant adjustments to the financial reports submitted by state agencies were required.
I would encourage you to review the audit findings issued by my office and other independent CPA firms.  These
audit findings are a vital part of our report as they acknowledge weaknesses existing in our state agencies that
should be addressed by management and those charged with governance.
Mississippi’s Annual Comprehensive Financial Report for fiscal year 2021 and our report thereon, dated April
8, 2022, has been issued under separate cover and is available electronically at http://www.dfa.state.ms.us/ or by
writing to the address below:
Mississippi Department of Finance and Administration
Attention:  Bureau of Financial Reporting
P. O. Box 267
Jackson, MS 39205
Respectfully submitted,
SHAD WHITE
State Auditor
STATE OF MISSISSIPPI
OFFICE OF THE STATE AUDITOR
SHAD WHITE
AUDITOR
p
y
,
SHAD WHITE

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iii
STATE OF MISSISSIPPI
Fiscal Year 2021
All Other
2%
Emergency Management
1%
Employment Security
17%
Finance and
Administration
12%
Health
2%
Human Services
12%
Medicaid
40%
Military Department
1%
Dept Rehabilitation
Services
1%
Transportation
5%
Education
7%
Expenditures of Federal Awards
by State Grantee Agency
DEPARTMENT OF
HOMELAND SECURITY
3%
U.S. DEPARTMENT OF
HEALTH AND HUMAN
SERVICES
44%
ALL OTHER
2%
U.S. DEPARTMENT OF
AGRICULTURE
13%
U.S.
DEPARTMENT
OF DEFENSE
1%
U.S. DEPARTMENT OF
EDUCATION
5%
U.S. DEPARTMENT OF
LABOR
15%
U.S. DEPARTMENT OF
TREASURY
12%
U.S. DEPARTMENT OF
TRANSPORTATION
5%
Expenditure of Federal Awards
by Federal Department

iv
STATE OF MISSISSIPPI
Fiscal Year 2021
Major Programs,
$11,566,843,875 , 94%
Other Programs,
$793,670,475 , 6%
Percentage of Major Program Assistance, by Dollars
Total Expenditures of Federal Awards $10,116,962,851
Major Programs
11%
Other Programs
89%
Percentage of Major Program Assistance, by Program
330 Programs

v
0
2
4
6
8
10
12
14
2017
2018
2019
2020
2021
Billions of Dollars
Total Federal Financial Assistance
Last 5 Fiscal Years
STATE OF MISSISSIPPI
Fiscal Year 2021

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vii
STATE OF MISSISSIPPI
SINGLE AUDIT REPORT
For the Year Ended June 30, 2021
TABLE OF CONTENTS
Page
I.
AUDIT REPORTING:
Independent Auditor’s Report on Internal Control over Financial Reporting
and on Compliance and Other Matters Based on an Audit of
Financial Statements Performed in Accordance with
Government Auditing Standards .............................................................
  1
Independent Auditor’s Report on Compliance for Each Major Federal Program;
Report on Internal Control over Compliance; and Report on Schedule
of Expenditures of Federal Awards Required by OMB Circular A-133 .
  5
Schedule of Expenditures of Federal Awards
by Federal Department .................................................................
1
Schedule of Expenditures of Federal Awards
by State Grantee Agency ..............................................................
2
Notes to the Schedule of Expenditures
of Federal Awards ........................................................................

Schedule of Findings and Questioned Costs:
Part 1 - Summary of Auditor’s Results ...................................................

Part 2 - Financial Statement Findings .....................................................
5
Part 3 - Federal Award Findings and Questioned Costs..........................

II.
SUMMARY SCHEDULE OF PRIOR FEDERAL AUDIT FINDINGS:
Instructions to Management ..........................................................................
211
Index Listed by Finding Number ..................................................................
213

viii
STATE OF MISSISSIPPI
Table of Contents (concluded)
Page
Summary Schedules of Prior Federal Audit Findings
(Categorized by State Grantee Agency)  .................................................
215
III.
MANAGEMENT RESPONSES AND CORRECTIVE ACTION PLANS:
Instructions to Management  .........................................................................
239
Management Responses and Corrective Action Plans
(Categorized by State Grantee Agency)  .................................................
241
IV.
INDICES:
Index of Financial Statement Findings and Responses
Financial Statement Findings and Recommendations  ……………….
343
Management Reponses and Corrective Action Plans   ……………….
343
Index of Federal Award Findings and Questioned Costs
Listed by Federal Department .................................................................
34
Index of Federal Award Findings and Questioned Costs
Listed by State Grantee Agency ..............................................................
34
Index of Federal Award Findings and Questioned Costs
Listed by Finding Number ......................................................................
34
Index of Management Responses to Federal Award Findings and Corrective Action Plans
Listed by State Grantee Agency ..............................................................
35
V.
ACKNOWLEDGMENTS ..........................................................................
35

I. AUDIT REPORTING

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INDEPENDENT AUDITOR’S REPORT ON
INTERNAL CONTROL OVER FINANCIAL REPORTING
AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF
FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE
WITH GOVERNMENT AUDITING STANDARDS
The Governor, Members of the Legislature and Citizens of the State of Mississippi
We have audited, in accordance with the auditing standards generally accepted in the United States of America
and the standards applicable to financial audits contained in Government Auditing Standards issued by the
Comptroller General of the United States, the financial statements of the governmental activities, the business-
type activities, the aggregate discretely presented component units, each major fund and the aggregate remaining
fund information of the State of Mississippi (the State), as of and for the year ended June 30, 2021, and the
related notes to the financial statements which collectively comprise the State’s basic financial statements, and
have issued our report thereon dated April 8, 2022.  Our report includes a reference to other auditors who audited
the financial statements of the following, as described in our report on the State of Mississippi’s financial
statements:

Government-wide Financial Statements

Governmental Activities
-
the Department of Environmental Quality Clean Water State Revolving Loan Fund, the
Department of Health Local Governments and Rural Water Systems Improvements
Revolving Loan Fund, the State Agencies Self-Insured Workers’ Compensation Trust
Fund, Department of Public Safety, Mississippi Development Authority, Department of
Health, Department of Corrections, Mississippi State Hospital, Administrative Office of
the Courts – Supreme Court, Boswell Regional Center, Department of Mental Health and
selected funds at the Community College Board, Department of Marine Resources, and the
Department of Transportation which, in the aggregate, represent 11 percent, 15 percent,
and 13 percent, respectively, of the assets, net position, and revenues of the governmental
activities;

Business-type Activities
-
AbilityWorks, Inc. within the Department of Rehabilitation Services, the Port Authority at
Gulfport, the Mississippi Prepaid Affordable College Tuition Program, the Veterans’
Home Purchase Board, and the Department of Finance and Administration State Life and
Health Plan which, in the aggregate, represent 63 percent, 63 percent, and 26 percent,
respectively, of the assets, net position, and revenues of the business-type activities;
STATE OF MISSISSIPPI
OFFICE OF THE STATE AUDITOR
SHAD WHITE
AUDITOR
1

Component Units
-
the Universities and the nonmajor component units.

Fund Financial Statements

Governmental Funds
-
the Department of Environmental Quality Clean Water State Revolving Loan Fund, the
Department of Health Local Governments and Rural Water Systems Improvements
Revolving Loan Fund, the State Agencies Self-Insured Workers’ Compensation Trust
Fund, Department of Public Safety, Mississippi Development Authority, Department of
Health, Department of Corrections, Mississippi State Hospital, Administrative Office of
the Courts – Supreme Court, Boswell Regional Center, Department of Mental Health and
selected funds at the Community College Board, Department of Marine Resources, and the
Department of Transportation, which, in the aggregate, represent 29 percent, 33 percent,
and 12 percent, respectively, of the assets, fund balance, and revenues of the governmental
activities;

Proprietary Funds
-
the Port Authority at Gulfport, the Mississippi Prepaid Affordable College Tuition
Program, and the Department of Finance and Administration State Life and Health Plan
which are considered major enterprise funds which, in the aggregate, represent 51 percent,
48 percent, and 28 percent, respectively, of the assets, fund balance, and revenues of the
proprietary funds;

Aggregate Remaining Funds
-
Nonmajor enterprise funds for AbilityWorks, Inc. within the Department of Rehabilitation
Services and the Veterans’ Home Purchase Board;
-
Other Employee Benefits Trust Fund – State Life and Health Insurance Plan;
-
the Pension Trust Funds;
-
the Private-Purpose Trust Funds of the Mississippi Affordable College Savings Program;
all of which represent 99 percent, 100 percent, and 100 percent, respectively, of the assets, net
position, and revenues of the aggregate remaining funds.
Except for the major component unit Universities, this report includes our consideration of the results of the
other auditors’ testing of internal control over financial reporting and compliance and other matters that are
reported on separately by those auditors.  However, this report, insofar as it relates to the results of the other
auditors, is based solely on the reports of the other auditors.  This report does not include the results of the other
auditor’s testing of internal control over financial reporting and compliance and other matters for the major
component unit Universities that are reported on separately by those auditors.
The financial statements of the Mississippi State University Foundation, Inc., the University of Mississippi
Foundation, the University of Southern Mississippi Foundation, the University of Mississippi Medical Center
Educational Building Corporation, the University of Mississippi Medical Center Tort Claims Fund, the State
Institutions of Higher Learning Self-Insured Workers’ Compensation Fund and the State Institutions of Higher
Learning Tort Liability Fund,  which were audited by other auditors upon whose reports we are relying, were
2

not audited in accordance with Government Auditing Standards, and accordingly this report does not include
reporting on internal control over financial reporting compliance and other matters associated with these funds
or entities.
Internal Control over Financial Reporting
In planning and performing our audit of the financial statements, we and other auditors considered the State of
Mississippi’s internal control over financial reporting (internal control) as a basis for designing the audit
procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial
statements, but not for the purpose of expressing an opinion on the effectiveness of the State of Mississippi’s
internal control.  Accordingly, we do not express an opinion on the effectiveness of the State of Mississippi’s
internal control.
Our and the other auditors’ consideration of internal control was for the limited purpose described in the
preceding paragraph and was not designed to identify all deficiencies in internal control that might be material
weaknesses or significant deficiencies and therefore, material weaknesses or significant deficiencies may exist
that have not been identified.  However, as described in the accompanying “Schedule of Findings and Questioned
Costs: Part 2 – Financial Statement Findings”, we and other auditors did identify certain deficiencies in internal
control that we consider to be material weaknesses.
A deficiency in internal control exists when the design or operation of a control does not allow management or
employees, in the normal course of performing their assigned functions, to prevent, or detect and correct,
misstatements on a timely basis.  A material weakness is a deficiency, or a combin1ation of deficiencies, in
internal control such that there is a reasonable possibility that a material misstatement of the entity’s financial
statements will not be prevented, or detected and corrected on a timely basis.  We consider the deficiencies
described in the accompanying “Schedule of Findings and Questioned Costs: Part 2 – Financial Statement
Findings” as items 2021-001, 2021-002, 2021-003, 2021-004, 2021-005, 2021-006, 2021-007, 2021-008, 2021-
009, 2021-016, 2021-017, and 2021-018 to be material weaknesses.
A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe
than a material weakness, yet important enough to merit attention by those charged with governance.  No
significant deficiencies were noted.
We and the other auditors also noted certain matters involving the internal control over financial reporting, which
we have reported to management of the applicable state agencies and institutions of the State of Mississippi in
separate communications.
Compliance and Other Matters
As part of obtaining reasonable assurance about whether the State of Mississippi’s financial statements are free
from material misstatement, we and other auditors performed tests of its compliance with certain provisions of
laws, regulations, contracts and grant agreements, noncompliance with which could have a direct and material
effect on the financial statements.  However, providing an opinion on compliance with those provisions was not
an objective of our audit, and accordingly, we do not express such an opinion.
We and the other auditors also noted certain matters which we have reported to management of the State of
Mississippi in separate communications.
Management’s Response to Finding
Management’s response to the findings identified in our audit is described in the accompanying “Management’s
Response and Corrective Action Plan” section.  Management’s response was not subjected to the auditing
procedures applied in the audit of the financial statements and, accordingly, we express no opinion on it.
3

Purpose of this Report
The purpose of this report is solely to describe the scope of our testing of internal control and compliance and
the results of that testing, and not to provide an opinion on the effectiveness of the State of Mississippi’s internal
control or on compliance.  This report is an integral part of an audit performed in accordance with Government
Auditing Standards in considering the entity’s internal control and compliance.  Accordingly, this
communication is not suitable for any other purpose.  However, this report is a matter of public record and its
distribution is not limited.
Stephanie C. Palmertree, CPA, CGMA
Director, Financial and Compliance
Audit Division
Jackson, Mississippi
April 8, 2022
4

POST OFFICE BOX 956 . JACKSON, MISSISSIPPI 39205 . (601)576-2800 . Fax (601) 576-2650
INDEPENDENT AUDITOR’S REPORT ON COMPLIANCE FOR EACH MAJOR FEDERAL
PROGRAM; REPORT ON INTERNAL CONTROL OVER COMPLIANCE; AND REPORT ON
SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS REQUIRED BY UNIFORM
GUIDANCE
The Governor, Members of the Legislature
and Citizens of the State of Mississippi
Report on Compliance for Each Major Federal Program
We and other auditors have audited the State of Mississippi’s (the State) compliance with the types of
compliance requirements described in the OMB Compliance Supplement that could have a direct and
material effect on each of the State’s major federal programs except for the Veterans State Nursing Home
Care Program for the year ended June 30, 2021; and we were engaged to audit the State’s compliance with
the type of compliance requirements described in the OMB Compliance Supplement that could have a direct
and material effect on the Veterans State Nursing Home Care Program for the year ended June 30, 2021.
The State of Mississippi’s major federal programs are identified in the Summary of Auditor’s Results
section of the accompanying Schedule of Findings and Questioned Costs.
The State of Mississippi’s basic financial statements include the operations of the State’s public universities,
as a major component unit within the discretely presented component units, which expended
$1,223,604,258 in federal awards which is not included in the State’s schedule of federal awards during the
year ended June 30, 2021.  Our audit, described below, did not include the operations of the public
universities because the universities component unit engaged other auditors to perform an audit in
accordance with the provisions of Uniform Guidance.
Management’s Responsibility
Management is responsible for compliance with federal statutes, regulations, and the terms and conditions
of its federal awards applicable to its federal programs.
Auditor’s Responsibility
Our responsibility is to express an opinion on compliance for each of the State’s major federal programs
based on our audit of the types of compliance requirements referred to above. We did not audit the
compliance of the following major programs:  National Guard Military Operations and Maintenance,
Community Development Block Grant, Immunization Cooperative Agreements, Epidemiology and
Laboratory Capacity for Infectious Disease, and Social Security Disability Insurance Cluster, which in total
represent 3.2% of the federal expenditures.  Those programs were audited by other auditors whose reports
have been furnished to us, and our opinions are based solely on the report of the other auditors.  This report
includes our consideration of the results of the other auditors’ testing of compliance and internal control
STATE OF MISSISSIPPI
OFFICE OF THE STATE AUDITOR
SHAD WHITE
AUDITOR
5

Independent Auditor’s Report on Compliance For Each Major Federal Program;
Report on Internal Control Over Compliance; and Report on Schedule of
Expenditures of Federal Awards Required by Uniform Guidance
over compliance that are reported on separately by those other auditors.  However, this report, insofar as it
relates to the results of the other auditors, is based solely on the reports of the other auditors.
Except as discussed in the following paragraph, we conducted our audits of compliance in accordance with
auditing standards generally accepted in the United States of America; the standards applicable to financial
audits contained in Government Auditing Standards, issued by the Comptroller General of the United
States; and the audit requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform
Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform
Guidance). Those standards and the Uniform Guidance require that we plan and perform the audit to obtain
reasonable assurance about whether noncompliance with the types of compliance requirements referred to
above that could have a direct and material effect on a major federal program occurred.  An audit includes
examining, on a test basis, evidence about the State of Mississippi’s compliance with those requirements
and performing such other procedures as we considered necessary in the circumstances.  We believe that
our audit provides a reasonable basis for our adverse, qualified, and unmodified opinions on compliance
for the major federal programs. However, our audit, and the audits of other auditors, do not provide a legal
determination of the State of Mississippi’s compliance.
The scope of this audit did not include testing transactions and records from the major federal programs of
the public universities of Mississippi.  The audit of those federal programs was conducted in accordance
with the provisions of Uniform Guidance, and a separate report was issued.
Summary of Opinions
ALN(s)
Major Program Name
Type of
Opinion
10.542
Pandemic EBT Cards
Qualified
10.557
Supplemental Nutrition Assistance Program (SNAP) for
Women, Infants and Children (WIC)
Unmodified
10.558
Child and Adult Care Program
Qualified
10.551, 10.561
Supplemental Nutrition Assistance Program (SNAP)
Qualified
10.553, 10.555, 10.556, 10.559
Child Nutrition Cluster
Unmodified
12.401
National Guard Military Operations and Maintenance
Unmodified
14.228
Community Development Block Grant
Unmodified
17.225
Unemployment Insurance
Adverse
21.019
Coronavirus Relief Fund
Adverse
21.023
Emergency Rental Assistance Program
Qualified
20.205, 20.219, 20.224
Highway Planning and Construction Cluster
Qualified
64.015
Veterans State Nursing Home Care
Disclaimer
84.010
Title I Grants to Local Educational Agencies
Qualified
84.027, 84.173
Special Education Cluster (IDEA)
Qualified
84.425C, 84.425D, 84.425R
Education Stabilization Fund
Qualified
93.268
Immunization Cooperative Agreements
Unmodified
93.323
Epidemiology and Laboratory Capacity for Infectious
Disease
Unmodified
93.568
Low-Income Home Energy Assistance Program
Qualified
93.767
Children’s Health Insurance Program (CHIP)
Qualified
93.558
Temporary Assistance for Needy Families (TANF)
Qualified
93.575, 93.596
Child Care Development Fund (CCDF) Cluster
Qualified
93.775, 93.777, 93.778
Medicaid Cluster
Qualified
97.050
Presidential Declared Disaster Assistance to Individuals
and Households – Other Needs
Qualified
6

Independent Auditor’s Report on Compliance For Each Major Federal Program;
Report on Internal Control Over Compliance; and Report on Schedule of
Expenditures of Federal Awards Required by Uniform Guidance
96.001
Social Security Disability Insurance Cluster
Unmodified
93.667
Social Services Block Grant
Qualified
Basis for Disclaimer of Opinion on the Veterans State Nursing Home Care Program
As described in the accompanying schedule of findings and questioned costs, we were unable to obtain
audit evidence supporting the State of Mississippi’s compliance with the Reporting compliance
requirements applicable to the Veterans State Nursing Home Care Program as described in Finding 2021-
051. As a result of this matter, we were unable to determine whether the State of Mississippi complied with
requirements applicable to the Veterans State Nursing Home Care Program.
Disclaimer of Opinion on the Veterans State Nursing Home Care Program
We do not express an opinion on the State of Mississippi’s compliance with the types of compliance
requirements identified as subject to audit in the OMB Compliance Supplement that could have a direct and
material effect on the Veterans State Nursing Home Care Program.  Because of the significance of the
matter discussed in the Basis for Disclaimer of Opinion on the Veterans State Nursing Home Care Program,
we have not been able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion
on compliance with the types of compliance requirements described in the OMB Compliance Supplement
that could have a direct and material effect on the Veterans State Nursing Home Care Program.
Basis for Adverse Opinion On the Coronavirus Relief Fund (CRF) and Unemployment Insurance
Program
As described in the accompanying “Schedule of Findings and Questioned Costs: Part 3 – Federal Award
Findings and Questioned Costs,” the State of Mississippi did not comply with requirements regarding the
following:
Finding #
ALN
Program/Cluster Name
Compliance Requirement
2021-015
17.225
Unemployment Insurance
Eligibility
2021-022
17.225
Unemployment Insurance
Matching, Level of Effort, Earmarking
2021-023
17.225
Unemployment Insurance
Period of Availability of Federal Funds
2021-024
17.225
Unemployment Insurance
Special Tests and Provisions
2021-025
17.225
Unemployment Insurance
Special Tests and Provisions
2021-026
17.225
Unemployment Insurance
Reporting
2021-027
17.225
Unemployment Insurance
Special Tests and Provisions
2021-029
17.225
Unemployment Insurance
Reporting
2021-043
21.019
Coronavirus Relief Fund
Activities Allowed and Allowable Costs
2021-044
21.019
Coronavirus Relief Fund
Activities Allowed and Allowable Costs
2021-045
21.019
Coronavirus Relief Fund
Subrecipient Monitoring
2021-046
21.019
Coronavirus Relief Fund
Activities Allowed and Allowable Costs
2021-047
21.019
Coronavirus Relief Fund
Subrecipient Monitoring
2021-048
21.019
Coronavirus Relief Fund
Subrecipient Monitoring
2021-049
21.019
Coronavirus Relief Fund
Subrecipient Monitoring
2021-050
21.019
Coronavirus Relief Fund
Activities Allowed and Allowable Costs
2021-052
21.019
Coronavirus Relief Fund
Reporting
Compliance with such requirements is necessary, in our opinion, for the State to comply with the
requirements applicable to that program.
Adverse Opinion on Coronavirus Relief Fund (CRF) and Unemployment Insurance Program
In our opinion, because of the significance of the matters discussed in the Basis for Adverse Opinion
paragraph, the State of Mississippi did not comply, in all material respects, with the types of compliance
7

Independent Auditor’s Report on Compliance For Each Major Federal Program;
Report on Internal Control Over Compliance; and Report on Schedule of
Expenditures of Federal Awards Required by Uniform Guidance
requirements referred to above that could have a direct and material effect on the Coronavirus Relief Fund
and Unemployment Insurance Program for the year ended June 30, 2021.
Basis for Qualified Opinion on the Pandemic EBT Cards Program, Child and Adult Care Program,
Supplemental Nutrition Assistance Program (SNAP), Emergency Rental Assistance Program,
Highway Planning and Construction Cluster, Title I Grants to Local Educational Agencies Program,
Special Education Cluster (IDEA), Education Stabilization Fund, Low-Income Home Energy
Assistance Program, Children’s Health Insurance Program (CHIP), Temporary Assistance for
Needy Families (TANF) Program, Child Care Development Fund (CCDF) Cluster, Medicaid Cluster,
Presidential Declared Disaster Assistance to Individuals and Households – Other Needs, and Social
Services Block Grant
As described in the accompanying “Schedule of Findings and Questioned Costs: Part 3 – Federal Award
Findings and Questioned Costs,” the State of Mississippi did not comply with requirements regarding the
following:
Finding #
ALN
Program/Cluster Name
Compliance
Requirement
2021-010
93.558, 93.568,
93.667
Temporary Assistance for Needy Families
(TANF),
Low-Income
Home
Energy
Assistance
(LIHEAP), Social Services
Block Grant
Reporting
2021-011
10.542
Pandemic EBT Cards
Reporting
2021-012
93.667
Social Services Block Grant
Reporting
2021-013
10.551, 93.558,
93.667, 93.575,
93.596, 93.568
Supplemental
Nutrition
Assistance
Program;  Temporary Assistance for Needy
Families (TANF), Social Services Block
Grant, Child Care Development Fund
(CCDF) Cluster, Low-Income Home Energy
Assistance Program
Subrecipient Monitoring
2021-014
10.551, 93.558,
93.667, 93.575,
93.596, 93.568
Supplemental
Nutrition
Assistance
Program;  Temporary Assistance for Needy
Families (TANF), Social Services Block
Grant, Child Care Development Fund
(CCDF) Cluster, Low-Income Home Energy
Assistance Program
Subrecipient Monitoring
2021-019
20.205
Highway Planning and Construction Cluster
Subrecipient Monitoring
2021-020
20.205
Highway Planning and Construction Cluster
Subrecipient Monitoring
2021-021
20.205
Highway Planning and Construction Cluster
Special
Tests
and
Provisions
2021-028
97.050
Presidential Declared Disaster Assistance to
Individuals and Households – Other Needs
Reporting
2021-029
97.050
Presidential Declared Disaster Assistance to
Individuals and Households – Other Needs
Reporting
2021-030
21.023
Emergency Rental Assistance Program
Reporting
2021-031
21.023
Emergency Rental Assistance Program
Reporting
2021-032
21.023
Emergency Rental Assistance Program
Monitoring
2021-034
10.558
Child and Adult Care Program
Activities Allowed and
Allowable Costs
2021-035
84.010,
84.425D
Title I Grants to Local Educational
Agencies, Education Stabilization Fund
Reporting
2021-036
84.010
Title I Grants to Local Educational Agencies
Monitoring
8

Independent Auditor’s Report on Compliance For Each Major Federal Program;
Report on Internal Control Over Compliance; and Report on Schedule of
Expenditures of Federal Awards Required by Uniform Guidance
2021-037
84.027, 84.173
Special Education Cluster (IDEA)
Monitoring
2021-038
84.010
Title I Grants to Local Educational Agencies
Special
Tests
and
Provisions
2021-039
93.767
Children’s
Health
Insurance
Program
(CHIP)
Activities Allowed and
Allowable Costs
2021-040
93.778
Medicaid Cluster
Activities Allowed and
Allowable Costs
2021-041
93.767, 93.778
Children’s
Health
Insurance
Program
(CHIP), Medicaid Cluster
Eligibility
2021-042
93.767
Children’s
Health
Insurance
Program
(CHIP)
Special
Tests
and
Provisions
2021-044
84.425D
Education Stabilization Fund
Activities Allowed and
Allowable Costs
Compliance with such requirements is necessary, in our opinion, for the State of Mississippi to comply with
the requirements applicable to those programs.
Qualified Opinion on the Pandemic EBT Cards Program, Child and Adult Care Program,
Supplemental Nutrition Assistance Program (SNAP), Emergency Rental Assistance Program,
Highway Planning and Construction Cluster, Title I Grants to Local Educational Agencies Program,
Special Education Cluster (IDEA), Education Stabilization Fund, Low-Income Home Energy
Assistance Program, Children’s Health Insurance Program (CHIP), Temporary Assistance for
Needy Families (TANF) Program, Child Care Development Fund (CCDF) Cluster, Medicaid Cluster,
Presidential Declared Disaster Assistance to Individuals and Households – Other Needs, and Social
Services Block Grant.
In our opinion, except for the noncompliance described in the Basis for Qualified Opinion paragraph, the
State of Mississippi complied, in all material respects, with the types of compliance requirements referred
to above that could have a direct and material effect on the Pandemic EBT Cards Program, Child and Adult
Care Program, Supplemental Nutrition Assistance Program (SNAP), Emergency Rental Assistance
Program, Highway Planning and Construction Cluster, Title I Grants to Local Educational Agencies
Program, Special Education Cluster (IDEA), Education Stabilization Fund, Low-Income Home Energy
Assistance Program, Children’s Health Insurance Program (CHIP), Temporary Assistance for Needy
Families (TANF) Program, Child Care Development Fund (CCDF) Cluster, Medicaid Cluster, Presidential
Declared Disaster Assistance to Individuals and Households – Other Needs, and Social Services Block
Grant for the year ended June 30, 2021.
Unmodified Opinion on Each of the Other Major Federal Programs
In our opinion, based on our audit and the reports of other auditors, the State complied, in all material
respects, with the types of compliance requirements referred to above that could have a direct and material
effect on each of its other major federal programs identified in the Summary of Auditor’s Results section
of the accompanying Schedule of Findings and Questioned Costs for the year ended June 30, 2021. We
did not test the transactions and records of the major federal programs administered by the state’s public
universities for compliance with any requirements referred to above to determine the effects of such
noncompliance, if any.
Other Matters
The results of our auditing procedures disclosed one other instance of noncompliance, which is required to
be reported in accordance with the Uniform Guidance and which is described in the accompanying
9

Independent Auditor’s Report on Compliance For Each Major Federal Program;
Report on Internal Control Over Compliance; and Report on Schedule of
Expenditures of Federal Awards Required by Uniform Guidance
“Schedule of Findings and Questioned Costs:  Part 3 - Federal Award Findings and Questioned Costs” as
item 2021-033. Our opinion on each major federal program is not modified with respect to this matter.
The responses by state agencies to the noncompliance findings identified in our audit, and the audits of
other auditors, are described in the accompanying “Section III – Management Responses and Corrective
Action Plans.”  Management’s responses were not subjected to the auditing procedures applied in the audit
of compliance and, accordingly, we express no opinion on the responses.
We also noted other immaterial instances of noncompliance which have been reported to management of
the State of Mississippi in separate communications.
Report on Internal Control Over Compliance
The management of the State of Mississippi is responsible for establishing and maintaining effective
internal control over compliance with the types of compliance requirements referred to above.
In planning and performing our audit of compliance, we considered the State’s internal control over
compliance with the types of requirements that could have a direct and material effect on each major federal
program to determine the auditing procedures that are appropriate in the circumstances for the purpose of
expressing an opinion on compliance for each major federal program and to test and report on internal
control over compliance in accordance with the Uniform Guidance, but not for the purpose of expressing
an opinion on the effectiveness of internal control over compliance.  Accordingly, we do not express an
opinion on the effectiveness of the State’s internal control over compliance.  We excluded the federal
programs of the State’s public universities, as discussed in the second paragraph of this report.
Our consideration of internal control over compliance was for the limited purpose described in the
preceding paragraph and was not designed to identify all deficiencies in internal control over compliance
that might be material weaknesses or significant deficiencies and therefore, material weaknesses or
significant deficiencies may exist have not been identified.  However, as discussed below, we did identify
certain deficiencies in internal control over compliance that we consider to be material weaknesses and
significant deficiencies.
A deficiency in internal control over compliance exists when the design or operation of a control over
compliance does not allow management or employees, in the normal course of performing their assigned
functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a
federal program on a timely basis.  A material weakness in internal control over compliance is a deficiency,
or a combination of deficiencies, in internal control over compliance, such that there is a reasonable
possibility that material noncompliance with a type of compliance requirement of a federal program will
not be prevented, or detected and corrected, on a timely basis.  We and the other auditors consider the
deficiencies in internal control over compliance described in the accompanying “Schedule of Findings and
Questioned Costs:  Part 3 - Federal Award Findings and Questioned Costs” as items 2021-010, 2021-011,
2021-013, 2021-014, 2021-015, 2021-019, 2021-020, 2021-022, 2021-023, 2021-024, 2021-025, 2021-026,
2021-027, 2021-028, 2021-029, 2021-030, 2021-031, 2021-032, 2021-034, 2021-035, 2021-036, 2021-037,
2021-039, 2021-041, 2021-042, 2021-043, 2021-044, 2021-045, 2021-046, 2021-047, 2021-048, 2021-049,
2021-050, 2021-051 and 2021-052 to be material weaknesses.
A significant deficiency in internal control over compliance is a deficiency, or a combination of
deficiencies, in internal control over compliance with a type of compliance requirement of a federal program
that is less severe than a material weakness in internal control over compliance, yet important enough to
merit attention by those charged with governance. We consider the deficiencies in internal control over
compliance described in the accompanying “Schedule of Findings and Questioned Costs:  Part 3 – Federal
10

Independent Auditor’s Report on Compliance For Each Major Federal Program;
Report on Internal Control Over Compliance; and Report on Schedule of
Expenditures of Federal Awards Required by Uniform Guidance
Award Findings and Questioned Costs” as items 2021-012, 2021-2021, 2021-033, 2021-038, and 2021-040
to be significant deficiencies.
The responses by state agencies to the internal control over compliance findings identified in our audit are
described in the accompanying “Section III – Management Responses and Corrective Action Plans.”
Management’s responses were not subjected to the auditing procedures applied in the audit of compliance
and, accordingly, we express no opinion on the responses.
We also noted other matters involving internal control over compliance and its operation, which have been
reported to management of the State of Mississippi in separate communications.
The purpose of this report on internal control over compliance is solely to describe the scope of our testing
of internal control over compliance and the results of that testing based on the requirements of the Uniform
Guidance.  Accordingly, this report is not suitable for any other purpose.  However, this report is matter of
public record and its distribution is not limited.
Report on Schedule of Expenditures of Federal Awards Required by Uniform Guidance
We have audited the financial statements of the governmental activities, the business-type activities, the
aggregate discretely presented component units, each major fund, and the aggregate remaining fund
information of the State of Mississippi as of and for the year ended June 30, 2021, and the related notes to
the financial statements, which collectively comprise the State of Mississippi’s basic financial statements.
We issued our report thereon dated April 8, 2022 which contained unmodified opinions on those financial
statements.  We did not audit the financial statements of:

Government-wide Financial Statements
x
Governmental Activities
-
the Department of Environmental Quality Clean Water State Revolving Loan Fund,
the Department of Health Local Governments and Rural Water Systems Improvements
Revolving Loan Fund, the State Agencies Self-Insured Workers’ Compensation Trust
Fund, Department of Public Safety, Mississippi Development Authority, Department
of Health, Department of Corrections, Mississippi State Hospital, Administrative
Office of the Courts – Supreme Court, Boswell Regional Center, Department of Mental
Health and selected funds at the Community College Board, Department of Marine
Resources, and the Department of Transportation which, in the aggregate, represent 11
percent, 15 percent, and 13 percent, respectively, of the assets, net position, and
revenues of the governmental activities;
x Business-type Activities
-
AbilityWorks, Inc. within the Department of Rehabilitation Services, the Port
Authority at Gulfport, the Mississippi Prepaid Affordable College Tuition Program,
the Veterans’ Home Purchase Board, and the Department of Finance and
Administration State Life and Health Plan which, in the aggregate, represent 63
percent, 63 percent, and 26 percent, respectively, of the assets, net position, and
revenues of the business-type activities;
11

Independent Auditor’s Report on Compliance For Each Major Federal Program;
Report on Internal Control Over Compliance; and Report on Schedule of
Expenditures of Federal Awards Required by Uniform Guidance
x Component Units
-
the Universities and the nonmajor component units.

Fund Financial Statements
x Governmental Funds
-
the Department of Environmental Quality Clean Water State Revolving Loan Fund,
the Department of Health Local Governments and Rural Water Systems Improvements
Revolving Loan Fund, the State Agencies Self-Insured Workers’ Compensation Trust
Fund, Department of Public Safety, Mississippi Development Authority, Department
of Health, Department of Corrections, Mississippi State Hospital, Administrative
Office of the Courts – Supreme Court, Boswell Regional Center, Department of Mental
Health and selected funds at the Community College Board, Department of Marine
Resources, and the Department of Transportation, which, in the aggregate, represent
29 percent, 33 percent, and 12 percent, respectively, of the assets, fund balance, and
revenues of the governmental activities;
x Proprietary Funds
-
the Port Authority at Gulfport, the Mississippi Prepaid Affordable College Tuition
Program, and the Department of Finance and Administration State Life and Health
Plan which are considered major enterprise funds which, in the aggregate, represent 51
percent, 48 percent, and 28 percent, respectively, of the assets, fund balance, and
revenues of the proprietary funds;
x Aggregate Remaining Funds
-
Nonmajor enterprise funds for AbilityWorks, Inc. within the Department of
Rehabilitation Services and the Veterans’ Home Purchase Board;
-
Other Employee Benefits Trust Fund – State Life and Health Insurance Plan;
-
the Pension Trust Funds;
-
the Private-Purpose Trust Funds of the Mississippi Affordable College Savings
Program;
all of which represent 99 percent, 100 percent, and 100 percent, respectively, of the assets,
net position, and revenues of the aggregate remaining funds.
Those statements were audited by other auditors whose reports have been furnished to us; and our opinions,
insofar as they relate to the amounts included for those agencies, funds, and component units, are based
solely on the reports of the other auditors.
The State of Mississippi has excluded federal programs administered by public universities from the
accompanying schedules of expenditures of federal awards, as more fully described in Note 2 to the
12

Independent Auditor’s Report on Compliance For Each Major Federal Program;
Report on Internal Control Over Compliance; and Report on Schedule of
Expenditures of Federal Awards Required by Uniform Guidance
schedules.  The State’s public universities were audited in accordance with statutory requirements and the
provisions of Uniform Guidance, and a separate report was issued.
Our audit and the audits of the other auditors were conducted for the purpose of forming our opinions on
the financial statements that collectively comprise the State of Mississippi’s basic financial statements.  The
accompanying Schedule of Expenditures of Federal Awards by Federal Department is presented for
purposes of additional analysis as required by the Uniform Guidance and is not a required part of the
financial statements. Such information is the responsibility of management and was derived from and
relates directly to the underlying accounting and other records used to prepare the financial statements.
The information in the schedule of expenditures of federal awards has been subjected to the auditing
procedures applied by us and other auditors in the audit of the  financial statements and certain additional
procedures, including comparing and reconciling such information directly to the underlying accounting
and other records used to prepare the basic financial statements or to the basic financial statements
themselves, and other additional procedures in accordance with auditing standards generally accepted in
the United States of America.  In our opinion, based upon our audit and the audit reports of the other
auditors, except for the effects of the omission described in the preceding paragraph, the schedule of
expenditures of federal awards is fairly stated in all material respects in relation to the basic financial
statements as a whole.
Stephanie C. Palmertree, CPA, CGMA
Deputy State Auditor
Audit Division
Jackson, Mississippi
November 11, 2022
13

(This page left blank intentionally.)

Schedule of Expenditures of Federal Awards by
Federal Department

(This page left blank intentionally.)

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1,034,734,973
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Total NSLP

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Total Child Nutrition Cluster
288,068,558
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Total Food Distribution Cluster
10,644,696

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67$7(2)0,66,66,33,
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)257+(<($5(1'('-81(
Total Special Supplemental Nutrition Program for Women, Infants, and Children
86'(3$570(172)$*5,&8/785(
Total Emergency Food Assistance Program (Administrative Costs)
)RUHVW6HUYLFH6FKRROVDQG5RDGV&OXVWHU
Total Forest Service Schools and Roads Cluster
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9,819,290

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Total Employment Service Cluster
6,933,970

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86'(3$570(172)75$163257$7,21
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Total Highway Planning and Construction Cluster
585,432,766
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Total Transit Services Programs Cluster
1,437,750

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Total Federal Transit Cluster
3,313,755

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Total Highway Safety Cluster
7,445,018

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3DVVHGWR
6XEUHFLSLHQWV
67$7(2)0,66,66,33,
6&+('8/(2)(;3(1',785(62))('(5$/$:$5'6%<)('(5$/'(3$570(17
)257+(<($5(1'('-81(

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3UHYHQWLYH+HDOWK6HUYLFHV±6H[XDOO\7UDQVPLWWHG'LVHDVHV&RQWURO*UDQWV

3UHYHQWLYH+HDOWKDQG+HDOWK6HUYLFHV%ORFN*UDQW

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$JLQJ&OXVWHU

6SHFLDO3URJUDPVIRUWKH$JLQJ±7LWOH,,,3DUW%±*UDQWVIRU6XSSRUWLYH6HUYLFHVDQG
6HQLRU&HQWHUV

&29,'6SHFLDO3URJUDPVIRUWKH$JLQJ±7LWOH,,,3DUW%±*UDQWVIRU6XSSRUWLYH
6HUYLFHVDQG6HQLRU&HQWHUV

Total Special Programs for the Aging

6SHFLDO3URJUDPVIRUWKH$JLQJ±7LWOH,,,3DUW&±1XWULWLRQ6HUYLFHV

&29,'6SHFLDO3URJUDPVIRUWKH$JLQJ±7LWOH,,,3DUW&±1XWULWLRQ6HUYLFHV

Total Special Programs for the Aging – Title III, Part C – Nutrition Services

1XWULWLRQ6HUYLFHV,QFHQWLYH3URJUDP

Total Aging Cluster
12,546,956
&&')&OXVWHU

&KLOG&DUHDQG'HYHORSPHQW%ORFN*UDQW

&29,'&KLOG&DUHDQG'HYHORSPHQW%ORFN*UDQW

Total Child Care and Development Block Grant

&KLOG&DUH0DQGDWRU\DQG0DWFKLQJ)XQGVRIWKH&KLOG&DUHDQG'HYHORSPHQW)XQG

Total CCDF Cluster
152,570,209
+HDG6WDUW&OXVWHU

+HDG6WDUW

Total Head Start Cluster
174,993

0HGLFDLG&OXVWHU

6WDWH0HGLFDLG)UDXG&RQWURO8QLWV

6WDWH6XUYH\DQG&HUWLILFDWLRQRI+HDOWK&DUH3URYLGHUVDQG6XSSOLHUV7LWOH;9,,,
0HGLFDUH

0HGLFDO$VVLVWDQFH3URJUDP

&29,'0HGLFDO$VVLVWDQFH3URJUDP

Total Medical Assistance Program

Total Medicaid Cluster
4,741,264,923
727$/86'(3$570(172)+($/7+$1'+80$16(59,&(6

)RVWHU*UDQGSDUHQW6HQLRU&RPSDQLRQ&OXVWHU

6HQLRU&RPSDQLRQ3URJUDP

Total Foster Grandparent/Senior Companion Cluster
198,951

727$/&25325$7,21)251$7,21$/$1'&20081,7<6(59,&(

+LJK,QWHQVLW\'UXJ7UDIILFNLQJ$UHDV3URJUDP

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Total Disability Insurance / SSI Cluster
27,013,239
727$/62&,$/6(&85,7<$'0,1,675$7,21

(;(&87,9(2)),&(2)7+(35(6,'(17
62&,$/6(&85,7<$'0,1,675$7,21
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23

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Total Disaster Grants – Public Assistance (Presidentially Declared Disasters)

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(PHUJHQF\0DQDJHPHQW3HUIRUPDQFH*UDQWV

&29,'(PHUJHQF\0DQDJHPHQW3HUIRUPDQFH*UDQWV

Total Emergency Management Performance Grants

6WDWH)LUH7UDLQLQJ6\VWHPV*UDQWV

$VVLVWDQFHWR)LUHILJKWHUV*UDQW

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&29,'3UHVLGHQWLDO'HFODUHG'LVDVWHU$VVLVWDQFHWR,QGLYLGXDOVDQG+RXVHKROGV
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Total Presidential Declared Disaster Assistance to Individuals and Households -
Other Needs

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727$/86'(3$570(172)+20(/$1'6(&85,7<

727$/(;3(1',785(62))('(5$/$:$5'6

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86'(3$570(172)+20(/$1'6(&85,7<
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24

Schedule of Expenditures of Federal Awards by
State Grantee Agency

(This page left blank intentionally.)

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Total U.S. DEPARTMENT OF AGRICULTURE
1,667,789
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Total U.S. DEPARTMENT OF THE INTERIOR

1$7,21$/(1'2:0(17)257+(+80$1,7,(6

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Total NATIONAL ENDOWMENT FOR THE HUMANITIES
96,820
727$/$UFKLYHVDQG+LVWRU\

1$7,21$/(1'2:0(17)257+($576

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Total U.S. DEPARTMENT OF JUSTICE
1,735,147
86'(3$570(172)+($/7+$1'+80$16(59,&(6

6WDWH0HGLFDLG)UDXG&RQWURO8QLWV

727$/$WWRUQH\*HQHUDO

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25

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Total U.S. DEPARTMENT OF AGRICULTURE
             329,647,222
86'(3$570(172)('8&$7,21

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26

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 Total U.S. DEPARTMENT OF EDUCATION
             536,091,916
86'(3$570(172)+($/7+$1'+80$16(59,&(6

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86'(3$570(172)75$163257$7,21

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 Total U.S. DEPARTMENT OF TRANSPORTATION

86'(3$570(172)+20(/$1'6(&85,7<

&RPPXQLW\$VVLVWDQFH3URJUDP6WDWH6XSSRUW6HUYLFHV(OHPHQW&$3666(

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Total U.S. DEPARTMENT OF HOMELAND SECURITY
             102,683,709
727$/(PHUJHQF\0DQDJHPHQW

86'(3$570(172)/$%25

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Total U.S. DEPARTMENT OF LABOR
          1,904,030,281
86'(3$570(172)+20(/$1'6(&85,7<

3UHVLGHQWLDO'HFODUHG'LVDVWHU$VVLVWDQFHWR,QGLYLGXDOVDQG+RXVHKROGV2WKHU1HHGV

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27

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Total U.S. DEPARTMENT OF THE INTERIOR
361,280
86'(3$570(172)/$%25

0LQH+HDOWKDQG6DIHW\*UDQWV

86'(3$570(172)7+(75($685<

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Total ENVIRONMENTAL PROTECTION AGENCY
20,086,661
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Total GULF COAST ECOSYSTEM RESORATION COUNCIL
3,512,964
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2,761,446
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20,786,673
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13,602,805
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Total U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES
             157,314,221
86'(3$570(172)+20(/$1'6(&85,7<

'LVDVWHU*UDQWV3XEOLF$VVLVWDQFH3UHVLGHQWLDOO\'HFODUHG'LVDVWHUV
7,115,393
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Total U.S. DEPARTMENT OF AGRICULTURE
          1,106,481,986
86'(3$570(172)+($/7+$1'+80$16(59,&(6

6SHFLDO3URJUDPVIRUWKH$JLQJ7LWOH9,,&KDSWHU3URJUDPVIRU3UHYHQWLRQRI(OGHU$EXVH
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6HQLRU&HQWHUV

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             365,766,647
&25325$7,21)251$7,21$/$1'&20081,7<6(59,&(

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86'(3$570(172)+($/7+$1'+80$16(59,&(6

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Total U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES
34,650
86'(3$570(172)+20(/$1'6(&85,7<

6WDWH)LUH7UDLQLQJ6\VWHPV*UDQWV

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Total U.S. DEPARTMENT OF HOMELAND SECURITY

727$/,QVXUDQFH

1$7,21$/)281'$7,21217+($576$1'7+(+80$1,7,(6

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Total U.S. DEPARTMENT OF COMMERCE
2,801,923
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Total U.S. DEPARTMENT OF THE INTERIOR
774,710
86'(3$50(172)7+(75($685<

5HVRXUFHVDQG(FRV\VWHPV6XVWDLQDELOLW\7RXULVW2SSRUWXQLWLHVDQG5HYLYHG(FRQRPLHVRIWKH
*XOI&RDVW6WDWHV

(19,5210(17$/3527(&7,21$*(1&<

(3$:HWODQGV3URJUDP'HYHORSPHQW

*8/)&2$67(&26<67(05(6725$7,21&281&,/

*XOI&RDVW(FRV\VWHP5HVWRUDWLRQ&RXQFLO2LO6SLOO,PSDFW3URJUDP

86'(3$570(172)+20(/$1'6(&85,7<

3RUW6HFXULW\*UDQW3URJUDP

+RPHODQG6HFXULW\*UDQW3URJUDP

Total U.S. DEPARTMENT OF HOMELAND SECURITY

727$/0DULQH5HVRXUFHV

86'(3$570(172)+($/7+$1'+80$16(59,&(6

$GXOW0HGLFDLG4XDOLW\,PSURYLQJ0DWHUQDODQG,QIDQW+HDOWK2XWFRPHVLQ0HGLFDLGDQG&+,3

&KLOGUHQ
V+HDOWK,QVXUDQFH3URJUDP

&29,'&KLOGUHQ
V+HDOWK,QVXUDQFH3URJUDP

7RWDO&KLOGUHQ
V+HDOWK,QVXUDQFH3URJUDP

0HGLFDO$VVLVWDQFH3URJUDP

&29,'0HGLFDO$VVLVWDQFH3URJUDP

7RWDO0HGLFDO$VVLVWDQFH3URJUDP

0RQH\)ROORZVWKH3HUVRQ5HEDODQFLQJ'HPRQVWUDWLRQ

6WDWH6XUYH\&HUWLILFDWLRQRI+HDOWK&DUH3URYLGHUVDQG6XSSOLHUV7LWOH;,;0HGLFDLG

Total U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES
          4,933,505,629
727$/0HGLFDLG

'(3$570(172)-867,&(

6HFRQG&KDQFH$FW5HHQWU\,QLWLDWLYH

Total U.S. DEPARTMENT OF JUSTICE
98,213
0HQWDO+HDOWK
0HGLFDLG
0DULQH5HVRXUFHV
;ĐŽŶƚŝŶƵĞĚͿ
^ĞĞĂĐĐŽŵƉĂŶǇŝŶŐEŽƚĞƐƚŽƚŚĞ^ĐŚĞĚƵůĞƐŽĨǆƉĞŶĚŝƚƵƌĞƐŽĨ&ĞĚĞƌĂůǁĂƌĚƐ
33

$/1
6WDWH$JHQF\)HGHUDO'HSDUWPHQW3URJUDP1DPH
&29,'
'HOLQHDWLRQ
)HGHUDO
([SHQGLWXUHV'LVWULE
XWLRQV,VVXDQFHV
67$7(2)0,66,66,33,
6&+('8/(2)(;3(1',785(62))('(5$/$:$5'6%<67$7(*5$17(($*(1&<
)257+(<($5(1'('-81(
86'(3$570(172)+($/7+$1'+80$16(59,&(6

&RPSUHKHQVLYH&RPPXQLW\0HQWDO+HDOWK6HUYLFHVIRU&KLOGUHQZLWK6HULRXV(PRWLRQDO
'LVWXUEDQFHV6('

0DWHUQDODQG&KLOG+HDOWK)HGHUDO&RQVROLGDWHG3URJUDPV

3URMHFWVIRU$VVLVWDQFHLQ7UDQVLWLRQIURP+RPHOHVVQHVV3$7+

6XEVWDQFH$EXVHDQG0HQWDO+HDOWK6HUYLFHV3URMHFWVRI5HJLRQDODQG1DWLRQDO6LJQLILFDQFH

'HYHORSPHQWDO'LVDELOLWLHV%DVLF6XSSRUWDQG$GYRFDF\*UDQWV

(PHUJHQF\*UDQWVWR$GGUHVV0HQWDODQG6XEVWDQFH8VH'LVRUGHUV'XULQJ&29,'

2SLRLG675

%ORFN*UDQWVIRU&RPPXQLW\0HQWDO+HDOWK6HUYLFHV

%ORFN*UDQWVIRU3UHYHQWLRQDQG7UHDWPHQWRI6XEVWDQFH$EXVH

Total U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES

727$/0HQWDO+HDOWK

86'(3$570(172)'()(16(

0LOLWDU\&RQVWUXFWLRQ1DWLRQDO*XDUG

1DWLRQDO*XDUG0LOLWDU\2SHUDWLRQVDQG0DLQWHQDQFH2	03URMHFWV

1DWLRQDO*XDUG&KDOOHQJH3URJUDP

Total U.S. DEPARTMENT OF DEFENSE
             107,976,806
727$/0LOLWDU\'HSDUWPHQW

86'(3$570(172)$*5,&8/785(

5XUDO%XVLQHVV'HYHORSPHQW*UDQW

86'(3$570(172)'()(16(

3URFXUHPHQW7HFKQLFDO$VVLVWDQFH)RU%XVLQHVV)LUPV

86'(3$570(172)+286,1*$1'85%$1'(9(/230(17

&RPPXQLW\'HYHORSPHQW%ORFN*UDQWV6WDWH
V3URJUDP

$33$/$&+,$15(*,21$/&200,66,21

$SSDODFKLDQ$UHD'HYHORSPHQW

$SSDODFKLDQ5HVHDUFK7HFKQLFDO$VVLVWDQFHDQG'HPRQVWUDWLRQ3URMHFWV

Total APPALACHIAN REGIONAL COMMISSION
7,096,534
60$//%86,1(66$'0,1,675$7,21

6WDWH7UDGH([SDQVLRQ

86'(3$570(172)(1(5*<

6WDWH(QHUJ\3URJUDP

727$/06'HYHORSPHQW$XWKRULW\

86'(3$570(172)+($/7+$1'+80$16(59,&(6

3URYLGHU5HOLHI)XQG

727$/066WDWH+RVSLWDO

06'HYHORSPHQW$XWKRULW\
0LOLWDU\'HSDUWPHQW
066WDWH+RVSLWDO
;ĐŽŶƚŝŶƵĞĚͿ
^ĞĞĂĐĐŽŵƉĂŶǇŝŶŐEŽƚĞƐƚŽƚŚĞ^ĐŚĞĚƵůĞƐŽĨǆƉĞŶĚŝƚƵƌĞƐŽĨ&ĞĚĞƌĂůǁĂƌĚƐ
34

$/1
6WDWH$JHQF\)HGHUDO'HSDUWPHQW3URJUDP1DPH
&29,'
'HOLQHDWLRQ
)HGHUDO
([SHQGLWXUHV'LVWULE
XWLRQV,VVXDQFHV
67$7(2)0,66,66,33,
6&+('8/(2)(;3(1',785(62))('(5$/$:$5'6%<67$7(*5$17(($*(1&<
)257+(<($5(1'('-81(
(19,5210(17$/3527(&7,21$*(1&<

0XOWLSXUSRVH*UDQWVWR6WDWHVDQG7ULEHV

6WDWH8QGHUJURXQG:DWHU6RXUFH3URWHFWLRQ

Total ENVIRONMENTAL PROTECTION AGENCY

727$/2LODQG*DV%RDUG

86'(3$570(172)-867,&(

+DUROG5RJHUV3UHVFULSWLRQ'UXJ0RQLWRULQJ3URJUDP

727$/%RDUGRI3KDUPDF\

86'(3$570(172)-867,&(

&RURQDYLUXV(PHUJHQF\6XSSOHPHQWDO)XQGLQJ

6HUYLFHVIRU7UDIILFNLQJ9LFWLPV

-XYHQLOH-XVWLFHDQG'HOLQTXHQF\3UHYHQWLRQ

1DWLRQDO&ULPLQDO+LVWRU\,PSURYHPHQW3URJUDP1&+,3

5HVLGHQWLDO6XEVWDQFH$EXVH7UHDWPHQWIRU6WDWH3ULVRQHUV

3URMHFW6DIH1HLJKERUKRRGV

6SHFLDO'DWD&ROOHFWLRQVDQG6WDWLVWLFDO6WXGLHV

35($3URJUDP6WUDWHJLF6XSSRUWIRU35($,PSOHPHQWDWLRQ

(GZDUG%\UQH0HPRULDO-XVWLFH$VVLVWDQFH*UDQW3URJUDP

'1$%DFNORJ5HGXFWLRQ3URJUDP

3DXO&RYHUGHOO)RUHQVLF6FLHQFHV,PSURYHPHQW*UDQW3URJUDP

(GZDUG%\UQH0HPRULDO&RPSHWLWLYH*UDQW

+DUROG5RJHUV3UHVFULSWLRQ'UXJ0RQLWRULQJ3URJUDP

(TXLWDEOH6KDULQJ3URJUDP

81
'&(63*UDQW

Total U.S. DEPARTMENT OF JUSTICE
4,991,224
86'(3$570(172)75$163257$7,21

0RWRU&DUULHU6DIHW\$VVLVWDQFH

&RPPHUFLDO'ULYHU
V/LFHQVH3URJUDP,PSOHPHQWDWLRQ*UDQW

0RWRU&DUULHU6DIHW\$VVLVWDQFH+LJK3ULRULW\$FWLYLWLHV*UDQWVDQG&RRSHUDWLYH$JUHHPHQWV

6WDWHDQG&RPPXQLW\+LJKZD\6DIHW\

1DWLRQDO+LJKZD\7UDIILF6DIHW\$GPLQLVWUDWLRQ1+76$'LVFUHWLRQDU\6DIHW\*UDQWVDQG
&RRSHUDWLYH$JUHHPHQWV

Total U.S. DEPARTMENT OF TRANSPORTATION
11,765,307
(;(&87,9(2)),&(2)7+(35(6,'(17

+LJK,QWHQVLW\'UXJ7UDIILFNLQJ$UHDV3URJUDP

86'(3$570(172)+20(/$1'6(&85,7<

1RQ3URILW6HFXULW\3URJUDP

3RUW6HFXULW\*UDQW3URJUDP

+RPHODQG6HFXULW\3UHSDUHGQHVV7HFKQLFDO$VVLVWDQFH3URJUDP

'ULYHU
V/LFHQVH6HFXULW\*UDQW3URJUDP

5XUDO(PHUJHQF\0HGLFDO&RPPXQLFDWLRQV'HPRQVWUDWLRQ3URMHFW
Total U.S. DEPARTMENT OF HOMELAND SECURITY
8,763,016
727$/3XEOLF6DIHW\

%RDUGRI3KDUPDF\
2LODQG*DV%RDUG
3XEOLF6DIHW\
;ĐŽŶƚŝŶƵĞĚͿ
^ĞĞĂĐĐŽŵƉĂŶǇŝŶŐEŽƚĞƐƚŽƚŚĞ^ĐŚĞĚƵůĞƐŽĨǆƉĞŶĚŝƚƵƌĞƐŽĨ&ĞĚĞƌĂůǁĂƌĚƐ
35

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6WDWH$JHQF\)HGHUDO'HSDUWPHQW3URJUDP1DPH
&29,'
'HOLQHDWLRQ
)HGHUDO
([SHQGLWXUHV'LVWULE
XWLRQV,VVXDQFHV
67$7(2)0,66,66,33,
6&+('8/(2)(;3(1',785(62))('(5$/$:$5'6%<67$7(*5$17(($*(1&<
)257+(<($5(1'('-81(
86'(3$570(172)75$163257$7,21

3LSHOLQH6DIHW\3URJUDP6WDWH%DVH*UDQW

6WDWH'DPDJH3UHYHQWLRQ3URJUDP*UDQWV

Total U.S. DEPARTMENT OF TRANSPORTATION

727$/3XEOLF6HUYLFH&RPPLVVLRQ

86'(3$570(172)('8&$7,21

5HKDELOLWDWLRQ6HUYLFHV9RFDWLRQDO5HKDELOLWDWLRQ*UDQWVWR6WDWHV

5HKDELOLWDWLRQ6HUYLFHV,QGHSHQGHQW/LYLQJ6HUYLFHVIRU2OGHU,QGLYLGXDOV:KRDUH%OLQG

6XSSRUWHG(PSOR\PHQW6HUYLFHVIRU,QGLYLGXDOVZLWKWKH0RVW6LJQLILFDQW'LVDELOLWLHV

5DQGROSK6KHSSDUG)LQDQFLDO5HOLHIDQG5HVWRUDWLRQ3D\PHQWV

Total U.S. DEPARTMENT OF EDUCATION

86'(3$570(172)+($/7+$1'+80$16(59,&(6

$&/,QGHSHQGHQW/LYLQJ6WDWH*UDQWV

$&/$VVLVWLYH7HFKQRORJ\

Total U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES
692,332
62&,$/6(&85,7<$'0,1,675$7,21

6RFLDO6HFXULW\±'LVDELOLW\,QVXUDQFH',

6RFLDO6HFXULW\:RUN,QFHQWLYHV3ODQQLQJDQG$VVLVWDQFH3URJUDP

Total SOCIAL SECURITY ADMINISTRATION
27,289,846
727$/5HKDELOLWDWLRQ6HUYLFHV

(/(&7,21$66,67$1&(&200,66,21

(OHFWLRQ6HFXULW\*UDQW

&29,'(OHFWLRQ6HFXULW\*UDQW

7RWDO(OHFWLRQ6HFXULW\*UDQW

7RWDO6HFUHWDU\RI6WDWH

86'(3$570(172)$*5,&8/785(

&RQVHUYDWLRQ5HVHUYH3URJUDP

6RLODQG:DWHU&RQVHUYDWLRQ

:DWHUVKHG3URWHFWLRQDQG)ORRG3UHYHQWLRQ

(QYLURQPHQWDO4XDOLW\,QFHQWLYHV3URJUDP

:DWHUVKHG5HKDELOLWDWLRQ3URJUDP

Total U.S. DEPARTMENT OF AGRICULTURE

727$/6RLODQG:DWHU&RQVHUYDWLRQ&RPPLVVLRQ

86'(3$570(172)+($/7+$1'+80$16(59,&(6

6WDWH&RXUW,PSURYHPHQW3URJUDP

727$/6XSUHPH&RXUW

6RLODQG:DWHU&RQVHUYDWLRQ&RPPLVVLRQ
6HFUHWDU\RI6WDWH
5HKDELOLWDWLRQ6HUYLFHV
3XEOLF6HUYLFH&RPPLVVLRQ
6XSUHPH&RXUW
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^ĞĞĂĐĐŽŵƉĂŶǇŝŶŐEŽƚĞƐƚŽƚŚĞ^ĐŚĞĚƵůĞƐŽĨǆƉĞŶĚŝƚƵƌĞƐŽĨ&ĞĚĞƌĂůǁĂƌĚƐ
36

$/1
6WDWH$JHQF\)HGHUDO'HSDUWPHQW3URJUDP1DPH
&29,'
'HOLQHDWLRQ
)HGHUDO
([SHQGLWXUHV'LVWULE
XWLRQV,VVXDQFHV
67$7(2)0,66,66,33,
6&+('8/(2)(;3(1',785(62))('(5$/$:$5'6%<67$7(*5$17(($*(1&<
)257+(<($5(1'('-81(
86'(3$570(172)75$163257$7,21

+LJKZD\5HVHDUFKDQG'HYHORSPHQW3URJUDP

+LJKZD\3ODQQLQJDQG&RQVWUXFWLRQ

)HGHUDO/DQGV$FFHVV3URJUDP

0HWURSROLWDQ7UDQVSRUWDWLRQ3ODQQLQJDQG6WDWHDQG1RQ0HWURSROLWDQ3ODQQLQJDQG5HVHDUFK

)RUPXOD*UDQWVIRU5XUDO$UHDVDQG7ULEDO7UDQVLW3URJUDP

&29,')RUPXOD*UDQWVIRU5XUDO$UHDVDQG7ULEDO7UDQVLW3URJUDP

7RWDO)RUPXOD*UDQWVIRU5XUDO$UHDVDQG7ULEDO7UDQVLW3URJUDP

(QKDQFHG0RELOLW\RI6HQLRUVDQG,QGLYLGXDOVZLWK'LVDELOLWLHV

-RE$FFHVVDQG5HYHUVH&RPPXWH3URJUDP

%XVDQG%XV)DFLOLWLHV)RUPXOD3URJUDP

1DWLRQDO,QIUDVWUXFWXUH,QYHVWPHQWV

727$/7UDQVSRUWDWLRQ

86'(3$570(172)$*5,&8/785(

6FKRROVDQG5RDGV±*UDQWVWR6WDWHV

727$/7UHDVXU\

86'(3$570(172)9(7(5$16$))$,56

9HWHUDQV6WDWH1XUVLQJ+RPH&DUH

$OO9ROXQWHHU)RUFH(GXFDWLRQDO$VVLVWDQFH

9HWHUDQV&HPHWDU\*UDQWV3URJUDP

Total U.S. DEPARTMENT OF VETERANS AFFAIRS

86'(3$570(172)+80$16(59,&(6

3URYLGHU5HOLHI)XQG

727$/9HWHUDQV$IIDLUV

86'(3$570(172)$*5,&8/785(

(PHUJHQF\:DWHUVKHG3URWHFWLRQ3URJUDP

86'(3$570(172)'()(16(

&RQVHUYDWLRQDQG5HKDELOLWDWLRQRI1DWXUDO5HVRXUFHVRQ0LOLWDU\,QVWDOODWLRQV

86'(3$570(172)7+(,17(5,25

6SRUW)LVK5HVWRUDWLRQ

)LVKDQG:LOGOLIH0DQDJHPHQW$VVLVWDQFH

:LOGOLIH5HVWRUDWLRQDQG%DVLF+XQWHU(GXFDWLRQ

&RRSHUDWLYH(QGDQJHUHG6SHFLHV&RQVHUYDWLRQ)XQG

(QKDQFHG+XQWHU(GXFDWLRQDQG6DIHW\

&RDVWDO3URJUDP

6WDWH:LOGOLIH*UDQWV

(QGDQJHUHG6SHFLHV5HFRYHU\,PSOHPHQWDWLRQ

2XWGRRU5HFUHDWLRQ$FTXLVLWLRQ'HYHORSPHQWDQG3ODQQLQJ

Total U.S. DEPARTMENT OF THE INTERIOR
10,124,086
:LOGOLIH)LVKHULHVDQG3DUNV
9HWHUDQV$IIDLUV
7UHDVXU\
7UDQVSRUWDWLRQ
;ĐŽŶƚŝŶƵĞĚͿ
^ĞĞĂĐĐŽŵƉĂŶǇŝŶŐEŽƚĞƐƚŽƚŚĞ^ĐŚĞĚƵůĞƐŽĨǆƉĞŶĚŝƚƵƌĞƐŽĨ&ĞĚĞƌĂůǁĂƌĚƐ
37

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6WDWH$JHQF\)HGHUDO'HSDUWPHQW3URJUDP1DPH
&29,'
'HOLQHDWLRQ
)HGHUDO
([SHQGLWXUHV'LVWULE
XWLRQV,VVXDQFHV
67$7(2)0,66,66,33,
6&+('8/(2)(;3(1',785(62))('(5$/$:$5'6%<67$7(*5$17(($*(1&<
)257+(<($5(1'('-81(
86'(3$570(172)75$163257$7,21

5HFUHDWLRQDO7UDLOV3URJUDP

86'(3$570(172)+20(/$1'6(&85,7<

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'LVDVWHU*UDQWV±3XEOLF$VVLVWDQFH3UHVLGHQWLDOO\'HFODUHG'LVDVWHUV

Total U.S. DEPARTMENT OF HOMELAND SECURITY

727$/:LOGOLIH)LVKHULHVDQG3DUNV

727$/(;3(1',785(62))('(5$/$:$5'6

(;3/$1$7,212))227127(5()(5(1&(
3URJUDP1XPEHUZLWK81GHQRWHVXQNQRZQ&)'$QXPEHUV
7KHWRWDOH[SHQGLWXUHVIRU&)'$1RLQFOXGHVWDWHH[SHQGLWXUHVRIDQGIHGHUDOH[SHQGLWXUHVRI
#'HQRWHVIHGHUDOSURJUDPVZLWKQRQFDVKEHQHILWV
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^ĞĞĂĐĐŽŵƉĂŶǇŝŶŐEŽƚĞƐƚŽƚŚĞ^ĐŚĞĚƵůĞƐŽĨǆƉĞŶĚŝƚƵƌĞƐŽĨ&ĞĚĞƌĂůǁĂƌĚƐ
38

Notes to the Schedules of Expenditures of Federal
Awards

(This page left blank intentionally.)

STATE OF MISSISSIPPI
_____________________________________________________________________________________
NOTES TO THE SCHEDULES OF EXPENDITURES OF FEDERAL AWARDS
FOR THE YEAR ENDED JUNE 30, 2021
_____________________________________________________________________________________
NOTE 1:  PURPOSE OF THE SCHEDULES
The accompanying Schedule of Expenditures of Federal Awards is required by and presented in accordance
with the Office of Management and Budget’s (OMB) Title 2 of the U.S. Code of Federal Regulations Part
200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards
(Uniform Guidance).  To comply with this requirement, the Department of Finance and Administration
required each state agency to prepare and submit a schedule of expenditures of federal awards.  Information
contained in these schedules was combined by the Department of Finance and Administration to form the
accompanying schedules of expenditures of federal awards.  Federal programs which have not been
assigned an Assistance Listing Number (ALN) have been identified. Because the Schedule presents only
a selected portion of the operations of the State, it is not intended to and does not present the Financial
Position, Changes in Net Position or Cash Flows of the State.
NOTE 2:  SIGNIFICANT ACCOUNTING POLICIES
A.
Basis of Presentation - The information in the accompanying schedules of expenditures of federal
awards is presented in accordance with OMB Title 2 of the U.S. Code of Federal Regulations Part 200
(Uniform Guidance).  The Schedule of Expenditures of Federal Awards by Federal Department
presents a summary of federal awards expended by federal department and ALN.  The Schedule of
Expenditures of Federal Awards by State Grantee Agency presents federal awards expended by
recipient agencies of the State of Mississippi.
•
Federal Financial Assistance - Pursuant to the Single Audit Act Amendments of 1996 (Public Law
104-156) and Uniform Guidance, federal financial assistance is defined as assistance provided by
a federal agency, either directly or indirectly, in the form of grants, cooperative agreements, loans,
loan guarantees, property (including donated surplus property), interest subsidies, insurance, direct
appropriations or other assistance.  Accordingly, nonmonetary federal assistance, including food
commodities, immunizations and surplus property, is included in federal financial assistance and,
therefore, is reported on the schedules of expenditures of federal awards.  Federal financial
assistance does not include direct federal cash assistance to individuals or procurement contracts
used to buy goods or services from vendors.
•
Major Programs - The Single Audit Act Amendments of 1996 and Uniform Guidance establish a
risk-based approach to determine which federal programs are major based on certain expenditure
thresholds and risk criteria.  According to the state’s Single Audit Report for the fiscal year ended
June 30, 2021, federal expenditures, distributions or issuances totaled $12,360,514,350.  This
established the threshold for Type A programs as those with federal expenditures, distributions or
issuances which exceeded $30,000,000.
For the fiscal year 2021 audit, there were initially twenty-one programs with expected expenditures
exceeding the Type A threshold.  Of those twenty-one, no High-Risk Type A programs and no
Low-Risk Type A programs fell below the Type A threshold based on actual expenditures.  Five
additional program were designated Type A before audited procedures had been completed.
Appropriate risk assessment procedures were performed, yielding five additional High Risk Type
A programs.  Therefore, final assessment after audit yielded twenty-six Type A programs.  Of these
twenty-six programs, three Type A programs were identified as low risk.  Risk assessments of Type
39

STATE OF MISSISSIPPI
Notes to Schedules of Expenditures of Federal Awards (continued)
B programs were performed until the appropriate number of high risk Type B programs were
identified. Additionally, one Type B program was audited due to Type A classification before
actual expenditures were received. Therefore, for fiscal year 2021, twenty-five federal award
programs, comprising twenty-three high risk Type A programs and two high risk Type B programs,
were audited as major programs for the State of Mississippi.
Assistance Listings - The Assistance Listings is a government-wide compendium of individual
federal programs.  Each program included in the listings is assigned a five-digit program
identification number (ALN) which is reflected in the accompanying schedules.  The first two digits
of the ALN designate the federal agency and the last three digits designate the federal assistance
program within the federal agency.
For programs that have not been assigned a ALN, the number shown in the Schedule is the federal
agency’s 2 digit prefix followed by “UN” and digits to identify one or more Federal award lines
which form the program.
•
Cluster of Programs – A grouping of closely related programs with different ALN’s that share
common compliance requirements is considered a cluster of programs.  The accompanying
Schedules have been designed to present federal financial assistance information by clusters.
•
Amount Provided to Subrecipients – The amount of federal assistance that the State provided to
subrecipients under each federal program is presented in a separate column in the accompanying
Schedules according to requirements in Uniform Guidance.  A subrecipient is defined by Uniform
Guidance as a non-federal entity that receives a subaward from a pass-through entity to carry out
part of a federal program.
•
Indirect Cost Rate – As detailed in Uniform Guidance, State Agencies may elect to charge a de
minimis cost rate of 10% of modified total direct costs which may be used indefinitely if said
agencies have not previously negotiated a separate indirect cost rate with the federal entity.  Except
for those agencies listed in Appendix A, all other State agencies covered in this report have elected
to use the 10% de minimis rate.
B.
Reporting Entity - The accompanying schedules include all federal programs administered by the State
of Mississippi, except for the programs accounted for by the major component unit, Universities,
within the component units section of the financial statements, for the year ended June 30, 2021.
Expenditures of federal awards provided to the state's public universities and related entities were
audited by other auditors in accordance with statutory requirements and the provisions of Office of
Management and Budget (OMB) Uniform Administrative Requirements, Cost Principles, and Audit
Requirements for Federal Awards (contained in Title 2 of the U.S. Code of Federal Regulations Part
200); and a separate report issued September 9, 2022.
C.
Basis of Accounting - Federal programs included in the accompanying schedules are accounted for in
the state's governmental and proprietary funds.  Governmental funds are accounted for by using the
current financial resources measurement focus and the modified accrual basis of accounting and
proprietary funds by using the economic resources measurement focus and the accrual basis of
accounting, in conformity with accounting principles generally accepted in the United States of
America as prescribed by the Governmental Accounting Standards Board.  Negative amounts reflected
in the accompanying Schedules represent adjustments or credits made in the normal course of business
to amounts reported as expenditures in prior years.
40

STATE OF MISSISSIPPI
Notes to Schedules of Expenditures of Federal Awards (continued)
The value of food commodity distributions within the National School Lunch Program on the
accompanying schedules was calculated using the U.S. Department of Agriculture, Food and Nutrition
Service commodity price list in effect at the date of distribution.
The state issues food stamp benefits in electronic form, and benefits are recognized as expenditures
when recipients use the benefits.
D.
Expenditures and Expenses - Certain transactions relating to expenditures of federal awards may
appear in records of more than one state grantee agency.  To avoid duplication and the overstatement
of the aggregate level of federal awards expended by the State of Mississippi, the following policies
have been adopted:
1. When monies are received by one state grantee agency and redistributed (expended) to another
state grantee agency (i.e., a pass-through of funds by the primary recipient state grantee agency to
a subrecipient state grantee agency), the federal financial assistance will be reflected in the primary
receiving/expending state grantee agency's accounts.
2. Purchases of services between state grantee agencies using federal monies will be recorded as
expenditures or expenses on the purchasing agency's records and as revenues for services rendered
on the providing agency's records.  Therefore, the expenditure of federal awards is attributed to the
purchasing agency, which is the primary receiving/expending state grantee agency.
NOTE 3:  OTHER
A.
All federal expenditures/distributions/issuances included in the accompanying schedules represent
assistance received directly from the federal government, unless otherwise noted.  Federal financial
assistance received indirectly from the federal government (i.e., passed-through from entities outside
of the State of Mississippi) is noted parenthetically.
B.
Expenditures reflected in the ALN 14.228 - Community Development Block Grants/State’s program
include disbursements made for grants and new loans totaling $457,967.  Program income generated
by the program in previous years was used to make these grants and new loan payments.  In subsequent
years, the program income generated from the repayment of loans will be deposited into a revolving
loan fund to be redistributed to the local governments under CFDA 14.228 for program activities.  At
June 30, 2020, the outstanding loan balance for the program totaled $3,806,395.
C.
The Unemployment Insurance program (ALN 17.225) is administered through a unique federal-state
partnership that was founded upon federal law, but implemented through state law.  For the purposes
of presenting the expenditures of this program in the accompanying schedules of expenditures of
federal awards, both state and federal funds have been considered federal awards expended as denoted
with an # to the right of the ALN.  The breakdown of the state and federal portions of the total program
expenditures is as follows:
State Portion
  $60,166,427
Federal Portion
    1,795,699,516
Total
          $1,855,865,943
D.
The United States Treasury, as part of the Coronavirus Aid, Relief, and Economic Security (CARES)
Act, granted the Mississippi Department of Finance and Administration (DFA), as the State’s Fiscal
Agent, $1.25 billion in Coronavirus Relief Funds (CRF) (ALN 21.019).  In order to expedite the
spending of the funds to abide by the initial period of performance end date of December 30, 2020,
41

STATE OF MISSISSIPPI
Notes to Schedules of Expenditures of Federal Awards (continued)
the Mississippi State Legislature passed several pieces of legislation that directed the Mississippi
Department of Finance and Administration to allocate the CRF grant funds to various other state
agencies.  These state agencies are considered part of the “prime recipient” along with DFA; therefore,
no subrecipient relationship existed within the regulations of the CRF grant.  In order to audit these
funds, audits of expenditures were performed at each state agency that received CRF monies.  Total
CRF grant expenditures, as reported under DFA in the State’s Schedule of Federal Expenditures,
totaled $1,197,036,463 as of June 30, 2021.  These expenditures were expended by state agencies
under the prime recipient as follows:
State Agency
Expenditures
Administrative Offices of the Court
$        2,121,785
Attorney General's Office
147,898
Department of Agriculture and Commerce
7,914,238
Department of Corrections
14,356,758
Department of Education
187,310,893
Department of Employment Security
216,582,402
Department of Finance and Administration
383,673,863
Department of Mental Health
1,361,193
Department of Revenue
1,499,999
Development Authority
161,786,171
Emergency Management Agency
122,714,895
Information Technology Service
6,132,311
Office of the State Auditor*
640,875
Secretary of State
265,358
State Department of Health
87,879,020
Veterans Affairs Board
2,648,777
$ 1,197,036,436
*costs paid to the Office of the State Auditor were audit fees related to CRF funds
E.
Expenditures reflected in ALN 66.458 - Capitalization Grants for Clean Water State Revolving Funds
- include loans to local governments for developing or constructing water treatment facilities.  The
funding source for these loans includes federal grant funds and state funds.  In subsequent years, local
governments will be required to repay these funds to the Mississippi Department of Environmental
Quality.  When received, these funds will be redistributed to local governments through new loans for
additional water treatment facility projects.  The outstanding loan balance for the year ended June 30,
2021, was $394,794,336.  Total disbursements for new loans for the year ended June 30, 2021, totaled
$31,894,894.  Administrative costs associated with the program for the year ended June 30, 2021,
totaled $1,267,938.
F.
Expenditures reflected in ALN 66.468 - Capitalization Grants for Drinking Water State Revolving
Funds - include loans to counties, municipalities and other tax exempt water systems organizations for
construction of new water systems, the expansion or repair of existing water systems, and/or the
consolidation of new or existing water systems.  The funding source for these loans includes federal
grant funds and state funds.  In subsequent years, the entities will be required to repay these funds to
the Mississippi Department of Health.  When received, these funds will be used to make new loans for
the program activities.  The outstanding loan balance for the year ended June 30, 2021, was
$170,872,358. Total disbursements for new loans made during fiscal year 2021 totaled $13,983,281.
Administrative costs associated with the program for the year ended June 30, 2021, totaled $689,642.
42

STATE OF MISSISSIPPI
Notes to Schedules of Expenditures of Federal Awards (continued)
G.
State Aid Road Construction is a division of the Mississippi Department of Transportation (MDOT).
Federal financial assistance in the amount of $38,122,591 related to State Aid Road Construction is
included on the schedules of expenditures of federal awards under Transportation Department program
20.205 - Highway Planning and Construction.
H.
Noncash Assistance.
The State of Mississippi participated in several federal programs in which noncash benefits were
provided through the state to eligible program participants.  These noncash benefits programs are
identified on the schedules of expenditures of federal awards with an @ to the right of the ALN.  A
listing of these programs follows:
ALN
Program Name
10.555
National School Lunch Program (NSLP)
10.559
Summer Food Service Program for Children (SFSPC)
10.569
Emergency Food Assistance Program (Food Commodities)
•
ALN 10.555 — National School Lunch Program received $42,157,492 including cash
assistance and noncash assistance.  Cash assistance totaled $22,985,568 and noncash
assistance totaled $19,171,924.
•
ALN 10.559 — Summer Food Service Program for Children expended $244,987,129
including cash assistance and noncash assistance.  Cash assistance totaled
$244,715,408 and noncash assistance totaled $271,721.
•
ALN 10.569 — Emergency Food Assistance Program (Food Commodities) expended
$7,808,425 all of which was in noncash assistance.
I.
Contingencies.
The State of Mississippi has received federal grants for specific purposes that are subject to audit by
the grantor agencies.  Entitlements to these resources are generally conditional upon compliance with
the terms and conditions of grant agreements and applicable federal regulations, including the
expenditure of resources for allowable purposes.  Any disallowance resulting from an audit may
become a liability of the State.
The Office of the Governor – Division of Medicaid has been notified by the Centers for Medicare and
Medicaid Services (CMS) of a potential claim relative to potential overpayments by CMS under
Medical Assistance Program grants that may have been made between 1981 and 2009 to a number of
states, including Mississippi.  CMS is working with the Division of Medicaid, as well as various other
states, to resolve the discrepancies.  The amount questioned by CMS approximates $28 million for the
Division of Medicaid.
Additionally, the Division of Medicaid has also been notified by the Office of the Inspector General
(OIG) of a potential claim relative to unallowable school-based Medicaid administrative costs for
federal fiscal years 2010 through 2012.  The amount determined by the OIG to be unallowable was
$21,200,000.
43

STATE OF MISSISSIPPI
Notes to Schedules of Expenditures of Federal Awards (continued)
J.
The State of Mississippi's major federal programs for the year ended June 30, 2021, were based on
federal expenditures/distributions/issuances and risk assessments as defined in Note 2:A.  Those
programs are as follows:
CFDA
Number
Program
Name
10.542
Pandemic EBT Food Benefits
Supplemental Nutrition Assistance Program Cluster
10.551
Supplemental Nutrition Assistance Program (SNAP)
10.561
State Administrative Matching Grants for the Supplemental Nutrition Assistance
Program
Child Nutrition Cluster
10.553
School Breakfast Program (SBP)
10.555
National School Lunch Program (NSLP)
10.556
Special Milk Program for Children (SMP)
10.559
Summer Food Service Program for Children (SFSP)
10.557
WIC Special Supplemental Nutrition Program for Women, Infants, and Children
10.558
Child and Adult Care Food Program
12.401
National Guard Military Operations and Maintenance (O&M) Projects
14.228
Community Development Block Grants
17.225
Unemployment Insurance
Highway Planning and Construction Cluster
20.205
Highway Planning and Construction
20.219
Recreational Trails Program
20.224
Federal Lands Access Program
21.019
Coronavirus Relief Fund
21.023
Emergency Rental Assistance Program
64.015
Veterans State Nursing Home Care
84.010
Title I Grants to Local Educational Agencies
Special Education Cluster (IDEA)
84.027
Special Education – Grants to States (IDEA, Part B)
84.173
Special Education – Preschool Grants (IDEA Preschool)
84.425
Education Stabilization Fund (ESF)
44

STATE OF MISSISSIPPI
Notes to Schedules of Expenditures of Federal Awards (continued)
93.268
Immunization Cooperative Agreements
93.323
Epidemiology and Laboratory Capacity for Infectious Diseases (ELC)
93.558
Temporary Assistance for Needy Families (TANF)
93.568
Low-Income Home Energy Assistance
CCDF Cluster
93.575
Child Care and Development Block Grant
93.596
Child Care Mandatory and Matching Funds of the Child Care
and Development Fund
93.667*
 Social Services Block Grant
93.767
Children’s Health Insurance Program
Medicaid Cluster
93.775
State Medicaid Fraud Control Units
93.777
State Survey and Certification of Health Care Providers and Suppliers
(Title XVIII) Medicare
93.778
Medical Assistance Program (Medicaid; Title XIX)
Disability Insurance/SSI Cluster
96.001*
Social Security Disability Insurance
97.050
Presidential Declared Disaster Assistance to Individuals and Households – Other Needs
* Denotes a Type B Program
45

STATE OF MISSISSIPPI
Notes to Schedules of Expenditures of Federal Awards (continued)
Appendix “A”
The following state agencies have negotiated an indirect cost rate and have not opted to use the de
minimis rate of 10% as allowed in Uniform Guidance:
Board of Animal Health
Department of Agriculture & Commerce
Department of Education
Department of Employment Security
Department of Environmental Quality
Department of Finance & Administration
Department of Health
Department of Human Services
Department of Marine Resources
Department of Mental Health
Department of Rehabilitation Services
Department of Transportation
Department of Wildlife Fisheries & Parks
Division of Medicaid
Mississippi Attorney General
Mississippi Community College Board
Mississippi Development Authority
Mississippi Emergency Management
Mississippi Military Department
Mississippi Veterans Affairs
Soil and Water Conservation Commission
46

Schedule of Findings and Questioned Costs
Part 1 – Summary of Auditor’s Results

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50

Schedule of Findings and Questioned Costs
Part 2 – Financial Statement Findings

(This page left blank intentionally.)

STATE OF MISSISSIPPI
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
FOR THE YEAR ENDED JUNE 30, 2021
PART 2 – FINANCIAL STATEMENT FINDINGS
Introduction
This part of the Schedule of Findings and Questioned Costs presents audit findings classified as material
weaknesses, significant deficiencies and material noncompliance that are related to the financial statements
and are required to be reported in accordance with Government Auditing Standards.
Findings are arranged in order by state agency.  Each finding has one of the following designations:
 Material Weakness – A deficiency, or a combination of deficiencies, in internal control, such
that there is a reasonable possibility that a material misstatement of the state’s financial
statements will not be prevented, or detected and corrected on a timely basis.
 Significant Deficiency – A deficiency, or a combination of deficiencies, in internal  control
that is less severe than a material weakness, yet important enough to merit attention by those
charged with governance.
 Material Noncompliance – Matters coming to the auditor’s attention relating to the  state’s
compliance with certain provision of laws, regulations, contracts and grant agreements,
noncompliance with which could have a direct and material effect on the determination of the
financial statement amounts.
51

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STATE OF MISSISSIPPI
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
FOR THE YEAR ENDED JUNE 30, 2021
PART 2 – FINANCIAL STATEMENT FINDINGS
Finding Number
Finding and Recommendation
DEPARTMENT OF CORRECTIONS
MATERIAL WEAKNESS
2021-005
Strengthen Controls Over Canteen Services Compensation.
Repeat Finding
Yes; 2020-019; Material Weakness Finding.
Criteria
Management is responsible for establishing and maintaining effective internal
control over financial reporting. Internal controls should allow management or
employees in the normal course of performing their assigned functions to prevent
or detect material misstatements in the financial reporting of all Funds.
The Internal Control – Integrated Framework published by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO) and the U.S.
Government Accountability Office Standards for Internal Control in the Federal
Government (Green Book) specify that a satisfactory control environment is only
effective when there are adequate control activities in place. Effective control
activities dictate that reconciliations of accounting data be timely and detailed in
order to ensure accuracy and reliability.
Condition
The Mississippi Department of Corrections (MDOC) has contracted with Premier
Supply Link, LLC (Premier) to provide canteen services toinmates statewide. The
contract is a net-of-fee contract whereby Premier provides canteen services and
MDOC is compensated based on a determined percentage of the retail sales of
canteen items to inmates. The MDOC relies on Premier invoices and supporting
documentation related to retail sales to determine MDOC’s compensation
accounted for in the Inmate Welfare Fund. There is no review of Premier’s monthly
calculation of MDOC’s compensation and verification of the retail sales and
supporting documentation.
Cause
The Mississippi Department of Corrections’ accounting policies and procedures do
not provide for verification of the canteen sales.
Effect
The lack of proper controls over canteen commissions could allow for inadvertent
errors or fraud related to canteen commissions.
Recommendation
Management should implement a more detailed process for the review and approval
of the canteen services compensation. As a part of this process, management should
consider performing an annual audit of the canteen services information utilized to
determine the canteen compensation. Additionally, the Mississippi Department of
53

STATE OF MISSISSIPPI
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
PART – 2 Financial Statement Findings (continued)
Views of Responsible
Officials
Corrections should consider having Premier obtain a Service Organization Control
(SOC) 1 report to provide independent verification of adequacy of their system of
controls.
The Mississippi Department of Corrections concurs with the finding. See
additional information in Management’s Corrective Action Plan at page 45.
54

STATE OF MISSISSIPPI
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
PART – 2 Financial Statement Findings (continued)
DEPARTMENT OF EDUCATION
SIGNIFICANT DEFICIENCY
2021-006
Strengthen Controls Over the Preparation of the Federal Grant Activity Schedule.
Repeat Finding
Yes; 2020-12; Material Weakness.
Criteria
The Internal Control – Integrated Framework, published by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO) and the U.S.
Government Accountability Office Standards for Internal Control in the Federal
Government (Green Book) specify that a satisfactory control environment is only
effective when control activities exist. This includes a review performed to verify
the accuracy and completeness of financial information reported.
The Mississippi Agency Accounting Policies and Procedures (MAAPP) Manual
Section 27.30.60 states, “The Federal Grant Activity schedule supports amounts
reported on the GAAP Packet for federal grant revenues, receivables, deferred
revenues and expenditures. The schedule is also used for preparing the Single Audit
Report required by the Single Audit Act…and the State’s audit requirements. The
amounts on this schedule should be reconciled by the agency with amounts reported
on federal financial reports.”
Condition
The Mississippi Department of Education (MDE) did not update the Grant Schedule
for all changes to grants amounts, grant numbers, and grant dates that occurred
during the fiscal year.  During testwork of the Grant Schedule, the auditor noted
errors in reporting for programs.  Examples of these errors include:
x
One instance in which the sub-grantees’ expenditures of $20,064,934 were
not properly captured on either the Subgrant Schedule form 27.30.70 or
on the Grant Schedule form 27.30.60 in the column for amounts passed to
sub-grantees.
x
Two instances in which the grant number per the Grant Schedule did not
agree to the grant number assigned to the federal award in Mississippi
Accountability System for Government Information and Collaboration
(MAGIC).
x
Eight instances in which the grant award per the Grant Schedule did not
agree with the grant award.
x
Five instances in which the grant funding period end date reported on the
Grant Schedule did not match the grant funding period end date per the
grant award.
x
One instance in which the cumulative expenditures for the federal
subprogram per the Grant Schedule exceeded the allocated amount
assigned by the agency to the federal subprogram within the block grant.
55

STATE OF MISSISSIPPI
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
PART – 2 Financial Statement Findings (continued)
x
Three instances in which the grant number reported on the Grant Schedule
did not match the grant number listed on the grant award.
Cause
The Mississippi Department of Education did not enforce proper internal control
structures over the preparation of the Federal Grant Activity Schedule and allowed
multiple errors in the schedule to remain by agency personnel.
Effect
Without proper internal control structures over the preparation of the Federal Grant
Activity Schedule, erroneous grant numbers, grant award amounts, and “Amount
Passed to Subrecipients” could be reported on the Federal Grant Activity Schedule.
In addition, the errors would be passed thru to the State’s Schedule of Federal
Expenditures and could result in reporting errors on the State’s Single Audit Report.
Recommendation
We recommend the Mississippi Department of Education strengthen controls over
Views of Responsible
Officials
the preparation of the Federal Grant Activity Schedule to ensure all grant award
information and amounts reported are accurate and correct.
The Mississippi Department of Education concurs with the finding.  See additional
information in Management’s Corrective Action Plan at page 7.
56

STATE OF MISSISSIPPI
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
PART – 2 Financial Statement Findings (continued)
DEPARTMENT OF EMPLOYMENT SECURITY
MATERIAL WEAKNESS
2021-008
Strengthen Controls over the Unemployment Insurance Benefits Paid.
Repeat Finding
Yes; 2020-007; Material Weakness.
Criteria
The Internal Control – Integrated Framework published by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO) specifies that a
satisfactory control environment is only effective when control activities, such as
authorization, approval, verification, and adherence to policy and procedures are
implemented and followed. These activities are essential to minimizing the risk of
fictitious claims and misstated financial position.
The Mississippi State Code Annotated (1972) §71-5-511 states that one is eligible
to receive benefits that “has been unemployed for a waiting period of one (1) week”;
“participates in reemployment services, such as job search assistance services, if, in
accordance with a profiling system established by the department, it has been
determined that he is likely to exhaust regular benefits and needs reemployment
services”; “is able to work, available for work and actively seeking work”.
The Mississippi State Code Annotated §71-5-505(1) states “For weeks beginning
on or after July 1, 1991, each eligible individual who is totally unemployed or part
totally unemployed in any week shall be paid with respect to such week a benefit in
an amount equal to his weekly benefit amount less that part of his wages, if any,
payable to him with respect to such week which is in excess of Forty Dollars
($40.00).”
The Mississippi State Code Annotated §71-5-513 describes reason for separation
that disqualifies the individual as “(a) For the week, or fraction thereof, which
immediately follows the day on which he left work voluntarily without good cause,
if so found by the department, and for each week thereafter until he has earned
remuneration for personal services performed for an employer, as in this chapter
defined, equal to not less than eight (8) times his weekly benefit amount, as
determined in each case; however, marital, filial and domestic circumstances and
obligations shall not be deemed good cause within the meaning of this subsection.
Pregnancy shall not be deemed to be a marital, filial or domestic circumstance for
the purpose of this subsection. (b) For the week, or fraction thereof, which
immediately follows the day on which he was discharged for misconduct connected
with his work, if so found by the department, and for each week thereafter until he
has earned remuneration for personal services performed for an employer, as in this
chapter defined, equal to not less than eight (8) times his weekly benefit amount, as
determined in each case. (c) The burden of proof of good cause for leaving work
shall be on the claimant, and the burden of proof of misconduct shall be on the
employer.”
Condition
The Coronavirus Aid, Relief, and Economic Security (CARES) Act enacted by the
federal government in response to the COVID-19 pandemic required state
57

STATE OF MISSISSIPPI
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
PART – 2 Financial Statement Findings (continued)
unemployment agencies to increase the amount of benefits paid to claimants.
Additionally, claimants were able to collect unemployment payments for an
expanded time frame, and claimants who would otherwise not qualify for benefits
(such as independent contractors and self-employed persons) were able to qualify
for benefits.  In order to process the multitude of claims in an expeditious manner,
Mississippi Department of Employment Security (MDES) opted to override the
existing controls designed in the internal control system.  Proven and tested controls
over Unemployment Insurance claims were altered or disregarded for the periods
of March 2020 through December 2020.  Controls altered for the claims submitted
in the noted timeframes were:
x
Waived; One week waiting period; March 8, 2020 – December 26, 2020;
x
Waived; Work Search Requirements; March 8, 2020 – August 8, 2020;
x
Waived; Able to work, Available to work, and Actively Seeking Work
(A&A); March 8, 2020 – September 26, 2020;
x
Altered; Weekly Earning Allowance increased from $40 to $200; May 3,
2020 – September 26, 2020; and
x
Altered; Reason for separation from ALL employers in base period
changed to separation from MOST RECENT employer; March 8, 2020 -
September 26, 2020.
Additionally, claims were approved without social security number verification
during the period March 2020 – May 2020.
Due to these controls being ignored or overridden, MDES was unable to properly
monitor the immense influx of claims and to properly vet those claims for fraud.
During fiscal year 2021, total unemployment benefit claims increased from
$2,146,060,996 (fiscal year 2020) to $2,475,899,125 (fiscal year 2021), a 15%
increase.  Overpayments of benefits was noted to increase from $117,948,403
(fiscal year 2020) to $473,787,010 (fiscal year 2021), a 301% increase.  These
payments include:
x
Payments made to individuals who never lost or had a reduction in wages;
x
Fraudulent payments due to stolen identity;
x
Payments made to incarcerated individuals; and
x
Payments made due to international unemployment fraud.
In particular, MDES inadvertently allowed incarcerated individuals to receive
payment when the control that required claimants to verify that they were “actively
seeking work” was waived.  Incarcerated individuals were then able to apply for
benefits and receive approval without any additional verification from MDES.
58

STATE OF MISSISSIPPI
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
PART – 2 Financial Statement Findings (continued)
MDES personnel were initially overwhelmed by the influx of claims and were
unable to accurately report the amount of increased loss the State was subject too,
and were unable to adequately monitor the fraud that was reported by individuals
when they received notification of benefits received.
Cause
MDES did not have proper internal controls in place due to overriding or waiving
existing controls.  This caused MDES the inability to verify that unemployment
claims were paid to proper claimants.
Effect
Failure to properly enable controls and follow policies and procedures increases the
risk of fraud and misappropriation, which can result in material misstatements of
financial statements. The waiver of strict controls on Unemployment Insurance
benefits resulted in an increase of known overpayments of 301% from fiscal year
2020 to fiscal year 2021.
Recommendation
We recommend the Mississippi Department of Employment Security strengthen
Views of Responsible
Officials
controls over policies and procedures to ensure internal controls are never disabled
or circumvented.  Additionally, we  recommend  further  analysis  of the
overpayments of unemployment claims be performed in order to maximize the
potential for recovery of fraudulent payments.
The Mississippi Department of Employment Security does not concur with the
finding. See additional information in Management’s Corrective Action Plan at
page 63; and the Auditor’s Response to the Corrective Action Plan at page DQG
71.
2021-016
Strengthen Controls over the Reconciliation of the State’s Financial Accounting
System (MAGIC) to the Third-Party Unemployment Software (ReEmploy).
Repeat Finding
Yes; 2020-006; Material Weakness.
Criteria
The Internal Control – Integrated Framework, published by the Committee of
Sponsoring Organizations of the Treadway Commission (COSOand the U.S.
Government Accountability Office Standards for Internal Control in the Federal
Government (Green Book) specifies that a satisfactory control environment is only
effective when control activities exist. This includes but is not limited to the review
process of transactions, proper support of transactions, proper documentation and
support of methodologies used in accounting practices, proper support of
information and communication within the agency, and a commitment to
competence by management.
The Mississippi Agency Accounting Policies and Procedures (MAAPP) Manual
Section 27.30.05 states that supporting schedules provide the details, which support
the adjusted MAGIC balances on the GAAP Trial Balance.
59

STATE OF MISSISSIPPI
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
PART – 2 Financial Statement Findings (continued)
The Mississippi Agency Accounting Policies and Procedures (MAAPP) Manual
Section 2.10.20 states that Proprietary Funds apply accrual accounting principles
appropriate for business enterprises.
Condition
The Mississippi Department of Employment Security (MDES) records statutorily
required GAAP entries in the Mississippi Accountability System for Government
Information and Collaboration (MAGIC) software during year-end by utilizing
summarized reports from the Unemployment Software – ReEmploy.  The majority
of the summarized reports used are historical reports that are incapable of being
reproduced due to ReEmploy reporting values as of close of business day that the
queries are ran. MDES currently does not save transactional reports that corroborate
with summarized reports used and required significant time to produce adequate
support of summarized values used in GAAP entries recorded.  MDES required a
period of multiple weeks to four months to provide support to audit requests for
GAAP entries recorded0.
During review of the supporting documentation for GAAP entries recorded by
MDES, Auditors noted several material misstatements due to incorrect values being
used, due to portions of entries being unrecorded, and due to improper revenue
recognition.
As a result of these incorrect values and improper revenue recongnition, the
following misstatements were noted:
x
Accounts receivable were understated by $58,935,428;
x
Allowance for doubtful accounts were understated by $30,646,422;
x
Due to federal government was understated by $127,078,028;
x
Unearned revenue was understated by $13,259,379; and
x
Subsidies was understated by $98,789,022.
Additionally, MDES does not currently have a transactional accounting system for
Enterprise Funds.  MDES uses internal trial balances created from daily and
monthly banking activity worksheets.  These worksheets only show summarized
transactions and creates a poor environment for auditors to trace individually
selected transactions to amounts recorded by MDES. Due to MDES not utilizing
MAGIC as the accounting system for Enterprise Funds, which requires supporting
documentation for entries recorded, auditors had to reconcile transactional support
provided by MDES and determine the reasoning behind differences noted between
transactional support and summarized values. Due to MDES only using banking
activity and ReEmploy summarized reports for financial reporting of Enterprise
Funds, MDES does not have an adequate control environment over individual
transactional review.
60

STATE OF MISSISSIPPI
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
PART – 2 Financial Statement Findings (continued)
Cause
The Mississippi Department of Employment Security (MDES) did not properly
reconcile amounts amalgamated in the reports from ReEmploy to the financial
information.  MDES only performed financial statement reconciliations of
unemployment data annually at the end of the fiscal year.  The information was also
not entered into the statewide accounting system MAGIC but once at year-end.
These untimely reconciliations and agreement of financial statements to ReEmploy
caused excessive delays in the preparation of financial statements of MDES.
Additionally, MDES operates on a cash basis accounting for transactions in
Enterprise Funds and relies on year-end GAAP entries to present on a modified-
accrual basis.  Enterprise Funds are required to be reported on an accrual basis
throughout the entire year.
Effect
Failure to properly record accruals and failure to perform timely and accurate
reconciliations of data greatly increase the risk of fraud and misappropriation of
assets and liabilities, which can result in material misstatements of financial
statements.  Several accounts were understated for fiscal year 2021 and required
material audit adjustments to correctly report the financial status of the Mississippi
Department of Employment Security.
Recommendation
We recommend the Mississippi Department of Employment Security strengthen
Views of Responsible
Officials
controls to endure accrual entries are correct and to record entries in the statewide
accounting system more frequently than once annually.  Additionally, personnel
should complete timely and accurate reconciliations to ensure information is
reported correctly.
The Mississippi Department of Employment Security concurs with the finding.
See additional information in Management’s Corrective Action Plan at page 7.
2021-017
Strengthen Controls over the Identification of Unemployment Benefit
Overpayments.
Repeat Finding
No.
Criteria
GASB Statement 62, paragraph 83 (Reporting a Change in Accounting Estimate)
states the effect of a change in accounting estimate should be accounted for in (a)
the period of change if the change affects that period only or (b) the period of change
and future periods in the change affects both.
The Mississippi State Code Annotated (1972) §71-5-517 states that any benefits
erroneously paid to claimant may be set up as an overpayment to the claimant; and
must be liquidated before any future benefits can be paid to the claimant.
61

STATE OF MISSISSIPPI
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
PART – 2 Financial Statement Findings (continued)
The Mississippi Agency Accounting Policies and Procedures (MAAPP) Manual
Section 27.30.05 states that supporting schedules provide the details, which support
the adjusted MAGIC balances on the GAAP Trial Balance.
Condition
The Mississippi Department of Employment Security (MDES) adopted a change in
the calculation of the unemployment benefit overpayment allowance for doubtful
accounts estimate for overpayments recorded in ReEmploy (the unemployment
software utilized by MDES) as of June 30, 2021.  Auditor notes that using the
previous method to calculate the allowance for doubtful accounts would result in an
uncollectable percentage of 68% whereas the new method lowered the
uncollectable percentage to 52%.  MDES reported the uncollectable percentage as
88.75% in the prior year.  During the review of the new accounting estimate
calculation, auditor noted MDES did not properly document the purpose nor reason
for the change in the method.  Despite the decrease in the percentage calculated,
auditor noted the balance reported for allowance for doubtful accounts of
$246,798,051 increased 150% from the prior year reported balance of $98,674,383.
Secondly, MDES used incorrect values to record additional overpayments recorded
in ReEmploy as of June 30, 2021.  MDES incorrectly reconciled amounts pulled
using two separate ReEmploy queries by using Pandemic Unemployment
Assistance (PUA) program disbursements for documented Pandemic Emergency
Unemployment Compensation (PEUC) program disbursements.  Auditor noted the
use of PUA disbursements improperly increased MDES Accounts Receivable
account balances by $1,080,926.16.
Additionally, during review of a sample of 320 unemployment benefit payments
recorded by MDES during fiscal year 2021, the auditor noted 12 duplicate payments
in the amount of $3,007 that were not properly recorded by MDES as an
overpayment for future collections.  During fiscal year 2021, MDES disbursed a
total of $2,475,899,125 in unemployment benefit payments.  Due to the duplicate
payments not being recorded by MDES, auditor determined a projected material
misstatement of $60,016,354 in potential overpayments was not recorded by
MDES.
Cause
The Mississippi Department of Employment Security (MDES) did not evaluate the
change of methodology used in the accounting estimate concerning the allowance
of doubtful accounts.  Also, MDES currently does not perform a review on duplicate
payments for payments made with the same close week ending denoted within
ReEmploy – unemployment benefit payment system.  MDES solely relies on
controls built within ReEmploy to prevent duplicate payments. Additionally,
MDES did not use appropriate federal program disbursement totals for year-end
GAAP entries.
Effect
Departure from historical methodology in calculation of accounting estimates
without proper documentation and disclosures may result in material effects to
account balances not being appropriately disclosed to report end users. Several
accounts were understated for fiscal year 2021 and required material audit
adjustments to correctly report the financial status of MDES.
62

STATE OF MISSISSIPPI
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
PART – 2 Financial Statement Findings (continued)
Recommendation
We recommend the Mississippi Department of Employment Security follow
Views of Responsible
Officials
guidance from the Governmental Accounting Standards Board (GASB) when
making significant changes to accounting estimates used in final financial reported
account balances.
Additionally, we recommend the Mississippi Department of Employment Security
strengthen controls over policies and procedures concerning unemployment benefit
payments to ensure the approved maximum benefit is paid to eligible claimants.
We further recommend the Mississippi Department of Employment Security
strengthen controls to ensure accrual entries are correct and to record entries in the
statewide accounting system more frequently than once annually. Additionally,
personnel should complete timely and accurate reconciliations to ensure
information is reported correctly.
The Mississippi Department of Employment Security concurs with the finding.
See additional information in Management’s Corrective Action Plan at page 7.
2021-018
Strengthen Controls over the Overpayments of Employer Contributions.
Repeat Finding
No.
Criteria
The Mississippi State Code Annotated (1972) §71-5-383 states the commission is
authorized and empowered to refund, without interest, such contributions, interest,
and penalties as it may determine were paid erroneously by an employer, or may
make or authorize an adjustment thereof in connection with subsequent contribution
payments, provided the employer shall make written application for such refund or
adjustment within three (3) years to the last day of the calendar year in which the
services of individuals in employment, with respect to which such contributions
were erroneously paid, were performed. For like cause and within the same period,
adjustment or refund may be made on the commission’s own initiative.
Additionally, Mississippi Department of Employment Security Administrative
Code 600.03 states overpayment of contributions by an employer for one period
may be credited on subsequent contributions due.
Condition
During review of employer assessments collected by the Mississippi Department of
Employment Security (MDES) during fiscal year 2021, the auditor noted MDES
improperly recorded overpayments of employer assessments as revenue.  Per
discussion with agency personnel, employers were issued assessment letters that
improperly denoted the employer as delinquent towards required employer tax
payments.  Due to this designation, employers were required to pay the highest
assessment rate plus penalties, which created a credit due to the employer once the
proper tax rate was applied to the employer’s assessment.  MDES recorded
$13,259,380 in employer overpayments in fiscal year 2021 compared to $605,644
in fiscal year 2020 (an increase of 2,089%).  MDES did not reach out to employers
63

STATE OF MISSISSIPPI
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
PART – 2 Financial Statement Findings (continued)
who submitted payment towards the improperly rated assessments at the time of
discovery of the error.  Communication was not made to these employersuntil asked
by auditor if MDES had communicated to employers their current credit balance.
MDES’s current policy requires employers to request in writing a refund from
MDES within three years of the established credit balance to receive assessments
that were paid erroneously. Once the three year window has passed, MDES removes
the remaining employer credit balance from employers’ accounts without final
notification that the credit will soon expire.  As of June 30, 2021, MDES has
removed $5,772,837.80 of expired employer credits.
Additionally, MDES did not effectively communicate between divisions the
policies and procedures of accounting for employer overpayments.  The Tax
Division of MDES communicated that MDES must wait a period of three years to
claim any employer overpayment balance as revenue.  However, the Business
Management Division of MDES improperly recognizes revenue immediately for
any and all employer overpayments as they are received.  The improper recognition
of employer overpayments as revenue during fiscal year 2021 created a material
misstatement by understating Unearned Revenue by $13,259,380.
Cause
The Mississippi Department of Employment Security (MDES) did not have proper
controls in place to communicate with employers that improper rates were used in
calculation of the employer’s required assessment.  Additionally, MDES does not
effectively communicate policies and procedures within divisions concerning the
recognition of revenue of employer overpayments.
Effect
Failure to notify employers of improperly excessive assessment rates used in
employer assessment calculations can result in employers not requesting a refund
within the statutory requirement of three years from the established overpayment.
Additionally improperly recording overpayments as revenue before the statutory
requirement of three years may result in material misstatements in reported revenue
balances.
Recommendation
We recommend the Mississippi Department of Employment Security strengthen
Views of Responsible
Officials
controls over policies and procedures to ensure employer overpayments are
properly recorded.  Additionally we recommend communicating with employers
when overpayments are established due to improper assessment rates being used in
the assessment calculation.
The Mississippi Department of Employment Security does not concur with the
finding. See additional information in Management’s Corrective Action Plan at
page8; and the Auditor’s Response to the Corrective Action Plan at page
DQG72
64

POST OFFICE BOX 956 • JACKSON, MISSISSIPPI 39205 • (601) 576-2800 • FAX (601) 576-2650
Auditor’s note to the Corrective Action Plan from Mississippi Department of Employment Security
(MDES) Management
Material Weakness
2021-008
Controls Should be Strengthened over Unemployment Insurance Benefits Paid.
The Office of the State Auditor (OSA) acknowledges that the Mississippi Department of Employment Security
(MDES) was faced with an unexpected and staggering task to ensure unemployment benefits were paid to
individuals during the pandemic.  OSA also acknowledges that certain federal guidelines were provided that MDES
had to comply with in order to receive additional federal unemployment funds.  While MDES’ response to the
finding focuses on the federal requirements and state guidance to waive or ignore existing controls, MDES fails to
identify any way that the agency mitigated any of the fraud risks or potential for overpayments created by waiving
or overriding these controls.  This failure on the part of MDES resulted in a 301% increase in known overpayments
from fiscal year 2020 to 2021.  This failure to safeguard the state’s assets is the basis for the material weakness
finding.  Additionally, MDES fails to acknowledge that the agency was required by the same type federal guidance
referenced in their response to the finding (UIPL Letters and Change Notices) to ensure adequate and proper fraud
detection and prevention techniques were being utilized by the agency.
Moreover, while MDES did receive federal guidance on making unemployment payments more accessible to those
directly impacted by the pandemic, the options provided by the federal government were to either modify or suspend
the work search requirements for individuals or employers directly impacted by COVID-19 due to an illness in the
workplace or direction from a public health official to isolate or quarantine workers.  States were also given the
flexibility to respond to the COVID-19 emergency in a broader way, if they chose to do so (emphasis added by
auditor). (Unemployment Insurance Program Letter Number 13-20, Change 1, Attachment 1, Question 2).  MDES
chose to suspend the requirement for all unemployment claims, and not only those that arose from an illness in the
workplace or from an order to isolate or quarantine workers.  The decision to implement broader flexibility and
completely waive work search requirements were made by MDES.  By MDES’ own admission in other auditee
responses to OSA, MDES stated that they requested the Governor’s Office waive the specific requirements.
Additionally, in each Executive Order (1462, 1481, 1502, and 1510), MDES was given flexibility to reassess and
modify these measures prior to their expiration date in the orders.
Additionally, The Department of Labor (DOL) included program integrity language in all of the major pieces of
guidance associated with the state implementation of the CARES Act programs and provisions (Unemployment
Insurance Program Letter Number 28-20).  Program Integrity requirements for the regular unemployment program
and unemployment programs authorized by the CARES Act were to operate in tandem, and CARES Act program
requires that states must ensure that only eligible individuals receive benefits (Unemployment Insurance Program
Letter Number 23-20).    Both UIPL letters 23-20 and 28-20 specify that the states must make efforts to rapidly and
proactively prevent, detect, and investigate fraudulent activity; establish and recover fraud overpayments; and
pursue criminal and civil prosecution to deter fraud.  Specifically, states were strongly encouraged to implement
the following measures to minimize fraud in the unemployment system:
STATE OF MISSISSIPPI
OFFICE OF THE STATE AUDITOR
SHAD WHITE
STATE AUDITOR
65

POST OFFICE BOX 956 • JACKSON, MISSISSIPPI 39205 • (601) 576-2800 • FAX (601) 576-2650
1) Social Security Administration Cross Match
2) Systematic Alien Verification for Entitlement
3) Incarceration cross matches
4) Internet Protocol Address checks
5) Data Analytics to cross reference claims for indicators of fraud.
Furthermore, many of the most effective tools to deter and detect fraud were available to MDES in the Integrity
Data Hub (IDH), and were available to states for well over a year.  These included:
1) Interstate Suspicious Actor Repository to match claims across states
2) Foreign IP Address verification to receive flags on claims filed from IP addresses outside of the United
States
3) Data Analytic tools
4) Fraud Alert Systems
5) Identify Verification for fraud scoring information, including flagging synthetic identities.
MDES has stated that they utilize the IDH; however, auditors cannot determine how effectively these programs
were utilized considering the high amount of overpayments that were made during fiscal year 2021.  Additionally,
one of the specific fraud risks the UIPL, incarceration cross matches, were not performed by MDES, and resulted
in overpayments to incarcerated individuals.  These incarcerated individuals were able to apply for benefits when
MDES overrode or turned off the automated controls and did not implement any compensating controls to ensure
payments were proper.
In summary, regardless of the federal requirements or Executive Orders issued, MDES is still responsible for
ensuring the accuracy of unemployment claims.  In order to assure the accuracy of those claims, MDES should have
implemented compensating controls to safeguard the unemployment trust fund when other controls were waived or
overrode.  The ultimate responsibility to ensure that unemployment payments were accurately paid out and that
overpayments were kept to a minimum is the responsibility of MDES personnel.
Material Weakness
2021-018
Strengthen Controls over the Overpayments of Employer Contributions.
According to multiple conversations with MDES personnel during the audit, MDES immediately recognized
employer overpayments as “Revenue” and moved the amounts to their Trust Fund from their clearing account,
which is a violation of generally accepted accounting principles as the money has not actually been “earned” until
the passage of the required three years.
Moreover, the MDES response states that they provide three forms of responses to employers regarding their
overpayments; however, this was not the practice in fiscal year 2021 until this matter was brought to Management’s
attention by the auditors.  Auditors informed Management of this issue prior to December 2021, so any action taken
by the MDES Chief of Tax as outlined in the response was in reaction to the lack of controls over employer
contributions, and therefore cannot be used as a validation of the existence of controls.  MDES states that these
overpayments can be refunded to the employer if the employer requests such a refund in writing; or the request
could be given at MDES discretion without a corresponding request.  MDES needs to ensure employers are aware
of overpayments so that they can request these refunds, if so desired.
In conclusion, MDES needs to strengthen controls over employer overpayments so that the State’s employers are
not penalized by an error in MDES’ system and can be refunded overpayments timely.
66

STATE OF MISSISSIPPI
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
PART – 2 Financial Statement Findings (continued)
DEPARTMENT OF FINANCE AND ADMINISTRATION
MATERIAL WEAKNESS
2021-002
Strengthen Controls Over the Change Logs of the Statewide Payroll and Human
Resource System (SPAHRS).
Repeat Finding
Yes; 2018-008, 2019-014 and 2020-04; Material Weakness Findings.
Criteria
Good internal controls dictate that all transactions and other significant events be
clearly documented and readily available for examination.  This audit trail, or
security audit log, documentation should include evidence on how transactions are
initiated, processed, recorded, and summarized.  Proper audit trail documentation
also includes evidence of transactions that may have been voided, deleted, or
changed after approval and initiation.  A “change log” should also be maintained
that summarizes any changes, especially those in the production environment.
Periodic reconciliations between the change log and a list of approved changes
should be performed to ensure all changes have been approved and authorized.
Condition
During testwork performed for fiscal year 2021, we noted the following:
x
Security logging was not enabled in the Natural Security log settings.
x
Reconciliations between approved changes and changes occurring in the
change log are not being performed.
Cause
There are inadequate controls surrounding SPAHRS security logging.
Effect
Failure to log transactional changes adequately and to periodically review logs for
appropriateness could result in untimely modification of data, security
configuration changes, or fictitious transactions.
Recommendation
We recommend that the Department of Finance and Administration enable the
Views of Responsible
Officials
Natural Security logging functionality and strengthen controls over the periodic
review of such logs.
The Mississippi Department of Finance and Administration concurs with  the
finding. See additional information in Management’s Corrective Action Plan at
page 91.
2021-003
Require Chief Fiscal Officers of State Agencies to hold Minimum Accounting
Qualifications and Attend Mandatory Training.
Repeat Finding
Yes; 2016-012, 2017-006, 2018-024, 2019-015 and 2020-010; Material Weakness
Findings
67

STATE OF MISSISSIPPI
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
PART – 2 Financial Statement Findings (continued)
Criteria
Section 7-7-3 Miss. Code Ann. (1972) states that the State Fiscal Officer (as defined
Condition
Cause
Effect
Recommendation
We recommend the Department of Finance and Administration implement
Views of Responsible
Officials
mandatory training sessions for accounting personnel and Chief Fiscal Officers.
Additionally, we recommend the State of Mississippi implement minimum
qualifications for Chief Financial Officers.
Management at the Department of Finance and Administration concurs with
the finding.  See additional information in Management's Corrective Action Plan
on Page 292.
68
by Section 21-104-6 Miss.Code Ann. (1972) as the Executive Director of the
Department of Finance and Administration shall conduct training seminars on a
regular basis to ensure that agencies have access to persons proficient in the correct
use of the statewide accounting system.
Section 7-7-211 Miss. Code Ann. (1972) authorizes the State Auditor to
establish training course and programs for the personnel of the various state
and local governmental entities.  These courses shall include, but are not limited to,
topics on internal control, purchasing and property, governmental accounting
and financial reporting, and internal auditing.
The Internal Control – Integrated Framework published by the Committee
of Sponsoring Organizations of the Treadway Commission (COSO) specifies
that a satisfactory control environment is only effective when there is a
commitment to competence that demonstrates a commitment to retain competent
employees.  This principle of competency can be achieved through analysis of
skills required for positions, training and development training.
During testing for fiscal year 2020, we noted, through inquiry and observation,
that the overall expertise level of accounting staff in various state agencies
was not consistent, and that job requirements often did not specify applicants
hold any specific accounting or governmental knowledge.  We also noted that,
although the Department of Finance and Administration (DFA) held GAAP
conversion and accounting training courses to aid state agencies in compiling
financial information, it was not a mandatory requirement and often agency
personnel did not attend. Likewise, qualification and skill requirements were
not consistently applied to Chief Financial Officers throughout the various state
agencies.
The lack of overall understanding and application of proper accounting standards
required the centralized accounting function of the state, DFA, to prepare
significant adjusting and reclassification entries in order to prevent material
misstatement.  While the majority of entries would not have materially
misstated accounts individually, in the aggregate, without adjustment, the
financials would have been materially misstated.
Lack of consistently applied agency qualifications for accounting personnel.
The failure of the State to hire and retain competent staff could result in
material misstatement of the financial statements.

STATE OF MISSISSIPPI
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
PART – 2 Financial Statement Findings (continued)
DEPARTMENT OF HUMAN SERVICES
MATERIAL WEAKNESS
2021-001
Strengthen Controls to Ensure Proper Review Processes for Financial Reporting.
Repeat Finding
Yes; 2020-008; Material Weakness.
Criteria
The Internal Control – Integrated Framework published by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO) and the U.S.
Government Accountability Office Standards for Internal Control in the Federal
Government (Green Book) specifies that a satisfactory control environment is only
effective when control activities exist. This includes but is not limited to the review
process of transactions, proper support of transactions, proper documentation and
support of methodologies used in accounting practices, proper support of
information and communication within the agency, and a commitment to
competence by management.
The Mississippi Agency Accounting Policies and Procedures (MAAPP) Manual
Section 27.30.05 states that supporting schedules provide the details, which support
the adjusted MAGIC balances on the GAAP Trial Balance.
MAAPP Manual Section 30.20.10 states, “While each state employee has personal
responsibility for maintaining internal controls, the agency head is ultimately
responsible and must assume ownership for internal control. All agency
management must support the agency’s internal control philosophy, promote
compliance, and maintain control within their areas of responsibility. Chief
financial officers have key oversight and policy enforcement roles over fiscal
matters. Other agency managers may hold lead responsibility for compliance with
non-financial aspects of laws, directives, policies, procedures, and the code of
ethics… Agencies are to maintain adequate written documentation for activities
conducted in connection with risk assessments, internal control reviews, and
follow-up actions. This documentation is to be available for review by agency
management, the Office of State Auditor, and DFA.”
Condition
The Mississippi Department of Human Services (MDHS) operates by dividing daily
operations into different departments with different functions.  During the audit for
FYE June 30, 2021, we noted that the different departments do not communicate
and exchange information.  For example, the Grant Schedule is created using
information for the state fiscal end.  These accruals and expenditures are not
reconciled with the TANF Programmatic Division’s federal fiscal year end
reporting.  The agency does not have in place any overarching policies to ensure the
integrity and accuracy of information between divisions.  Additionally, policies and
procedures in Budgets and Account and Grants Management divisions are often
unwritten or out of date.  Lastly, the auditor noted that MDHS does not maintain
written policies and procedures over the review and approval of the Federal
Subgrant Activity Schedule.  In the aggregate, these instances result in a material
weakness in the agency’s overall control environment.  Examples of these errors
include:
69

STATE OF MISSISSIPPI
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
PART – 2 Financial Statement Findings (continued)
x
Two instances in which the amounts recorded as “Passed to Subrecipients”
were coded to the incorrect CFDA number on the Schedule of Federal
Grant Activity.
x
Nineteen instances in which amounts recorded as amounts passed to sub-
grantees on the Federal Subgrant Activity Schedule (form 27.30.30) did
not agree to amounts recorded as “amounts passed to subrecipients” on the
Schedule of Federal Grant Activity.
x
Ninety-six instances in which amounts recorded as “Current Year
Subgrant Federal Expenditures” on the Federal Subgrant Activity
Schedule (form 27.30.70) did not agree to supporting documentation as
provided by the agency.
x
One hundred forty-seven instances in which the amounts recorded as
“Paid to Sub-grantee” per the Federal Subgrant Activity Schedule (form
27.30.70) did not agree to amounts reported on the KOB1 report (Internal
Order Report) within the Mississippi Accountability System for
Government Information and Collaboration (MAGIC).
Cause
The Mississippi Department of Human Services did not possess or enforce proper
internal controls structures over financial reporting. Additionally, management has
not enforced a commitment to competence at the agency, and has allowed multiple
errors in financial reporting to remain undetected by agency personnel. Lack of
written policies has contributed to agency personnel not performing adequate
reviews over financial information.  Lastly, different departments within the agency
do not communicate and reconcile accounting information between them to verify
the accuracy of that reported information.
Effect
Without proper internal control structures over financial reporting, erroneous
financial statements and corresponding schedules could be compiled, resulting in a
misrepresentation of the financial standing of the Mississippi Department of Human
Services.
Recommendation
We recommend management at the Department of Human Services evaluate
Views of Responsible
Officials
internal control procedures over the review and approval of GAAP Packet
information and the Federal Sub-Grant Activity Schedule.
Additionally, we
recommend existing staff obtain the needed training to be able to accurately report
and review financial information, and that the agency develop overarching policies
aimed at ensuring communication about and reconciliation of financial statement
information is performed regularly.
The Mississippi Department of Human Services concurs with the finding. See
additional information in Management’s Corrective Action Plan at page 01.
70

STATE OF MISSISSIPPI
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
PART – 2 Financial Statement Findings (continued)
DEPARTMENT OF MARINE RESOURCES
MATERIAL WEAKNESS
2021-004
Strengthen Controls Over Financial Reporting.
Repeat Finding
Yes; 2020-014; Material Weakness.
Criteria
Per GASB Statement 33 related to voluntary nonexchange transactions, cash and
other assets that are provided in advance should be reported as unearned revenues
[liabilities] by recipients until allowable costs have been incurred.  At this point,
revenues should be recognized for amount of the programmatic expenditures.
In addition, the Internal Control – Integrated Framework published by the
Committee of Sponsoring Organizations of the Treadway Commission (COSO) and
the U.S. Government Accountability Office Standards for Internal Control in the
Federal Government (Green Book) specifies that a satisfactory control environment
is only effective when control activities exist.  This includes a review performed to
verify the accuracy of information reported to ensure that transactions are recorded
in the proper period and that invoices are not recorded twice.
Condition
During audit testing of federal revenue, for fund 5345300000, it was noted that
federal grant revenue received in fiscal year 2021 were recorded as unearned
revenue instead of matching programmatic expenditures that were incurred in
fiscal year 2021. As a result, revenues were understated and liabilities were
overstated by $6,051,392.  In addition, expenditures in the prior year were
overstated and fund balance understated by $496,616 due to double counting of
an invoice in fiscal year 2020, resulting in a prior period adjustment.
Cause
The Mississippi Department of Marine Resources did not possess or enforce proper
internal controls structures over financial reporting. Errors in reporting revenue and
related liabilities were not identified in a timely manner. In addition, an invoice was
booked twice in the prior year.
Effect
The ending fund balance of fund 5345300000 was materially understated by
$6,548,008, and required an adjustment to correct the ending balance. The adjusted
fund balance at the end of the year should be $899,997.
Recommendation
We recommend that the Mississippi Department of Marine Resources strengthen
Views of Responsible
Officials
controls over the preparation and review of financial statements to ensure that errors
are identified and corrected in a timely manner.
The Mississippi Department of Marine Resources concurs with the finding;
however, they do not agree that it constitutes a material weakness in internal
controls.  See additional information in Management’s Corrective Action Plan
at page 9.
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STATE OF MISSISSIPPI
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
PART – 2 Financial Statement Findings (continued)
DEPARTMENT OF PUBLIC SAFETY
MATERIAL WEAKNESS
2021-009
Strengthen Controls Over Financial Reporting.
Repeat Finding
Yes, 2020-016.
Criteria
The Internal Control – Integrated Framework published by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO) and the U.S.
Government Accountability Office Standards for Internal Control in the Federal
Government (Green Book) specifies that a satisfactory control environment is only
effective when control activities exist. This includes but is not limited to the review
process of transactions, proper support of transactions, proper documentation and
support of methodologies used in accounting practices, proper support of
information and communication within the agency, and a commitment to
competence by management.
Condition
During the audit, it was noted that the due to and from balances between Mississippi
Department of Public Safety intra-agency funds did not balance and eliminate when
consolidated.  The Fingerprint Fund (3371H00000) billed the Highway Patrol Fund
(2271100000) for services provided between fiscal years 2014 – 2021.  The
Fingerprint Fund recognized revenue and the related due from balance.  However,
Highway Patrol Fund did not record the offsetting expense and due to balance.
Management concluded that the due from balance recorded in the Fingerprint Fund
was not collectible.
Cause
The Mississippi Department of Public Safety’s internal controls were not designed
to reconcile the due to and from balances for intra-agency funds that were not
required to submit a GAAP package to the Mississippi Department of Finance and
Administration.   In addition, internal controls were not designed to analyze due
from balances for collectability.
Effect
The Mississippi Department of Public Safety’s assets were overstated by
approximately $1,203,568, current period revenues were overstated by
approximately $11,328 and the beginning fund balance was overstated by
$1,192,240.  As a result of this misstatement, and audit adjustment was recorded.
Recommendation
We recommend the Mississippi Department of Public Safety (DPS) strengthen
Views of Responsible
Officials
internal controls over financial reporting to ensure that due to and from balances
reconcile to supporting schedules and other DPS funds.  We also recommend that
DPS assess the due from balances on an annual basis to ensure that they are
collectible.
The Mississippi Department of Public Safety concurs with the finding. See
additional information in Management’s Corrective Action Plan at page 11.
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STATE OF MISSISSIPPI
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
PART – 2 Financial Statement Findings (continued)
DIVISION OF MEDICAID
MATERIAL WEAKNESS
2021-007
Strengthen Controls Over the Preparation and Review of the Schedule of
Expenditures of Federal Awards.
Repeat Finding
Yes; 2020-011; Material Weakness.
Criteria
The Internal Control – Integrated Framework, published by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO) and the U.S.
Government Accountability Office Standards for Internal Control in the Federal
Government (Green Book) specify that a satisfactory control environment is only
effective when control activities exist. This includes a review performed to verify
the accuracy and completeness of financial information reported.
The Mississippi Agency Accounting Policies and Procedures (MAAPP) manual
Section 27.30.60 states, “The Federal Grant Activity schedule supports amounts
reported on the GAAP Packet for federal grant revenues, receivables, deferred
revenues and expenditures. The schedule is also used for preparing the Single Audit
Report required by the Single Audit Act…and the State’s audit requirements. The
amounts on this schedule should be reconciled by the agency with amounts reported
on federal financial reports.”
Condition
During the audit of the Mississippi Division of Medicaid for fiscal year ended June
30, 2021, we became aware of ineffective processes and/or procedures relating to
internal controls over financial reporting and the Schedule of Expenditures of
Federal Awards. In the aggregate, these instances resulted in a material weakness
in the agency’s overall control environment.  The following exceptions were noted:
x
One instance in which the “Grant Period End Date” per the Schedule of
Expenditures of Federal Awards did not agree with the “Grant End Date”
per the Grant Award.  Incorrect dates could lead to monies being expended
past the period of performance of the grant.
x
Two instances in which the amount listed in the grant award section of the
Schedule of Expenditures of Federal Awards did not agree with the Grant
Award.
x
Three instances in which expenditures per the Schedule of Expenditures
of Federal Awards did not agree to the Mississippi Accountability System
for Government Information and Collaboration (MAGIC), resulting in
adjustments of $23,849,744 to the Schedule of Expenditures of Federal
Awards.
x
Three instances in which federal expenditures were recorded as state
expenditures in Mississippi Accountability System for Government
Information and Collaboration (MAGIC) and were not included on the
75

STATE OF MISSISSIPPI
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
PART – 2 Financial Statement Findings (continued)
Schedule of Expenditures of Federal Awards, resulting in adjustments of
$15,684,719.
x
One instance in which the State’s portion of an accrual was not recorded
in Mississippi Accountability System for Government Information and
Collaboration (MAGIC), resulting in adjustments of $29,235,528.
x
Agency does not perform a reconciliation of the Schedule of Expenditures
of Federal Awards to MAGIC.
The lack of adequate controls over the Schedule of Expenditures of Federal
Awards and the Claims Payable calculation resulted in the following:
x
Accounts Receivable was understated by $42,129,340;
x
Subsidies Loans and Grants was understated by $42,129,340;
x
Due from Federal Government was overstated by $10,545,495;
x
Unearned Federal Revenue was overstated by $5,881,659; and
x
Federal Revenue was overstated by $4,663,836.
Cause
The Mississippi Division of Medicaid (“Medicaid”) did not possess or enforce
proper internal control structures.  Additionally, Agency did not properly review
and reconcile grant schedule information and did not perform review over crucial
aspects of financial reporting.
Effect
Without proper internal control structures over financial reporting, erroneous
financial statements and corresponding schedules could be compiled, resulting in a
misrepresentation of the financial standing of the Mississippi Division of Medicaid.
Failure to properly ensure the CFDA numbers and amounts are correct on the
Federal Grant Activity Schedule could result in reporting errors on the State’s
Single Audit Report.
Recommendation
We recommend the Mississippi Division of Medicaid strengthen controls over the
Views of Responsible
Officials
preparation and review of the Schedule of Expenditures of Federal Awards and
Claims Payable calculation to ensure all grant award information and amounts
reported are accurate and correct.
The Mississippi Division of Medicaid concurs with the finding.  See additional
information in Management’s Corrective Action Plan at page 21.
76

Schedule of Findings and Questioned Costs
Part 3 – Federal Award Findings and Questioned
Costs

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STATE OF MISSISSIPPI
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
FOR THE YEAR ENDED JUNE 30, 2021
PART 3 – FEDERAL AWARD FINDINGS AND QUESTIONED COSTS
Introduction
This part of the Schedule of Findings and Questioned Costs presents audit findings required to be reported by
OMB Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards 2
CFR 200, Section 5.16
Findings are grouped by federal funding agency and then organized by state agency.  Findings within the state
agency are listed in order by type of compliance requirement as listed in Appendix XI to the OMB Uniform
Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards 2 CFR 200.
Each finding has one of the following designations:

Material Weakness – A material weakness in internal control over compliance is a deficiency,
or combination of deficiencies, in internal control over compliance such that there is a
reasonable possibility that material noncompliance with a type of compliance requirement of a
federal program will not be prevented, or detected and corrected on a timely basis.

Significant Deficiency – A significant deficiency in internal control over compliance is a
deficiency, or a combination of deficiencies, in internal control over compliance with a type of
compliance requirement of a federal program that is less severe than a material weakness in
internal control over compliance, yet important enough to merit attention by those charged with
governance.

Material Noncompliance – Conditions representing noncompliance with the provisions of
laws, regulations, contracts or grant agreements, that in the auditor’s judgment have a direct
and material effect on a major federal program.

Immaterial Noncompliance – Conditions representing noncompliance with the provisions of
laws, regulations, contracts, or grant agreements that do not have a direct and material effect
on a major federal program.
77

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STATE OF MISSISSIPPI
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
FOR THE YEAR ENDED JUNE 30, 2021
PART 3 – FEDERAL AWARD FINDINGS AND QUESTIONED COSTS
U.S. DEPARTMENT OF AGRICULTURE
Finding Number
Finding and Recommendation__________________________________
DEPARTMENT OF EDUCATION
ACTIVITIES ALLOWED/ALLOWABLE COSTS
Material Weakness
Material Noncompliance
2021-034
Strengthen Controls to Ensure Compliance with Allowable Costs Requirements of
the Child and Adult Care Food Program (CACFP).
ALN Number
10.558 Child and Adult Care Food Program
Federal Award No.
All Current Active Grants
Pass-through Entity
N/A
Questioned Costs
$126,191
Criteria
Code of Federal Regulations (7 CFR 226.15(e)) states, each institution shall
establish procedures to collect and maintain all program records required under
this part, as well as any records required by the State agency. Failure to maintain
such records shall be grounds for the denial of reimbursement for meals served
during the period covered by the records in question and for the denial of
reimbursement for costs associated with such records. At a minimum, the
following records shall be collected and maintained:
x
Documentation of the enrollment of each participant at centers and child
at day care homes. Such documentation of enrollment must be updated
annually, signed by a parent or legal guardian, and include information on
each child's normal days and hours of care and the meals normally
received while in care.
x
Daily records indicating the number of participants in attendance and the
daily meal counts, by type (breakfast, lunch, supper, and snacks), served
to family day care home participants, or the time of service meal counts,
by type (breakfast, lunch, supper, and snacks), served to center
participants.
x
Copies of invoices, receipts, or other records required by the State agency
financial management instruction to document: administrative costs
claimed by the institution; operating costs claimed by the institution except
sponsoring organizations of day care homes; and income to the program.
79

STATE OF MISSISSIPPI
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
PART 3 – Federal Award Findings and Questioned Costs – US Dept of Agriculture (continued)
Mississippi Department of Education Office of Child Nutrition: Recordkeeping
Manual for the Child and Adult Care Food Program states, “Organizations that
participate in the CACFP are required to maintain enrollment information for each
participant attending the center. The enrollment form must be updated
ANNUALLY and when required information has changed. Failure to maintain a
current enrollment form on each participant will result in the disallowance of meals
and repayment of Program funds. … Each enrollment form must contain the
following: Participant’s Name, Date of Birth, Home Address, Medical
Information, Name and phone number of a person to be contacted in case of
emergency, Signature of Parent/Guardian, Participant’s Signature (or that of
another responsible adult)-Adult Day Care, Date Signed, Enrollment and
Withdrawal Dates, Meals Needed, Days and Hours of Care.”
Mississippi Department of Education Office of Child Nutrition: Recordkeeping
Manual for the Child and Adult Care Food Program states, “Participants eligible
for free or reduced priced meals enrolling after July 1, must have meal applications
completed before the end of the month. The category of each participant, as stated
on the meal application, is recorded on the Master Roster. Failure to have a
complete meal application on file for each enrolled participant will result in the
disallowance of meals and repayment of Program funds. …It is the responsibility
of the center staff to review and categorize the application as free, reduced, or
denied/paid. The staff must sign and date the application in the “official use only”
section.”
Mississippi Department of Education Office of Child Nutrition: Recordkeeping
Manual for the Child and Adult Care Food Program states, “The United States
Department of Agriculture (USDA) issues CACFP reimbursement for
organizations based on three categories: free, reduced price and paid. To qualify
for the free or reduced-price categories, a family must meet the income level and
household size specified on the Income Eligibility Guidelines.”
Mississippi Department of Education Office of Child Nutrition: Recordkeeping
Manual for the Child and Adult Care Food Program states, “The Master Roster is
used to give a summary of categories of eligibility for participants enrolled in the
center. This information comes from the meal application. The category totals on
the Master Roster are used to complete the monthly claim.
Mississippi Department of Education Office of Child Nutrition: Recordkeeping
Manual for the Child and Adult Care Food Program requires the eligibility
category on the Master Roster to be marked for each participant.
Mississippi Department of Education Office of Child Nutrition: Recordkeeping
Manual for the Child and Adult Care Food Program states, “Attendance records
verify that participants claimed were actually present. An individual record of each
participant’s attendance (days present and absent) must be recorded each day.
…Failure to complete and document attendance will result in the disallowance of
meals and the repayment of Program Funds. Claiming meals more than
80

STATE OF MISSISSIPPI
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
PART 3 – Federal Award Findings and Questioned Costs – US Dept of Agriculture (continued)
documented in attendance will result in the designation of your organization as
seriously deficient.”
Mississippi Department of Education Office of Child Nutrition: Recordkeeping
Manual for the Child and Adult Care Food Program states, “The Daily Record of
Meal Count must be recorded at the end of each meal service and must accurately
reflect actual meals served.
The Mississippi Department of Education CACFP: Participant Guide states,
“Meal count and attendance records must indicate that meal count totals are never
HIGHER than attendance totals.”
Mississippi Department of Education Office of Child Nutrition: Recordkeeping
Manual for the Child and Adult Care Food Program states the organization is to
file invoices and receipts in a monthly folder after each CACFP approved
purchase. In addition, the cost worksheet should be completed after each purchase
or payment for CACFP.
Mississippi Department of Education Office of Child Nutrition: Recordkeeping
Manual for the Child and Adult Care Food Program states “Program operators are
required to track an organization’s spending and provide a Balance on Hand of
CACFP funds independently of other center funds. The State Agency highly
recommends opening a separate Checking Account for the tracking of CACFP
funds. … No payments may be made for expenses not directly related to operation
of the CACFP. Any payments of this nature will be disallowed, and the
organization will be required to repay all such expenditures.”
Mississippi Department of Education Office of Child Nutrition Recordkeeping
Manual for the Child and Adult Care Food Program (CACFP) states,
“CACFP/SFSP Sponsor/Institution agrees to ensure all goods and services are
properly procured and maintain all records relating to the purchase of goods and
services and the procurement process. All Program records and documentation will
be maintained for three years plus the current year.”
Condition
             During testwork performed for Activities Allowed and Allowable Costs for
CACFP grants for the 2020-2021 year, the auditor noted the following exceptions:
x 402 instances in which the 2020 - 2021 enrollment form did not contain
all the required elements or was not provided, resulting in questioned
costs of $66,593.
x 93 instances in which documentation for the Free/Reduced Meal
Application was not provided or was not completed correctly, resulting
in $22,045 of questioned costs.
x Three instances in which weekly meal count forms for the month did not
include all participants listed on the Master Roster for a Headstart
Program for a sponsored site, resulting in $245 of questioned costs.
x 31 instances in which the meal category on the Free/Reduced Lunch
Application was not recorded correctly on the Master Roster, resulting in
$3,500 of questioned costs.
81

STATE OF MISSISSIPPI
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
PART 3 – Federal Award Findings and Questioned Costs – US Dept of Agriculture (continued)
x 35 instances in which no supporting documentation was provided for
expenses on the sponsors’ monthly cost worksheets, resulting in
questioned costs of $33,808.
x Auditor noted several instances in which the organization either did not
maintain a clear audit trail or did not maintain clear comprehensive
documentation, including:
o
Mileage reimbursement forms did not contain site names or
addresses on the itinerary listed, therefore, auditor could not
determine if reimbursement was correct.
o
A sponsor organization’s system of accounting for the general
ledger only includes the aggregate total paid to the providers each
period, therefore, auditor was unable to determine amounts paid
to individual providers.
o
Payroll records did not have a clear record of which federal
program the employee compensation should be allocated. Auditor
was unable to trace employee payroll records to the CACFP
staffing patterns.
o
Payments per the cost worksheet could not be traced to the bank
statements. Due to lack of clear audit trail, items listed on the cost
worksheet could not be tracked into the aggregate vendor
payments per the bank statement.
CACFP testwork was not performed using a statistically valid sampling
approach; therefore, projection of questioned costs is not considered
appropriate.
Cause
Effect
Recommendation
Repeat Finding
Statistically Valid
View of Responsible
Officials
MDE did not monitor subrecipients properly and ensure that subrecipients are
maintaining required supporting documentation as required by written policies and
procedures.
Failure to not properly monitor subrecipients and ensure required supporting
documentation is maintained could result in questioned costs and loss of funding.
We recommend the Mississippi Department of Education strengthen controls to
ensure compliance with allowable costs requirements of the Child and Adult Care
Food Program (CACFP).
No.
No.
Management at the Mississippi Department of Education does not concur with
this finding.  See additional comments in the Corrective Action Plan on page 51
of this audit reporWDQGWKH$XGLWRU¶V5HVSRQVHWRWKH&RUUHFWLYH$FWLRQ3ODQDW
SDJHDQG9
82

POST OFFICE BOX 956 • JACKSON, MISSISSIPPI 39205 • (601) 576-2800 • FAX (601) 576-2650
Auditor’s note to the Corrective Action Plan from Mississippi Department of Education
(MDE) Management
Department of Education – Activities Allowed/Allowable Costs - Material Weakness/Material
Noncompliance
2021-034
Strengthen Controls to Ensure Compliance with Allowable Costs Requirements of
the Child and Adult Care Food Program (CACFP).
Mississippi Department of Education (MDE) asserts in their disagreement with the finding that they have
a “robust system of monitoring” and that they could not verify the accuracy of the finding due to “not being
included in the reviews of the recipients.
OSA reviewed a significantly lower percentage of CACFP subrecipients than MDE alleges they reviewed
in their response (42%) and OSA found enough noncompliance to warrant a material noncompliance
finding with $126,191 in questioned costs, which should be noted is more than triple ($37,408) the amount
MDE stated they recovered from similar organizations.
Additionally, the assertion that the accuracy could not be verified due to not being “included in the reviews
of subrecipients” is misleading, and implies that MDE was not made aware of the particulars of the
questioned costs.  MDE was provided with a list of all the CACFP subrecipients that are noted in the finding
and a list of the specific questioned costs.  MDE stated it would take months to review those expenditures
at the same level of detail that OSA personnel were able to complete in less than six weeks.
In conclusion, the sheer number of errors in the subreicipient monitoring process that led to the questioned
allowable costs does not support MDE’s statement that their internal controls and subrecipient monitoring
system is either robust or adequate.
STATE OF MISSISSIPPI
OFFICE OF THE STATE AUDITOR
SHAD WHITE
STATE AUDITOR
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STATE OF MISSISSIPPI
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
PART 3 – Federal Award Findings and Questioned Costs – US Dept of Agriculture (continued)
DEPARTMENT OF HUMAN SERVICES
REPORTING
Material Weakness
Material Noncompliance
2021-011
Strengthen Controls to Ensure Compliance with Reporting Requirements for
Pandemic EBT Food Benefits.
ALN Number(s)
10.542 Pandemic EBT Food Benefits
Federal Award             12352834-DP20 (2020)
Pass-Through
N/A
Questioned Costs
N/A
Criteria
The Code of Federal Regulations (2 cfr 200.302(b)) states in part that the financial
management system of each non-Federal entity must provide for the
“identification, in its accounts, of all Federal awards received and expended and
the Federal programs under which they were received. Federal program and
Federal award identification must include, as applicable, the Assistance Listings
title and number, Federal award identification number and year, name of the
Federal agency, and name of the pass-through entity, if any…”
Condition
When performing testwork related to Pandemic EBT (PEBT) Reporting as of June
30, 2021, the auditor noted that the Mississippi Department of Human Services
(MDHS) did not separately identify the PEBT grant award(s) on its Federal Grant
Activity Schedule, nor within Mississippi’s Accountability System for
Government Information and Collaboration (MAGIC).
Cause
MDHS staff combined regular EBT benefits with PEBT benefits for grant
reporting.
Effect
Failure to report any applicable awards correctly resulted in MDHS being in
noncompliance with federal requirements.
Recommendation
We recommend the Mississippi Department of Human Services strengthen
controls to ensure compliance with reporting requirements for Pandemic EBT
Food Benefits.
Repeat Finding
No.
Statistically Valid
No.
View of Responsible
85

STATE OF MISSISSIPPI
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
PART 3 – Federal Award Findings and Questioned Costs – US Dept of Agriculture (continued)
Officials
Management at the Mississippi Department of Human Services concurs
with this finding.  See additional comments in the Corrective Action Plan on
page 303 of this audit report.
SUBRECIPIENT MONITORING
Material Weakness
Material Noncompliance
2021-013
Strengthen Controls over On-Site Monitoring for the Supplemental Nutrition
Assistance Program (SNAP), Temporary Assistance for Needy Families (TANF),
Child Care and Development Block Grant (CCDF), Low Income Home Energy
Assistance Program (LIHEAP), and Social Services Block Grant (SSBG)
Programs.
CFDA Number
10.551 Supplemental Nutrition Assistance Program
93.558 Temporary Assistance for Needy Families State Programs
93.667 Social Services Block Grant
93.575 Child Care and Development Block Grant
93.596 Child Care Mandatory and Matching Funds of the Child Care and
Development Fund
93.568 Low Income Home Energy Assistance Program
Federal Award No.
SNAP – Letter of Credit
2001MSCCDF (2020)
G1901MSTANF (2019)              G2001MSSOSR (2020)
G2001MSTANF (2020)            G20B1MSLIEA (2020)
Pass-Through
N/A
Questioned Costs
N/A
Criteria
The terms and conditions of the grant agreements between the Mississippi
Department of Human Services (MDHS) and the U.S. Department of Health and
Human Services require MDHS to administer grants in compliance with the Code
of Federal Regulations (2 cfr Part 200).  The Code of Federal Regulations (2 cfr
Part 200.331) designates MDHS as a pass through entity to properly identify
subgrant requirements to subrecipients, evaluate the risk of noncompliance for
each subrecipient, and monitor the activities of subrecipients as necessary to ensure
that subgrants are used for authorized purposes, complies with the terms and
conditions of the subgrants and achieves performance goals.
The auditor evaluated MDHS’s compliance with subrecipient monitoring
requirements based on written policies and procedures designed by MDHS’s
Division of Program Integrity – Division of Monitoring (DM) to satisfy during-
the-award monitoring requirements.  DM procedures require: an on-site
86

STATE OF MISSISSIPPI
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
PART 3 – Federal Award Findings and Questioned Costs – US Dept of Agriculture (continued)
monitoring review of each subrecipient contract at least once during the subgrant
period. Monitoring tools/checklists are used during each on-site monitoring review
to provide guidance and to document a review was performed.  The on-site
monitoring workpapers are reviewed and approved by DM supervisory personnel
prior to issuance of a written report, the Initial Report of Findings &
Recommendations, which is used for communicating finding(s) and/or questioned
costs to subrecipients. The written report should be issued within 60 days from the
date of the exit conference, which is normally held on the last day of the on-site
review. Additionally, if the initial report identifies any administrative findings or
questioned costs, a response to the findings is required to be submitted by the
subrecipient to DM within thirty (30) working days from the date the report was
issued.
The Code of Federal Regulations (2 cfr 200.328(a)) states that the non-Federal
entity is responsible for oversight of the operations of the Federal award supported
activities. The non-Federal entity must monitor its activities under Federal awards
to assure compliance with applicable Federal requirements and performance
expectations are being achieved. Monitoring by the non-Federal entity must cover
each program, function or activity. See also § 200.331 Requirements for pass-
through entities.
The Code of Federal Regulations (2 cfr 200.328(b)(2)), states the non-Federal
entity must submit performance reports using OMB-approved government-wide
standard information collections when providing performance information. As
appropriate in accordance with above mentioned information collections, these
reports will contain, for each Federal award, brief information on the following
unless other collections are approved by OMB:
(i)
A comparison of actual accomplishments to the objectives of the Federal
award established for the period. Where the accomplishments of the
Federal award can be quantified, a computation of the cost (for example,
related to units of accomplishment) may be required if that information
will be useful. Where performance trend data and analysis would be
informative to the Federal awarding agency program, the Federal
awarding agency should include this as a performance reporting
requirement.
(ii)
The reasons why established goals were not met, if appropriate.
(iii) Additional pertinent information including, when appropriate, analysis
and explanation of cost overruns or high unit costs.
The Code of Federal Regulations (2 CFR 200.332 (d)) States that the pass-through
entity “Monitor the activities of the subrecipient as necessary to ensure that the
subaward is used for authorized purposes, in compliance with Federal statutes,
regulations, and the terms and conditions of the subaward; and that subaward
performance goals are achieved…”
87

STATE OF MISSISSIPPI
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
PART 3 – Federal Award Findings and Questioned Costs – US Dept of Agriculture (continued)
Additionally, the Code of Federal Regulations (2 cfr 200.62), states that a non-
Federal entity must have internal control over compliance designed to provide
reasonable assurance that transactions are executed in compliance with Federal
statutes, regulations, and the terms and conditions of the Federal award that could
have a direct and material effect on a Federal program; and any other Federal
statutes and regulations that are identified in the Compliance Supplement.
Furthermore, the Internal Control – Integrated Framework published by the
Committee of Sponsoring Organizations of the Treadway Commission (COSO)
specifies that a satisfactory control environment is only effective when there are
adequate control activities in place. Effective control activities dictate that: the
agency perform appropriate; multi-level reviews over the monitoring process; the
agency and subgrants of the agency maintain adequate documentation (i.e.
Identification Cards, Birth Certificates, Driver’s Licenses, etc.) in order to verify
eligibility information submitted by clients of the Federal Programs; the agency
perform tests over the eligibility of clients of the Federal program in order to ensure
the subrecipient is in compliance with Federal statutes, regulations, and the terms
and conditions of the subaward; the agency ensures timely communication from
the subgrantees and timely resolution of findings; and the Division of Monitoring
act separately from the programmatic funding divisions in order to prevent; detect;
and deter fraud, waste, and abuse or the misuse of federal funds.
Condition
During testwork performed on subrecipient on-site monitoring for 117 subgrant
contracts during state fiscal year 2020, auditor noted the following exceptions:
x
Two instances, or 2 percent, in which the Division of Monitoring did
not perform monitoring of subgrants.
x
Five instances, or 5 percent, in which the Supervisor's Checklist was
not included for Subrecipient on the FY 2020 Monitoring Reviews
Smartsheet; therefore, auditor could not verify Supervisory Review of
the Monitoring process.
x
10 instances, or 9 percent, in which the Programmatic Tool was not
included for Subrecipient on FY 2020 Monitoring Reviews
Smartsheet, and could not be provided by the Division of Monitoring.
x
Four instances, or 3 percent, in which the Initial Report was not issued
within 60 working days of the exit conference.
x
28 instances, or 24 percent, in which auditor could not verify
Eligibility was tested by either the Division of Monitoring or the
Programmatic Division, or the Monitoring Smartsheet did not contain
enough documentation to ensure eligibility was tested appropriately.
x
One instance, or 1 percent, in which auditor could not verify a
clearance or resolution of monitoring findings.
x
One instance, or 1 percent, in which the Division of Monitoring did
not receive a response from a subrecipient in regards to the Initial
Finding Letter.
88

STATE OF MISSISSIPPI
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
PART 3 – Federal Award Findings and Questioned Costs – US Dept of Agriculture (continued)
Cause
Effect
Recommendation
Repeat Finding
Statistically Valid
View of Responsible
Officials
Additionally, auditor noted that the Division of Monitoring performs monitoring
of subrecipients’ programmatic performance and spending based on programmatic
tools provided by MDHS’ individual programmatic divisions and not on
knowledge of the federal program and its corresponding rules and regulations.
Staff were either unaware or did not follow identified policies and procedures for
monitoring requirement.
MDHS programmatic funding divisions rely upon DM monitoring procedures to
verify compliance with program regulations and to identify potential problem areas
needing corrective action. Failure to properly monitor subrecipients in a timely
manner could allow noncompliance with federal regulations to occur and go
undetected, potentially resulting in questioned costs.
We recommend the Mississippi Department of Human Services’ Division of
Program Integrity – Division of Monitoring (DM) strengthen controls over
subrecipient monitoring. We also recommend the agency ensure subgrants are
monitored timely and that the “Report of Findings & Recommendations” prepared
as a result of the on-site monitoring be issued in a timely manner to enable
immediate corrective action procedures to be initiated.  Additionally, we
recommend that the agency maintain all supporting monitoring tools, reports, and
correspondence in the monitoring file. We further recommend the agency monitor
eligibility for all subrecipients and ensure subrecipients maintain adequate
documentation that supports the eligibility determination of their clients.
Yes – 2020-030; Yes – 2019-042 in 2019; 2018-046 in 2018; 2017-037 in 2017;
2016-027 in 2016; 2015-005 in 2015; 2014-017 in 2014; 2013-015 in 2013.
Yes.
Management at the Mississippi Department of Human Services concurs
with this finding.  See additional comments in the Corrective Action Plan on
page 304 of this audit report.
Material Weakness
Material Noncompliance
2021-014
Strengthen Controls Over Subrecipient Monitoring to Ensure Compliance with
Uniform Guidance Auditing Requirements.
CFDA Number
10.551 Supplemental Nutrition Assistance Program
93.558 Temporary Assistance for Needy Families State Programs
93.575 Child Care and Development Block Grant
93.596 Child Care Mandatory and Matching Funds of the Child Care and
Development Fund
89

STATE OF MISSISSIPPI
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
PART 3 – Federal Award Findings and Questioned Costs – US Dept of Agriculture (continued)
93.667 Social Services Block Grant
93.568 Low Income Home Energy Assistance Program
Federal Award No.
SNAP – Letter of Credit
TANF – G1901MSTANF, G2001MSTANF
CCDF – G1901MSCCDF, G2001MSCCDF
SSBG – G2001MSSOSR
LIHEAP – G20B1MSLIEA, G2001MSLIEA
Pass-Through
N/A
Questioned Costs
N/A
Criteria
The Internal Control - Integrated Framework published by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO) specifies that a
satisfactory control environment is only effective when there are adequate control
activities in place. Adequate controls would allow for a tracking system that
includes all sub-recipients receiving federal funds from the agency as well as the
maintenance of OMB monitoring files.
The Office of Management and Budget’s (OMB) Uniform Guidance states the
pass-through entity is responsible for (1) ensuring that subrecipients expending
$750,000 or more in Federal awards during their fiscal year have met the audit
requirements of Uniform Guidance and that the required audits are completed
within nine months of the end of the subrecipient’s audit period; (2) issuing a
management decision on findings within 6 months after receipt of the
subrecipient’s audit report; and (3) ensuring that the subrecipient takes timely
and appropriate corrective action on all audit findings.  In cases of continued
inability or unwillingness of a subrecipient to have the required audits, the
pass-through entity shall take appropriate action using sanctions.
Additionally, the Code of Federal Regulations (45 cfr 200.62), states that a non-
Federal entity must have internal control over compliance designed to provide
reasonable assurance that;
(a) Transactions are properly recorded and accounted for, in order to:
(1) Permit the preparation of reliable financial statements and Federal
reports;
(2) Maintain accountability over assets; and
(3) Demonstrate compliance with Federal statutes, regulations, and the
terms and conditions of the Federal award;
(b) Transactions are executed in compliance with:
(1) Federal statutes, regulations, and the terms and conditions of the
Federal award that could have a direct and material effect on a Federal
program; and
(2) Any other Federal statutes and regulations that are identified in the
Compliance Supplement; and
90

STATE OF MISSISSIPPI
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
PART 3 – Federal Award Findings and Questioned Costs – US Dept of Agriculture (continued)
(c) Funds, property, and other assets are safeguarded against loss from
unauthorized use or disposition.
The Code of Federal Regulations (2 cfr §200.331(f)) states all pass-through entities
(PTE’s) must verify that every subrecipient is audited as required by Subpart F -
Audit Requirements of this part when it is expected that the subrecipient's Federal
awards expended during the respective fiscal year equaled or exceeded the
threshold set forth in § 200.501 Audit requirements.
The Code of Federal Regulations (2 cfr §200.332) states that all pass-through
entities must:
(d) Monitor the activities of the subrecipient as necessary to ensure that the
subgrant is used for authorized purposes, in compliance with Federal statutes,
regulations, and the terms and conditions of the subgrant; and that subgrant
performance goals are achieved. Pass-through entity monitoring of the
subrecipient must include:
(1) Reviewing financial and performance reports required by the pass
through entity.
(2) Following-up and ensuring that the subrecipient takes timely and
appropriate action on all deficiencies pertaining to the Federal award
provided to the subrecipient from the pass-through entity detected through
audits, on-site reviews, and written confirmation from the subrecipient,
highlighting the status of actions planned or taken to address Single Audit
findings related to the particular subgrant.
The Code of Federal Regulations (2 cfr § 200.512(a)(1)) states the audit must be
completed and the data collection form described in paragraph (b) of this section
and reporting package described in paragraph (c) of this section must be submitted
within the earlier of 30 calendar days after receipt of the auditor's report(s), or nine
months after the end of the audit period. If the due date falls on a Saturday, Sunday,
or Federal holiday, the reporting package is due the next business day.
Furthermore, MDHS’ Policy regarding the Responsibilities of the Monitoring Unit
Related to Uniform Guidance Audit Requirements Audits includes:
(1) Providing an Initial Notice Letter to subrecipients to notify them of the audit
requirements under the OMB Uniform Guidance Audit Requirements and
providing the Subrecipient Audit Information Form (SAIF) to document that an
audit is not required for subrecipients that expend less than $750,000.
(2) Issuing a Reminder Letter to subrecipients that have not submitted either an audit
report or SAIF form to document that an audit was not required.
(3) Issuing a Demand Letter to subrecipients that fail to submit an audit report or SAIF
form to document that an audit was not required.
(4) Identifying any audit findings contained in the audit reports and notifying the
responsible MDHS Funding Division so that the audit findings can be resolved
91

STATE OF MISSISSIPPI
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
PART 3 – Federal Award Findings and Questioned Costs – US Dept of Agriculture (continued)
within the six-month deadline imposed under OMB Uniform Guidance Audit
Requirements.
(5) Maintaining an audit file for each MDHS subrecipient which includes an archive
copy of the audit report or Subrecipient Audit Information Form, the Uniform
Guide for Initial Review of Audit Reports, copies of the transmittal memorandum
sent to each MDHS Funding Division, copies of any reminder letters sent to the
subrecipient, and the Audit Finding and Questioned Costs Tracking Record and a
copy of the clearance letter issued by the MDHS Funding Division for those
subrecipients with audit findings.
Finally, the MDHS Subgrant/Agreement Manual
states that all MDHS
subrecipients are required to complete the MDHS Subrecipient Audit Information
Form (MDHS-DPI-002). This form must be submitted to the Division of Program
Integrity – Division of Monitoring no later than ninety (90) calendar days after the
end of the subrecipient’s fiscal year. This form is necessary to certify the sources
and amounts of all Federal awards received and expended by the subrecipient.
Condition
During the audit of the Mississippi Department of Human Services (MDHS), the
auditors reviewed the Division of Monitoring (DM) audit files and Single Audit
Tracking Document for MDHS Subgrantees for state fiscal year 2019. During the
review, the following weaknesses were noted:
x
One instance in which the Uniform Guide for the Initial Report of
Uniform Guidance Audit Reports was not included on the FY 2019
Single Audit Tracking Smartsheet; therefore, auditor could not verify
the DM reviewed and approved the submitted Subgrantee audit report.
x
33 instances in which Auditor could not verify if reminder letters were
sent to the Subrecipient due to these letters not being included on the
FY 2019 Single Audit Tracking Smartsheet or reminder letters were
sent untimely.
x
Three instances in which the Office of Monitoring did not receive the
Subgrantee SAIF form within 90 days of the subrecipient’s fiscal year
end. Average submission was 123 working days late.
x
Eight instances in which the FY 2019 Single Audit Tracking
Smartsheet did not contain a SAIF form or audit report for the
Subgrantee; therefore, auditor could not verify compliance with the
monitoring process.
Cause
Staff were either unaware or did not follow identified policies and procedures for
subrecipient monitoring related to Uniform Guidance.
Effect
Failure to properly monitor subrecipients could allow noncompliance with federal
regulations to occur and go undetected, potentially resulting in fraud, waste, and
abuse within the agency.
Recommendation
We recommend the Mississippi Department of Human Services’ Division of
Program Integrity – Division of Monitoring (DM) strengthen controls over
92

STATE OF MISSISSIPPI
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
PART 3 – Federal Award Findings and Questioned Costs – US Dept of Agriculture (continued)
Repeat Finding
Statistically Valid
View of Responsible
Officials
subrecipient monitoring for Uniform Guidance audits to ensure recipients
expending $750,000 or more in Federal funds during their fiscal year are
appropriately monitored and an Uniform Guidance audit is obtained and continue
to follow-up in a timely manner to obtain an Uniform Guidance audit or
Subgrantee Audit Information Form after the demand letter is issued.
Yes – 2020-031; Yes – 2019-043; 2018-047 in 2018; 2017-038 in 2017; 2016-028
in 2016; 2015-009 in 2015; 2014-016 in 2014.
Yes.
Management at the Mississippi Department of Human Services concurs with
this finding.  See additional comments in the Corrective Action Plan on page
306 of this audit report.
93

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STATE OF MISSISSIPPI
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
FOR THE YEAR ENDED JUNE 30, 2021
PART 3 – FEDERAL AWARD FINDINGS AND QUESTIONED COSTS
U.S. DEPARTMENT OF EDUCATION
Finding Number
Finding and Recommendation__________________________________
DEPARTMENT OF EDUCATION
ACTIVITIES ALLOWED AND ALLOWABLE COSTS
Material Weakness
Material Noncompliance
2021-044
Strengthen Controls to Ensure Compliance with Allowable Costs Requirements of
the Coronavirus (COVID) Relief Funds (CRF) and Elementary and Secondary
School Emergency Relief Fund (ESSER).
ALN Number
84.425D Education Stabilization Fund (ESSER)
21.019 Coronavirus Relief Fund (CRF)
Federal Award No.    All Current Active Grants
Pass-through Entity
N/A
Questioned Costs
N/A
Background
During the Fiscal Year 2020 Legislative Session of the Mississippi Legislature,
legislators appropriated over $1.25 billion dollars of Coronavirus Aid, Relief, and
Economic Security Act (CARES) funds from the Coronavirus Relief Fund grant
(ALN 21.019).  As part of those appropriated funds, the Mississippi Department
of Education was charged with assisting schools in purchasing laptop computers
or tablets so that K-12 students could participate in distance learning efforts.  The
MS Legislature required schools to “match” any CRF funds utilized with ESSER
funds at a 20/80 percent match (20 percent ESSER).  Since these funds could not
be segregated from the total purchase price of the computers, both CRF and
ESSER share finding 2021-044.
Criteria
Per Section 31-7-9, Mississippi Code of 1972, Annotated, “Procurement
regulations shall be promulgated by the Office of Purchasing, Travel, and Fleet
Management, with approval of the Public Procurement Review Board.”
Per the Mississippi Procurement Manual, Section 1.103, “All procurement
regulations require all parties involved in the negotiation, performance or
administration of Mississippi contracts to act in good faith.”
95

STATE OF MISSISSIPPI
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
PART 3 – Federal Award Findings and Questioned Costs – US Dept of Education (continued)
Per the Mississippi Procurement Manual, Section 1.104 (2), “The procurement
regulations shall apply to every expenditure of public funds irrespective of their
source, when such expenditures are made in compliance with or are designated by
Section 31-7-1, et seq. Mississippi Code of 1972, Annotated. However, in the event
of a conflict, the guidelines of the grant, gift, or self-generated funds shall prevail;
and in any case, violation of these regulations shall carry such penalties as may be
applicable under state laws.”
Per the Mississippi Procurement Manual, Section 3.110, “Notwithstanding any
other provisions of this regulation, the Chief Procurement Officer, the head of a
purchasing agency, or a designee of either officer may make or authorize others to
make emergency procurements under emergency conditions … provided, that such
emergency procurements shall be made with such competition as is practicable
under the circumstances.”
Condition
Mississippi Senate Bill 3044, adopted during the 2020 legislative session,
otherwise known as the “Equity in Distance Learning Act (the Act)”, provided
funding for devices and other technology for the students, teachers, and
administrators in the schools of Mississippi.    The Act authorized MDE to prepare
an Express Product Listing (EPL) for computer equipment.  The Act further
authorized MDE to utilize emergency procurement procedures to solicit bids for
the EPL.  MDE signed contracts with Apple, Inc. to provide Apple devices to
schools without any competitive bidding process.  However, MDE opted to use a
competitive bidding process with bid solicitations for other computer and
technology needs.
During our audit, auditors noted that MDE staff conducted regular meetings with
individuals from the winning bidder of the authorized Express Product Listing
prior to publishing the official Request For Quote (RFQ) to vendors.  Additionally,
MDE’s Chief Information Officer forwarded a draft of the “Prime Contractor
Requirements” or specifications to a member of the winning bidder 20 days before
the RFQ was officially released.  The winning bidder made modifications to the
specifications before they were submitted in the RFQ.
MDE stated that all vendors that were solicited for bids were provided the
specifications in advance; however, only the winning bidder was given the
opportunity to make suggestions to edits to the specifications.  According to
documentation provided to auditors, the following serves as a timeline of
communication:
July 2, 2020 – Email to future winning bidder with listed specifications as “draft”.
July 9, 2020 – Email from future winning bidder to MDE with changes in
specifications marked in red.
July 21, 2020 – Microsoft “Teams” chat with second bidder where specifications
(with some of future winning bidder edits) are provided.
July 22, 2020 – Email to third bidder where specifications (with some of future
winning bidder edits) are provided.
July 29, 2020 – Official RFQ was provided to vendors.
96

STATE OF MISSISSIPPI
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
PART 3 – Federal Award Findings and Questioned Costs – US Dept of Education (continued)
July 31, 2020 – Deadline for vendor questions.
August 1, 2020 – Deadline for questions answered.
August 3, 2020 – Deadline for submissions of responses to RFQ.
August 3, 2020 – Evaluation of Responses.
August 4, 2020 – Vendor interviews.
August 4, 2020 – Review of submissions by MDE panel.
August 5, 2020 – Contract negotiations.
August 6, 2020 – Board Approval.
August 18, 2020 – Contract Awarded (no later than date).
It should be noted that four vendors submitted proposals and were evaluated.
However, MDE did not present documentation that showed the fourth vendor was
provided specifications in advance.  The memorandum on August 4, 2020 that
describes the selection process in broad terms only references three vendors, but
does show a scored rubric for four vendors, illustrating inconsistencies in the
procurement process.
The winning bidder was provided the ability to edit specifications and was
provided the specifications approximately 20 days in advance while the other
vendors were only given approximately two weeks to prepare bids.  The winning
bidder suggested extensive “prime contractor requirements” for the specifications,
including information suggesting how many square feet distribution centers
needed to be sized, financing options, experience with specific programs, etc.
Auditors could not see evidence that these specific requirements were added to the
specifications provided to other vendors; however, the winning bidder was
provided an unfair advantage in suggesting that these requirements would aid in
the deployment process.  Additionally, similar requirements and experience factors
were noted by MDE and the procurement reviewers during the proposal analysis
phase.
When comparing prices on the RFQ, the winning bidder received 35 points for the
category of “Devices, including price considerations.”  However, when price was
compared, the winning bidder was not the lowest bidder, nor the second lowest
bidder.  The next highest score in the category was “25” but the prices of the
competitor were significantly lower.  MDE failed to provide any information on
why the points were assigned and calculated other than an overall memorandum
of the scores and process.  Based on information provided, it does not appear that
the procurement process was designed to promote fair and open competition; nor
does it appear that all parties negotiated the agreements in good faith.
Cause
MDE failed to act in good faith in obtaining requisitions of equipment related to
CRF and ESSER funds.
Effect
Failure to act in good faith during procurement negotiations can open MDE to civil
litigation claims.  Additionally, implied preference to vendors could result in
public distrust in the procurement process.  Lastly, implied preference could result
in fraud, waste, or abuse during the procurement process.
97

STATE OF MISSISSIPPI
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
PART 3 – Federal Award Findings and Questioned Costs – US Dept of Education (continued)
Recommendation      We recommend the Mississippi Department of Education strengthen controls to
ensure compliance with allowable costs requirements of the Coronavirus (COVID)
Relief Funds (CRF) and Elementary and Secondary School Emergency Relief
Fund (ESSER).
Repeat Finding
No.
Statistically Valid
No.
View of Responsible
Officials
Management at the Mississippi Department of Education does not concur with this
finding.  See additional comments in the Corrective Action Plan on page 249 of
this audit report; and the Auditor’s Response to the Corrective Action Plan on page
107 and 261.
REPORTING
Material Weakness
Material Noncompliance
2021-035
Strengthen Controls to Ensure Compliance with Federal Funding Accountability
and Transparency Act (FFATA) requirements
ALN Number
84.010 Title I – Grants to Local Education Agencies
84.425D Education Stabilization Fund (ESSER)
Federal Award No.
All Current Active Grants
Pass-through Entity
N/A
Questioned Costs
N/A
Criteria
     The Code of Federal Regulations (2 CFR 170, Appendix A((I)(a)(2)(ii)) states a
subaward must be reported in FSRS by the last day of the month following the
obligation date, which is defined as the date the subaward is signed.
The Code of Federal Regulations (2 CFR 170, Appendix A(I)(b)(1)(i)) sets forth
the reporting requirements of the Transparency Act that related to subawards under
grants.  Direct recipients of grants who make first-tier subawards equal to or
exceeding $30,000 are required to report each subaward obligating action equal to
$30,000 or more in Federal funds.
Condition
     During testwork performed for the Federal Funding Accountability and
Transparency Act (FFATA) reporting fiscal year 2021, the auditor noted the
following exceptions:
98

STATE OF MISSISSIPPI
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
PART 3 – Federal Award Findings and Questioned Costs – US Dept of Education (continued)
Fifteen instances out of 15 reports tested for Title I, in which there was
no supporting documentation for the date the report was submitted to
the Federal Funding Accountability and Transparency Act Subaward
Reporting System (FSRS). Due to the lack of supporting documentation
for the date of report submission, the auditor was not able to determine
if the FSRS reports were reported timely, no later than the last day of
the month following the month in which the subaward/subaward
amendment obligation was made or the subcontract award/subcontract
modification was made.
Transactions
Tested
Subaward
Not
Reported
Report Not
Timely
Subaward
Amount
Incorrect
Subaward
Missing Key
Elements
15
0
15
0
0
Dollar
Amount
Tested
For
Transactions
Subaward
Not
Reported
Report Not
Timely
Subaward
Amount
Incorrect
Subaward
Missing Key
Elements
$21,747,051
$0
$21,747,051
$0
$0
Fifteen (15) instances out of 15 reports tested for Elementary and
Secondary School Emergency Relief Fund II (ESSER II), in which the
report was not submitted within the required timeframe.  Of the 15
reports tested, all had a subaward action date of 2/25/2021.  Submission
date for these reports was 4/12/2021.  Per the compliance supplement,
the FFATA reports are required to be submitted no later than the last
day of the following month in which the sub-grant is awarded.  The
deadline for reports reviewed would be 3/31/21; therefore, all were 12
days late.
Transactions
Tested
Subaward
Not
Reported
Report Not
Timely
Subaward
Amount
Incorrect
Subaward
Missing
Key
Elements
15
0
15
0
0
Dollar
Amount
Tested
For
Transactions
Subaward
Not
Reported
Report Not
Timely
Subaward
Amount
Incorrect
Subaward
Missing
Key
Elements
$137,165,965
$0
$137,165,965 $0
$0
Mississippi Department of Education (MDE) has not established
internal control policies or procedures, nor is a supervisory review
performed of the subrecipient contract information that is reported to
verify the data is reported timely.
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STATE OF MISSISSIPPI
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
PART 3 – Federal Award Findings and Questioned Costs – US Dept of Education (continued)
Cause
MDE personnel did not maintain documentation of the date of report submission
to FSRS.
Effect
Failure to maintain documentation that reports are submitted timely can undermine
transparency and accountability since the public will not know about these grants
awards in an appropriate manner.
Recommendation
We recommend the Mississippi Department of Education (MDE) strengthen
controls to ensure compliance with Federal Funding Accountability and
Transparency Act (FFATA) requirements.
Repeat Finding
No.
Statistically Valid
Yes.
View of Responsible
Officials
Management at the Mississippi Department of Education does not concur with this
finding.  See additional comments in the Corrective Action Plan on page 253 of
this audit report; and Auditor’s Response to the Corrective Action Plan on page
107 and 261.
SUBRECIPIENT MONITORING
Material Weakness
Material Noncompliance
2021-036
Strengthen Controls to Ensure Compliance with On-Site Monitoring Requirements
for Title I.
ALN Number
84.010 Title I – Grants to Local Education Agencies
Federal Award No.
All Current Active Grants
Pass-through Entity
N/A
Questioned Costs
Criteria
N/A

The
terms
and
conditions
of
the
grant
agreements
between
the
Mississippi Department of Education (MDE) and the U.S. Department of
Education require MDE to administer grants in compliance with the Code of
Federal Regulations (2 CFR Part 200 – Uniform Guidance). The Code of
Federal Regulations (2 CFR Part 200.332) designates MDE, as a pass
through entity, to properly identify subaward requirements to subrecipients,
evaluate the risk of noncompliance for each subrecipient, and monitor the
activities of subrecipients as necessary to ensure that subawards are used for
authorized purposes, complies with the terms and conditions of the subawards
and achieves performance goals.
100

STATE OF MISSISSIPPI
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
PART 3 – Federal Award Findings and Questioned Costs – US Dept of Education (continued)
The Code of Federal Regulations (2 CFR 200.332(b)) states, all pass-through
entities must evaluate each subrecipient's risk of noncompliance with Federal
statutes, regulations, and the terms and conditions of the subaward for purposes of
determining the appropriate subrecipient monitoring described in paragraphs (d)
and (e) of this section, which may include consideration of such factors as: (1) The
subrecipient's prior experience with the same or similar subawards; (2) The results
of previous audits including whether or not the subrecipient receives a Single Audit
in accordance with Subpart F of this part, and the extent to which the same or
similar subaward has been audited as a major program; (3) Whether the
subrecipient has new personnel or new or substantially changed systems; and (4)
The extent and results of Federal awarding agency monitoring (e.g., if the
subrecipient also receives Federal awards directly from a Federal awarding
agency).
The Code of Federal Regulations (2 CFR 200.332(d)) requires all pass-through
entities must monitor the activities of the subrecipient as necessary to ensure that
the subaward is used for authorized purposes, in compliance with Federal statutes,
regulations, and the terms and conditions of the subaward; and that subaward
performance goals are achieved.
   We evaluated MDE’s compliance with subrecipient monitoring requirements
based on written policies and procedures designed by MDE’s Office of Federal
Programs Division of Compliance (OFP-DC) to satisfy during-the-award
monitoring requirements.  OFP-DC procedures require an on-site monitoring
review of each subgrantee contract based on risk assessment level of moderate or
high. A tracking mechanism is used to ensure all subgrantee contracts are properly
identified and monitored.  OFP-DC written procedures requires the MDE
Executive Director of Federal Programs to send the monitoring report with
appropriate cover letter to the Local Educational Agency (LEA) notifying the
Superintendent, Federal Programs Director, and Business Manager, typically
within 45 days.  OFP-DC written procedures require the LEA to prepare a
Corrective Action Plan (CAP) within 30 days of receipt of the monitoring report
and require OFP-DC to follow up with the CAP to ensure it is accomplished,
typically, within 12 months of the monitoring visit. Finally, the written procedures
state a potential condition of approval of the LEA’s annual funding application is
that the status of the monitoring report must be either Closed or Pending
Compliance with Approved Corrective Action Plan.
Condition
     For the 2019 – 2020 monitoring cycle, the Mississippi Department of Education
(MDE) did not perform a risk assessment to evaluate each subrecipient's risk of
noncompliance with Federal statutes, regulations, and the terms and conditions of
the subaward. Instead, MDE performed on-site monitoring for all local educational
agencies (LEAs) that had not been monitored in the last three monitoring cycles.
During testwork performed on subrecipient monitoring, the auditor tested 37 of the
47 local education agencies (LEAs) that had on-site monitoring for the 2019-2020
monitoring cycle and noted the following:
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SCHEDULE OF FINDINGS AND QUESTIONED COSTS
PART 3 – Federal Award Findings and Questioned Costs – US Dept of Education (continued)

Seven instances (or 19 percent) in which the school district did not provide
MDE with a corrective action plan (CAP) within 30 days of the monitoring
report.

One instance (or 3 percent) in which no documentation of a monitoring
instrument and follow-up communication was provided.
Cause
        MDE did not follow federal regulations related to assessing the risk of each LEA
prior to performing on-site monitoring for the 2019-2020 monitoring cycle. In
addition, MDE did not follow policies and procedures related to ensuring the LEAs
submit their CAP within twelve months of the monitoring visits and the monitoring
instruments are properly maintained after the on-site visits are performed.
Effect
MDE programmatic funding divisions rely upon on-site monitoring procedures to
verify compliance with program regulations and to identify potential problem areas
needing corrective action. Failure to properly monitor subrecipients and ensure
closure of the monitoring visits in a timely manner could allow noncompliance
with federal regulations to occur and go undetected, potentially resulting in
questioned costs.
Recommendation
We recommend the Mississippi Department of Education strengthen controls to
ensure compliance with subrecipient monitoring requirements for Title I.
Repeat Finding
Yes, 2020-032.
Statistically Valid
Yes.
View of Responsible
Officials
Management at the Mississippi Department of Education concurs with this finding.
See additional comments in the Corrective Action Plan on page 254 of this audit
report.
Material Weakness
Material Noncompliance
2021-037
Strengthen Controls to Ensure Compliance with On-Site Subrecipient Monitoring
Requirements for Special Education Cluster Programs.
ALN Number
84.027 Special Education – Grants to States (IDEA, Part B)
84.173 Special Education – Preschool Grants (IDEA, Preschool)
Federal Award No.
All Current Active Grants
Pass-through Entity
N/A
Questioned Costs
N/A
102

STATE OF MISSISSIPPI
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
PART 3 – Federal Award Findings and Questioned Costs – US Dept of Education (continued)
Criteria
The terms and conditions of the grant agreements between the Mississippi
Department of Education (MDE) and the U.S. Department of Education require
MDE to administer grants in compliance with the Code of Federal Regulations (2
CFR Part 200 – Uniform Guidance). The Code of Federal Regulations (2 CFR
Part 200.331) designates MDE, as a pass-through entity, to properly identify
subaward requirements to subrecipients, evaluate the risk of noncompliance for
each subrecipient, and monitor the activities of subrecipients as necessary to ensure
that subawards are used for authorized purposes, complies with the terms and
conditions of the subawards and achieves performance goals.
The Code of Federal Regulations (2 CFR 200.332(b)) states, all pass-through
entities must evaluate each subrecipient's risk of noncompliance with Federal
statutes, regulations, and the terms and conditions of the subaward for purposes of
determining the appropriate subrecipient monitoring described in paragraphs (d)
and (e) of this section, which may include consideration of such factors as: (1) The
subrecipient's prior experience with the same or similar subawards; (2) The results
of previous audits including whether or not the subrecipient receives a Single Audit
in accordance with Subpart F of this part, and the extent to which the same or
similar subaward has been audited as a major program; (3) Whether the
subrecipient has new personnel or new or substantially changed systems; and (4)
The extent and results of Federal awarding agency monitoring (e.g., if the
subrecipient also receives Federal awards directly from a Federal awarding
agency).
The Code of Federal Regulations (2 CFR 200.332(d)) requires all pass-through
entities must monitor the activities of the subrecipient as necessary to ensure that
the subaward is used for authorized purposes, in compliance with Federal statutes,
regulations, and the terms and conditions of the subaward; and that subaward
performance goals are achieved.
MDE’s Office of Special Education Bureau of Monitoring and Technical
Assistance (OSE-BMTA) procedures require an on-site monitoring visit of each
subgrantee contract based on a four-year rotating cycle. Each Local Education
Agency (LEA) in Mississippi receives an on-site compliance monitoring visit at
least once every four years. The OSE-BMTA written procedures state each
monitoring visit will have a monitoring team leader who is responsible for
completing the monitoring report and sending the report to the Office of Special
Education (OSE) Bureau Director for approval. The monitoring instrument is
designed to include all areas of compliance to be monitored and consists of a
programmatic portion and a fiscal portion. The written procedures require the
monitoring report be provided to the LEA within 30 calendar days of the
monitoring visit. The written procedures further state that within 14 calendar days
from the receipt of the monitoring report, the LEA must submit a response to
OSE of any inconsistencies in the report along with documentation to support the
findings. OSE-BMTA written procedures require the LEA to prepare and submit
an Improvement Plan within 30 days of receipt of the monitoring report. The
written procedures further state that all noncompliance must be corrected as soon
103

STATE OF MISSISSIPPI
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
PART 3 – Federal Award Findings and Questioned Costs – US Dept of Education (continued)

as possible, but in no case more than 12 months from the date of the monitoring
report.

Condition
             For the 2019 – 2020 monitoring cycle, the Mississippi Department of Education
(MDE) did not perform a risk assessment to evaluate each subrecipient's risk of
noncompliance with Federal statutes, regulations, and the terms and conditions of
the subaward. In addition, The Mississippi Department of Education (MDE) did
not properly monitor all Local Education Agencies (LEAs) on a four-year cycle.
Per MDE policy, roughly 35 LEAs should be monitored in the monitoring cycle
each year. During the last completed monitoring cycle (School Year 2019 – 2020),
no cyclical monitoring cycle was performed. Thus, the auditor was unable to
continue testing the cyclical monitoring and deemed controls ineffective. The
agency has not fully implemented the corrective action plan from the prior year
finding over subrecipient monitoring.

Cause                           MDE did not follow federal regulations related to assessing the risk of each LEA.
In addition, MDE did not follow written policies related to their cyclical
monitoring cycle.

Effect
MDE programmatic funding divisions rely upon on-site monitoring procedures to
verify compliance with program regulations and to identify potential problem areas
needing corrective action. Failure to properly monitor subrecipients and ensure
closure of the monitoring visits in a timely manner could allow noncompliance
with federal regulations to occur and go undetected, potentially resulting in
questioned costs.

Recommendation
We recommend the Mississippi Department of Education strengthen controls to
ensure compliance with subrecipient monitoring requirements for the Special
Education Cluster Programs.

Repeat Finding
Yes, 2020-033.

Statistically Valid
No.

View of Responsible
Officials
Management at the Mississippi Department of Education concurs with this finding.
See additional comments in the Corrective Action Plan on page 255 of this audit
report.

SPECIAL TESTS AND PROVISIONS – PARTICIPATION OF PRIVATE SCHOOL CHILDREN

Significant Deficiency
Immaterial Noncompliance

2021-038
Strengthen Controls to Ensure Compliance with Equitable Participation of Private
School Children Requirements.
104

STATE OF MISSISSIPPI
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
PART 3 – Federal Award Findings and Questioned Costs – US Dept of Education (continued)

ALN Number
84.010 Title I – Grants to Local Education Agencies

Federal Award No.
All Current Active Grants

Pass-through Entity
N/A

Questioned Costs
N/A

Criteria
The Mississippi Department of Education (MDE) Final Equitable Services Plan
states, the equitable services filings required include the Final Equitable Service
Plan for each private school served. Each form must be returned, marked, and
signed by the district representative to certify that the plan is true and correct.  The
district is required to upload the Final Equitable Service Plan and Written
Affirmation into Mississippi Comprehensive Automated Performance-based
System (MCAPS) by May 29, 2020, though for FY21 that deadline was waived
due to the pandemic and changed to when a local educational agency (LEA)
reopened.

The Elementary and Secondary Education Act Section 1117 (c)(1) states, “A local
educational agency shall have the final authority, consistent with this section, to
calculate the number of children, ages 5 through 17, who are from low-income
families and attend private schools by— (A) using the same measure of low
income used to count public school children; (B) using the results of a survey that,
to the extent possible, protects the identity of families of private school students,
and allowing such survey results to be extrapolated if complete actual data are
unavailable; (C) applying the low-income percentage of each participating public
school attendance area, determined pursuant to this section, to the number of
private school children who reside in that school attendance area; or (D) using an
equated measure of low income correlated with the measure of low income used
to count public school children.”

The Internal Control – Integrated Framework, published by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO) and the U.S.
Government Accountability Office Standards for Internal Control in the Federal
Government (Green Book) specify that a satisfactory control environment is only
effective when there are adequate control activities in place. Effective control
activities dictate that an agency maintain an audit trail to ensure adherence to
written policies and procedures.

Condition
During testwork performed on the equitable participation of private school
children requirements for Title I, the auditor tested five out of 30 local educational
agencies (LEAs) receiving Title I equitable services for fiscal year 2021(School
Year 2020-2021) and noted the following exceptions:

 Two instances (or 40 percent) in which the number of qualifying low-
income students per the Household Income Surveys does not agree with
the low-income count number reported in the Non-Public Equitable
105

STATE OF MISSISSIPPI
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
PART 3 – Federal Award Findings and Questioned Costs – US Dept of Education (continued)

Services section of the FY 2021 Consolidated Application submitted by
the LEA.
 One instance (or 20 percent) in which the number of qualifying low-
income students per the Free/Reduced Lunch Applications does not agree
with the low-income count number reported in the Non-Public Equitable
Services section of the FY 2021 Consolidated Application submitted by
the LEA.
 One instance (or 20 percent) in which the LEA did not submit the Final
Equitable Service Plan and Written Affirmation in a timely manner.  The
Final Equitable Service Plan and Written Affirmation was signed and
uploaded to Mississippi Comprehensive Automated Performance-based
System (MCAPS) following the end of School Year 2020-2021.
 One instance (or 20 percent) in which the Final Equitable Service Plan was
submitted without the District’s Representative’s signature.
 One instance (or 20 percent) in which a LEA was listed on the SY20-21
(FY21) Equitable Services spreadsheet as participating in Title I Equitable
Services, but there were no allocation amounts in MCAPS in the Non-
Public Equitable Services screen for School Year 2020-2021 (FY21).

Cause
MDE staff did not review the documentation used by the LEAs to determine the
qualifying low-income student count numbers reported in the Consolidated
Application in MCAPS prior to MDE’s Office of Federal Programs approval.

Effect
Failure to review the proper documentation to support the data submitted by the
LEA on their Consolidated Application prior to MDE’s Office of Federal Programs
approval may result in improper payment to the LEAs which could also reduce the
amount of future funding of Title I.

Recommendation
We recommend the Mississippi Department of Education strengthen controls to
ensure compliance with equitable participation of private school children
requirements.

Repeat Finding
No.

Statistically Valid
Yes.

View of Responsible
Officials
Management at the Mississippi Department of Education does not concur with this
finding.  See additional comments in the Corrective Action Plan on page 257 of
this audit report; and the Auditor’s Response to the Corrective Action Plan on page
108 and 262.

_____________________________________________________________________________________

106

Auditor’s note to the Corrective Action Plan from Mississippi Department of Education
(MDE) Management
Department of Education – Activities Allowed/Allowable Costs - Material Weakness/Material
Noncompliance
2021-044
Strengthen Controls to Ensure Compliance with Allowable Costs Requirements of
the Coronavirus (COVID) Relief Funds (CRF) and Elementary and Secondary
School Emergency Relief Fund (ESSER).
MDE states in their response to the finding that “the crux of this finding hinges on the erroneous assertion
that only one vendor was allowed to offer input on the specifications.”  The finding acknowledges that
MDE provided evidence that three of the four vendors received the specifications in advance, but the
winning bidder received them 20 days in advance, while the remaining two vendors received them 7-8 days
in advance.  Additionally, the specifications sent to the winning bidder were marked “draft” and redline
comments were added to the specifications by the winning bidder when they were returned to MDE.  While
MDE did not adopt all of the winning bidder’s suggested modifications to the specifications, modifications
like the size of the needed laptop screens were adopted by MDE.  MDE could provide no support that the
fourth bidder was given advance notice of the specifications.
Secondly, MDE asserts that the points assigned to the winning bidder for the “Devices” category hinged on
the guarantee that the devices would be delivered by the November 20, 2022 delivery timeline; however,
two other bidders with lower price points overall on devices also committed to having devices delivered no
later than November 20, 2022.  In fact, bidders were told that that delivery by November 20, 2022 was a
requirement to bid on the RFQ.  MDE did not describe why the bidders received the points that they did (as
stated in the finding), and their statement that it depended on delivery dates is not supported by the RFQs.
This type of discrepancy is the reason that the evaluations of RFQ’s should contain sufficient detailed
justification of points awarded.
Department of Education – Reporting – Material Weakness - Material Noncompliance
2021-035
Strengthen Controls to Ensure Compliance with Federal Funding Accountability and
Transparency Act (FFATA) Requirements.
MDE states that they do not concur that FFATA information was entered timely or that no documentation
was maintained that could verify the information was entered; however, their response verifies that “MDE
is unable to demonstrate when the file was initially submitted…” Additionally, MDE has provided a
STATE OF MISSISSIPPI
OFFICE OF THE STATE AUDITOR
SHAD WHITE
STATE AUDITOR
POST OFFICE BOX 956 • JACKSON, MISSISSIPPI 39205 • (601) 576-2800 • FAX (601)576-2650
107

corrective action plan to address the elements of the finding. OSA will review this corrective action in later
audits to determine if MDE has complied.”
Department of Education – Special Tests and Provisions – Significant Deficiency/Immaterial
Noncompliance
2021-038
Strengthen Controls to Ensure Compliance with Equitable Participation of Private
School Children Requirements.
MDE states that they do not believe this is a systemic problem with the program, but states that they do not
require supporting documentation in the application phase, and review those documents in the monitoring
phase of the grant process. There is a significant lag time between the application phase on the grant cycle
and MDE’s subrecipient monitoring. Due to this lag, errors in the Local Educational Agency (LEA’s)
documentation would not be identified timely, resulting in improper Title-I allocation. In addition, every
LEA is not selected for on-site monitoring each year. Not reviewing the LEA’s documentation prior to
approval could result in errors in the Title-I allocation that may not be identified timely or at all. MDE
should consider strengthening these controls to ensure the proper allocation of funds timely.
POST OFFICE BOX 956 • JACKSON, MISSISSIPPI 39205 • (601) 576-2800 • FA (601)576-2650
108

STATE OF MISSISSIPPI
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
FOR THE YEAR ENDED JUNE 30, 2021
PART 3 – FEDERAL AWARD FINDINGS AND QUESTIONED COSTS
U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES
Finding Number
Finding and Recommendation__________________________________
DEPARTMENT OF HEALTH
REPORTING
Significant Deficiency
Immaterial Noncompliance
2021-033
Strengthen Controls to Ensure Compliance with the Federal Funding
Accountability and Transparency Act (FFATA) Reporting Requirements.
ALN Number
93.323 Epidemiology and Laboratory Capacity for Infectious Diseases
Federal Award No.
All Current Active Grants
Pass-through Entity
N/A
Questioned Costs
N/A
Criteria
Per the Code of Federal Regulations (2 cfr 200.303), “(a) 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 of the Federal award.”
Under the requirements of the Federal Funding Accountability and Transparency
Office (Pub. L. No. 109-282) as amended by section 6202 of Public Law 110-252,
recipients of grants or cooperative agreements are required to report first-tier
subawards of $30,000 or more to Federal Funding Accountability and
Transparency Act Subaward Reporting System (FSRS) no later than the last day
of the month following the month in which the subaward/subaward amendment
obligation was made or the subcontract award/subcontract modification was made.
The Internal Control – Integrated Framework published by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO) and the U.S.
Government Accountability Office Standards for Internal Control in the Federal
Government (Green Book) specifies that a satisfactory control environment is only
effective when control activities exist. This includes but is not limited to the entity
determining which laws and regulations apply to the entity and setting objectives
that incorporate these requirements.
109

STATE OF MISSISSIPPI
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
PART 3 – Federal Award Findings and Questioned Costs – US Department of HHS (continued)
Condition
Cause
Effect
Recommendation
Repeat Finding
Statistically Valid
View of Responsible
Officials
When performing testwork related to Federal Funding Accountability and
Transparency Act (FFATA) Reporting as of June 30, 2021, the auditor noted that
the Mississippi Department of Health did not perform reporting over FFATA as
required.
The Mississippi Department of Health (Health) staff were unaware of FFATA
reporting requirements.
Failure to report any applicable awards and subawards resulted in Health being in
noncompliance with federal reporting requirements and could result in a
misstatement of federal expenditures to the federal awarding agency. Failure to
submit reports could additionally result in losing federal grants due to
noncompliance.
We recommend the Mississippi Department of Health strengthen controls to
ensure compliance with the Federal Funding Accountability and Transparency Act
(FFATA) Reporting Requirements.
No.
No.
Management at the Mississippi Department of Health concurs with this
finding. See additional comments in the Corrective Action Plan on page 9 of
this audit report.
110

STATE OF MISSISSIPPI
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
PART 3 – Federal Award Findings and Questioned Costs – US Department of HHS (continued)
DEPARTMENT OF HUMAN SERVICES
REPORTING
Material Weakness
Material Noncompliance
2021-010
Strengthen Controls to Ensure Compliance with the Federal Funding
Accountability and Transparency Act (FFATA) Reporting Requirements.
ALN Number(s)
93.558 Temporary Assistance for Needy Families (TANF)
93.667 Social Services Block Grant (SSBG)
93.568 Low Income Home Energy Assistance (LIHEAP)
Federal Award             G1901MSTANF (2019)
G1901MSSOSR (2019)
G1901MSLIEA (2019)
         G2001MSTANF (2020)
G2001MSSOSR (2020)
G2001MSLIEA (2020)
         G2101MSTANF (2021)
G2101MSSOSR (2021)
G2101MSLIEA (2021)
Pass-Through
 N/A
Questioned Costs
 N/A
Criteria
Per the Code of Federal Regulations (2 cfr 170.200), “(a) federal awarding
agencies are required to publicly report Federal awards that equal or exceed the
micro-purchase threshold and publish the required information on a public-facing,
OMB-designated, government wide website and follow Uniform Guidance to
support Transparency Act implementation. (b) Federal awarding agencies that
obtain post-award data on subaward obligations outside of this policy should take
the necessary steps to ensure that their recipients are not required, due to the
combination of agency-specific and Transparency Act reporting requirements, to
submit the same or similar data multiple times during a given reporting period.”
The Internal Control – Integrated Framework published by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO) and the U.S.
Government Accountability Office Standards for Internal Control in the Federal
Government (Green Book) specifies that a satisfactory control environment is only
effective when control activities exist. This includes but is not limited to the entity
determining which laws and regulations apply to the entity and setting objectives
that incorporate these requirements.
Condition
When performing testwork related to Federal Funding Accountability and
Transparency Act (FFATA) Reporting as of June 30, 2021, the auditor noted that
the Mississippi Department of Human Services (MDHS) did not perform reporting
over FFATA as required by the Code of Federal Regulations (2 cfr 170.200).
Cause
MDHS staff failed to follow grant regulations requiring FFATA reporting.
111

STATE OF MISSISSIPPI
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
PART 3 – Federal Award Findings and Questioned Costs – US Department of HHS (continued)
Effect
Recommendation
Repeat Finding
Statistically Valid
View of Responsible
Officials
Failure to report any applicable awards and subawards resulted in MDHS being in
noncompliance with federal reporting requirements and could result in a
misstatement of federal expenditures to the federal awarding agency.
We recommend the Mississippi Department of Human Services strengthen
controls to ensure compliance with the Federal Funding Accountability and
Transparency Act (FFATA) Reporting.
No.
No.
Management at the Mississippi Department of Human Services concurs
with this finding.  See additional comments in the Corrective Action Plan on
page 303 of this audit report.
Significant Deficiency
2021-012
Strengthen Controls Over the Compilation and Submission of Required Federal
Reports for the Social Services Block Grant (SSBG) Program.
ALN Number(s)
93.667 Social Services Block Grant (SSBG)
Federal Award
G1901MSSOSR (2019)
       G2001MSSOSR (2020)
         G2101MSSOSR (2021)
Pass-Through
N/A
Questioned Costs
N/A
Criteria
Per the Code of Federal Regulations (2 cfr 200.62), “a nonfederal entity must have
internal control over compliance designed to provide reasonable assurance that;
(a) Transactions are properly recorded and accounted for, in order to:
(1) Permit the preparation of reliable financial statements and Federal
reports…”
Additionally, the Code of Federal Regulations (2 cfr 200.334), states that “Financial
records, supporting documents, statistical records, and all other non-Federal entity
records pertinent to a Federal award must be retained for a period of three years from
the date of submission of the final expenditure report or, for Federal awards that are
renewed quarterly or annually, from the date of the submission of the quarterly or
annual financial report, respectively, as reported to the Federal awarding agency or pass
through entity in the case of a subrecipient…”
112

STATE OF MISSISSIPPI
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
PART 3 – Federal Award Findings and Questioned Costs – US Department of HHS (continued)
The Internal Control – Integrated Framework published by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO) and the U.S.
Government Accountability Office Standards for Internal Control in the Federal
Government (Green Book) specify that a satisfactory control environment is only
effective when control activities exist. Good internal controls dictate a proper review
process for all calculations and reports. These controls should be reviewed throughout
the accounting process in such a manner to ensure amounts are properly transferred to
the Federal reports. Additionally, adequate controls dictate the use and maintenance of
supporting documentation (i.e. birth certificates, driver’s licenses, ID Cards, etc.) in
order to determine eligibility and ensure the identity of the recipients of benefits and/or
services.
Condition
When performing testwork related to Social Services Block Grant (SSBG)
Reporting as of June 30, 2021, the auditor noted the following:
x
One instance in which MDHS could not provide supporting
documentation for the amount of Special Services - Youth at Risk
recipients listed on the Post Expenditure Report. The recipient amount
reported on the Post Expenditure Report is 101. Per MDHS personnel, the
amount of youth that received services during 10/1/2019 to 9/30/2020 was
119.
x
MDHS nor the SSBG subrecipients, known as Area Agency on Aging
(AAA), require recipients of benefits and/or services to provide proof of
age or identity before receiving benefits and/or services from the AAA.
x
MDHS does not have controls in place over the review and approval of
the Social Service Block Grant Post Expenditure Report.
Cause
MDHS has no controls in place over the review and approval of Social Service
Block Grant Post Expenditure Report.
Effect
Failure to review reports properly could result in the reporting of incorrect amounts
and could impact funding determinations. Additionally, failure to ask for support
of client eligibility and identity could result in fraudulent spending.
Recommendation
We recommend the Mississippi Department of Human Services (MDHS)
strengthen controls over the compilation and submission of required federal reports
for the Social Services Block Grant (SSBG) Program. Additionally, MDHS should
keep adequate records of recipients served in each category of service and should
require AAAs to ask for proper supporting documentation to verify eligibility and
identities of recipients of benefits and/or services.
Repeat Finding
No.
Statistically Valid
Yes.
113

STATE OF MISSISSIPPI
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
PART 3 – Federal Award Findings and Questioned Costs – US Department of HHS (continued)
View of Responsible
Officials
Management at the Mississippi Department of Human Services concurs
with this finding.  See additional comments in the Corrective Action Plan on
page 304 of this audit report.
SUBRECIPIENT MONITORING
Material Weakness
Material Noncompliance
2021-013
Strengthen Controls over On-Site Monitoring for the Supplemental Nutrition
Assistance Program (SNAP), Temporary Assistance for Needy Families (TANF),
Child Care and Development Block Grant (CCDF), Low Income Home Energy
Assistance Program (LIHEAP), and Social Services Block Grant (SSBG)
Programs.
CFDA Number
10.551 Supplemental Nutrition Assistance Program
93.558 Temporary Assistance for Needy Families State Programs
93.667 Social Services Block Grant
93.575 Child Care and Development Block Grant
93.596 Child Care Mandatory and Matching Funds of the Child Care and
Development Fund
93.568 Low Income Home Energy Assistance Program
Federal Award No.
SNAP – Letter of Credit
2001MSCCDF (2020)
G1901MSTANF (2019)              G2001MSSOSR (2020)
G2001MSTANF (2020)            G20B1MSLIEA (2020)
Pass-Through
N/A
Questioned Costs
N/A
Criteria
The terms and conditions of the grant agreements between the Mississippi
Department of Human Services (MDHS) and the U.S. Department of Health and
Human Services require MDHS to administer grants in compliance with the Code
of Federal Regulations (2 cfr Part 200).  The Code of Federal Regulations (2 cfr
Part 200.331) designates MDHS as a pass through entity to properly identify
subgrant requirements to subrecipients, evaluate the risk of noncompliance for
each subrecipient, and monitor the activities of subrecipients as necessary to ensure
that subgrants are used for authorized purposes, complies with the terms and
conditions of the subgrants and achieves performance goals.
114

STATE OF MISSISSIPPI
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
PART 3 – Federal Award Findings and Questioned Costs – US Department of HHS (continued)
The auditor evaluated MDHS’s compliance with subrecipient monitoring
requirements based on written policies and procedures designed by MDHS’s
Division of Program Integrity – Division of Monitoring (DM) to satisfy during-
the-award monitoring requirements.  DM procedures require: an on-site
monitoring review of each subrecipient contract at least once during the subgrant
period. Monitoring tools/checklists are used during each on-site monitoring review
to provide guidance and to document a review was performed.  The on-site
monitoring workpapers are reviewed and approved by DM supervisory personnel
prior to issuance of a written report, the Initial Report of Findings &
Recommendations, which is used for communicating finding(s) and/or questioned
costs to subrecipients. The written report should be issued within 60 days from the
date of the exit conference, which is normally held on the last day of the on-site
review. Additionally, if the initial report identifies any administrative findings or
questioned costs, a response to the findings is required to be submitted by the
subrecipient to DM within thirty (30) working days from the date the report was
issued.
The Code of Federal Regulations (2 cfr 200.328(a)) states that the non-Federal
entity is responsible for oversight of the operations of the Federal award supported
activities. The non-Federal entity must monitor its activities under Federal awards
to assure compliance with applicable Federal requirements and performance
expectations are being achieved. Monitoring by the non-Federal entity must cover
each program, function or activity. See also § 200.331 Requirements for pass-
through entities.
The Code of Federal Regulations (2 cfr 200.328(b)(2)), states the non-Federal
entity must submit performance reports using OMB-approved government-wide
standard information collections when providing performance information. As
appropriate in accordance with above mentioned information collections, these
reports will contain, for each Federal award, brief information on the following
unless other collections are approved by OMB:
(i)
A comparison of actual accomplishments to the objectives of the Federal
award established for the period. Where the accomplishments of the
Federal award can be quantified, a computation of the cost (for example,
related to units of accomplishment) may be required if that information
will be useful. Where performance trend data and analysis would be
informative to the Federal awarding agency program, the Federal
awarding agency should include this as a performance reporting
requirement.
(ii)
The reasons why established goals were not met, if appropriate.
(iii) Additional pertinent information including, when appropriate, analysis
and explanation of cost overruns or high unit costs.
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PART 3 – Federal Award Findings and Questioned Costs – US Department of HHS (continued)
The Code of Federal Regulations (2 CFR 200.332 (d)) States that the pass-through
entity “Monitor the activities of the subrecipient as necessary to ensure that the
subaward is used for authorized purposes, in compliance with Federal statutes,
regulations, and the terms and conditions of the subaward; and that subaward
performance goals are achieved…”
Additionally, the Code of Federal Regulations (2 cfr 200.62), states that a non-
Federal entity must have internal control over compliance designed to provide
reasonable assurance that transactions are executed in compliance with Federal
statutes, regulations, and the terms and conditions of the Federal award that could
have a direct and material effect on a Federal program; and any other Federal
statutes and regulations that are identified in the Compliance Supplement.
Furthermore, the Internal Control – Integrated Framework published by the
Committee of Sponsoring Organizations of the Treadway Commission (COSO)
specifies that a satisfactory control environment is only effective when there are
adequate control activities in place. Effective control activities dictate that: the
agency perform appropriate; multi-level reviews over the monitoring process; the
agency and subgrants of the agency maintain adequate documentation (i.e.
Identification Cards, Birth Certificates, Driver’s Licenses, etc.) in order to verify
eligibility information submitted by clients of the Federal Programs; the agency
perform tests over the eligibility of clients of the Federal program in order to ensure
the subrecipient is in compliance with Federal statutes, regulations, and the terms
and conditions of the subaward; the agency ensures timely communication from
the subgrantees and timely resolution of findings; and the Division of Monitoring
act separately from the programmatic funding divisions in order to prevent; detect;
and deter fraud, waste, and abuse or the misuse of federal funds.
Condition
During testwork performed on subrecipient on-site monitoring for 117 subgrant
contracts during state fiscal year 2020, auditor noted the following exceptions:
x
Two instances, or 2 percent, in which the Division of Monitoring did
not perform monitoring of subgrants.
x
Five instances, or 5 percent, in which the Supervisor's Checklist was
not included for Subrecipient on the FY 2020 Monitoring Reviews
Smartsheet; therefore, auditor could not verify Supervisory Review of
the Monitoring process.
x
10 instances, or 9 percent, in which the Programmatic Tool was not
included for Subrecipient on FY 2020 Monitoring Reviews
Smartsheet, and could not be provided by the Division of Monitoring.
x
Four instances, or 3 percent, in which the Initial Report was not issued
within 60 working days of the exit conference.
x
28 instances, or 24 percent, in which auditor could not verify
Eligibility was tested by either the Division of Monitoring or the
Programmatic Division, or the Monitoring Smartsheet did not contain
enough documentation to ensure eligibility was tested appropriately.
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x
One instance, or 1 percent, in which auditor could not verify a
clearance or resolution of monitoring findings.
x
One instance, or 1 percent, in which the Division of Monitoring did
not receive a response from a subrecipient in regards to the Initial
Finding Letter.
Cause
Effect
Recommendation
Repeat Finding
Statistically Valid
View of Responsible
Officials
Additionally, auditor noted that the Division of Monitoring performs monitoring
of subrecipients’ programmatic performance and spending based on programmatic
tools provided by MDHS’ individual programmatic divisions and not on
knowledge of the federal program and its corresponding rules and regulations.
Staff were either unaware or did not follow identified policies and procedures for
monitoring requirement.
MDHS programmatic funding divisions rely upon DM monitoring procedures to
verify compliance with program regulations and to identify potential problem areas
needing corrective action. Failure to properly monitor subrecipients in a timely
manner could allow noncompliance with federal regulations to occur and go
undetected, potentially resulting in questioned costs.
We recommend the Mississippi Department of Human Services’ Division of
Program Integrity – Division of Monitoring (DM) strengthen controls over
subrecipient monitoring. We also recommend the agency ensure subgrants are
monitored timely and that the “Report of Findings & Recommendations” prepared
as a result of the on-site monitoring be issued in a timely manner to enable
immediate corrective action procedures to be initiated.  Additionally, we
recommend that the agency maintain all supporting monitoring tools, reports, and
correspondence in the monitoring file. We further recommend the agency monitor
eligibility for all subrecipients and ensure subrecipients maintain adequate
documentation that supports the eligibility determination of their clients.
Yes – 2020-030; Yes – 2019-042 in 2019; 2018-046 in 2018; 2017-037 in 2017;
2016-027 in 2016; 2015-005 in 2015; 2014-017 in 2014; 2013-015 in 2013.
Yes.
Management at the Mississippi Department of Human Services concurs
with this finding.  See additional comments in the Corrective Action Plan on
page 304 of this audit report.
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PART 3 – Federal Award Findings and Questioned Costs – US Department of HHS (continued)
2021-014
Strengthen Controls Over Subrecipient Monitoring to Ensure Compliance with
Uniform Guidance Auditing Requirements.
CFDA Number
10.551 Supplemental Nutrition Assistance Program
93.558 Temporary Assistance for Needy Families State Programs
93.575 Child Care and Development Block Grant
93.596 Child Care Mandatory and Matching Funds of the Child Care and
Development Fund
93.667 Social Services Block Grant
93.568 Low Income Home Energy Assistance Program
Federal Award No.
SNAP – Letter of Credit
TANF – G1901MSTANF, G2001MSTANF
CCDF – G1901MSCCDF, G2001MSCCDF
SSBG – G2001MSSOSR
LIHEAP – G20B1MSLIEA, G2001MSLIEA
Pass-Through
N/A
Questioned Costs
N/A
Criteria
The Internal Control - Integrated Framework published by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO) specifies that a
satisfactory control environment is only effective when there are adequate control
activities in place. Adequate controls would allow for a tracking system that
includes all sub-recipients receiving federal funds from the agency as well as the
maintenance of OMB monitoring files.
The Office of Management and Budget’s (OMB) Uniform Guidance states the
pass-through entity is responsible for (1) ensuring that subrecipients expending
$750,000 or more in Federal awards during their fiscal year have met the audit
requirements of Uniform Guidance and that the required audits are completed
within nine months of the end of the subrecipient’s audit period; (2) issuing a
management decision on findings within 6 months after receipt of the
subrecipient’s audit report; and (3) ensuring that the subrecipient takes timely
and appropriate corrective action on all audit findings.  In cases of continued
inability or unwillingness of a subrecipient to have the required audits, the
pass-through entity shall take appropriate action using sanctions.
Additionally, the Code of Federal Regulations (45 cfr 200.62), states that a non-
Federal entity must have internal control over compliance designed to provide
reasonable assurance that;
(a) Transactions are properly recorded and accounted for, in order to:
(1) Permit the preparation of reliable financial statements and Federal
reports;
(2) Maintain accountability over assets; and
18
Material Weakness
Material Noncompliance

STATE OF MISSISSIPPI
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
PART 3 – Federal Award Findings and Questioned Costs – US Department of HHS (continued)
(3) Demonstrate compliance with Federal statutes, regulations, and the
terms and conditions of the Federal award;
(b) Transactions are executed in compliance with:
(1) Federal statutes, regulations, and the terms and conditions of the
Federal award that could have a direct and material effect on a Federal
program; and
(2) Any other Federal statutes and regulations that are identified in the
Compliance Supplement; and
(c) Funds, property, and other assets are safeguarded against loss from
unauthorized use or disposition.
The Code of Federal Regulations (2 cfr §200.331(f)) states all pass-through entities
(PTE’s) must verify that every subrecipient is audited as required by Subpart F -
Audit Requirements of this part when it is expected that the subrecipient's Federal
awards expended during the respective fiscal year equaled or exceeded the
threshold set forth in § 200.501 Audit requirements.
The Code of Federal Regulations (2 cfr §200.332) states that all pass-through
entities must:
(d) Monitor the activities of the subrecipient as necessary to ensure that the
subgrant is used for authorized purposes, in compliance with Federal statutes,
regulations, and the terms and conditions of the subgrant; and that subgrant
performance goals are achieved. Pass-through entity monitoring of the
subrecipient must include:
(1) Reviewing financial and performance reports required by the pass through
entity.
(2) Following-up and ensuring that the subrecipient takes timely and
appropriate action on all deficiencies pertaining to the Federal award
provided to the subrecipient from the pass-through entity detected through
audits, on-site reviews, and written confirmation from the subrecipient,
highlighting the status of actions planned or taken to address Single Audit
findings related to the particular subgrant.
The Code of Federal Regulations (2 cfr § 200.512(a)(1)) states the audit must be
completed and the data collection form described in paragraph (b) of this section
and reporting package described in paragraph (c) of this section must be submitted
within the earlier of 30 calendar days after receipt of the auditor's report(s), or nine
months after the end of the audit period. If the due date falls on a Saturday, Sunday,
or Federal holiday, the reporting package is due the next business day.
Furthermore, MDHS’ Policy regarding the Responsibilities of the Monitoring Unit
Related to Uniform Guidance Audit Requirements Audits includes:
(1) Providing an Initial Notice Letter to subrecipients to notify them of the audit
requirements under the OMB Uniform Guidance Audit Requirements and
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providing the Subrecipient Audit Information Form (SAIF) to document that an
audit is not required for subrecipients that expend less than $750,000.
(2) Issuing a Reminder Letter to subrecipients that have not submitted either an audit
report or SAIF form to document that an audit was not required.
(3) Issuing a Demand Letter to subrecipients that fail to submit an audit report or SAIF
form to document that an audit was not required.
(4) Identifying any audit findings contained in the audit reports and notifying the
responsible MDHS Funding Division so that the audit findings can be resolved
within the six-month deadline imposed under OMB Uniform Guidance Audit
Requirements.
(5) Maintaining an audit file for each MDHS subrecipient which includes an archive
copy of the audit report or Subrecipient Audit Information Form, the Uniform
Guide for Initial Review of Audit Reports, copies of the transmittal memorandum
sent to each MDHS Funding Division, copies of any reminder letters sent to the
subrecipient, and the Audit Finding and Questioned Costs Tracking Record and a
copy of the clearance letter issued by the MDHS Funding Division for those
subrecipients with audit findings.
Finally, the MDHS Subgrant/Agreement Manual
states that all MDHS
subrecipients are required to complete the MDHS Subrecipient Audit Information
Form (MDHS-DPI-002). This form must be submitted to the Division of Program
Integrity – Division of Monitoring no later than ninety (90) calendar days after the
end of the subrecipient’s fiscal year. This form is necessary to certify the sources
and amounts of all Federal awards received and expended by the subrecipient.
Condition
During the audit of the Mississippi Department of Human Services (MDHS), the
auditors reviewed the Division of Monitoring (DM) audit files and Single Audit
Tracking Document for MDHS Subgrantees for state fiscal year 2019. During the
review, the following weaknesses were noted:
x
One instance in which the Uniform Guide for the Initial Report of
Uniform Guidance Audit Reports was not included on the FY 2019
Single Audit Tracking Smartsheet; therefore, auditor could not verify
the DM reviewed and approved the submitted Subgrantee audit report.
x
33 instances in which Auditor could not verify if reminder letters were
sent to the Subrecipient due to these letters not being included on the
FY 2019 Single Audit Tracking Smartsheet or reminder letters were
sent untimely.
x
Three instances in which the Office of Monitoring did not receive the
Subgrantee SAIF form within 90 days of the subrecipient’s fiscal year
end. Average submission was 123 working days late.
x
Eight instances in which the FY 2019 Single Audit Tracking
Smartsheet did not contain a SAIF form or audit report for the
Subgrantee; therefore, auditor could not verify compliance with the
monitoring process.
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Cause
Effect
Recommendation
Repeat Finding
Statistically Valid
View of Responsible
Officials
Staff were either unaware or did not follow identified policies and procedures for
subrecipient monitoring related to Uniform Guidance.
Failure to properly monitor subrecipients could allow noncompliance with federal
regulations to occur and go undetected, potentially resulting in fraud, waste, and
abuse within the agency.
We recommend the Mississippi Department of Human Services’ Division of
Program Integrity – Division of Monitoring (DM) strengthen controls over
subrecipient monitoring for Uniform Guidance audits to ensure recipients
expending $750,000 or more in Federal funds during their fiscal year are
appropriately monitored and an Uniform Guidance audit is obtained and continue
to follow-up in a timely manner to obtain an Uniform Guidance audit or
Subgrantee Audit Information Form after the demand letter is issued.
Yes – 2020-031; Yes – 2019-043; 2018-047 in 2018; 2017-038 in 2017; 2016-028
in 2016; 2015-009 in 2015; 2014-016 in 2014.
Yes.
Management at the Mississippi Department of Human Services concurs with
this finding.  See additional comments in the Corrective Action Plan on page
306 of this audit report.
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STATE OF MISSISSIPPI
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
PART 3 – Federal Award Findings and Questioned Costs – US Department of HHS (continued)
DIVISION OF MEDICAID
ACTIVITIES ALLOWED AND ALLOWABLE COSTS
Material Weakness
Material Noncompliance
2021-039
Strengthen Controls to Ensure Compliance with the Allowable Costs
Requirements of the Children’s Health Insurance Program (CHIP).
ALN Number
93.767 – Children’s Health Insurance Program (CHIP)
Federal Award No.
All Current Active Grants
Pass-through Entity
N/A
Questioned Costs
N/A
Criteria
Code of Federal Regulations (42 CFR §457.505) states, “The State plan must
include a description of (a) the amount of premiums, deductibles, coinsurance,
copayments, and other cost sharing imposed.”
Code of Federal Regulations (42 CFR § 457.515) states, “To impose copayments,
coinsurance, deductibles or similar charges on enrollees, the State plan must
describe — (a) The service for which the charge is imposed; (b) The amount of the
charge; (c) The group or groups of enrollees that may be subject to the cost-sharing
charge.”
Mississippi Children’s Health Insurance Program State Plan Section 8.2.3 states
that children whose annual family income is less than or equal to 150 percent of
the Federal Poverty Level are not subject to any co-payments or co-insurance.
Mississippi Children’s Health Insurance Program State Plan Section 8.2.3 states
that children whose annual family income is between 151 percent and 175 percent
of the Federal Poverty Level are subject to co-payments of $5.00 per doctor visit,
$15.00 per emergency room visit, and an out-of-pocket maximum of $800.00.
Mississippi Children’s Health Insurance Program State Plan Section 8.2.3 states
that children whose annual family income is between 176 percent and 209 percent
of the Federal Poverty Level are subject to co-payments of $5.00 per doctor visit,
$15.00 per emergency room visit, and an out-of-pocket maximum of $950.00.
Condition
During testwork performed over allowable costs requirements for the Children’s
Health Insurance Program (CHIP) as of June 30, 2021, the auditor tested 60 total
beneficiaries and noted the following:
x
20 (or 33 percent) of the CHIP beneficiaries tested in which the beneficiary
123

STATE OF MISSISSIPPI
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PART 3 – Federal Award Findings and Questioned Costs – US Department of HHS (continued)
was not placed in the correct CHIP sub-group that determines the
beneficiary’s co-payments and out-of-pocket maximums.
o
Seven instances (or 12 percent) in which the family of the
beneficiary had an annual income at or below 150 percent of the
Federal Poverty Level, but the beneficiary was placed in the CHIP
sub-group for children whose family had an annual income
between 151 percent and 175 percent of the Federal Poverty
Level.
o
13 instances (or 22 percent) in which the family of the beneficiary
had an annual income at or below 175 percent of the Federal
Poverty Level, but the beneficiary was placed in the CHIP sub-
group for children whose family had an annual income between
176 percent and 209 percent of the Federal Poverty Level.
Cause
Effect
Recommendation
Repeat Finding
Statistically Valid
View of Responsible
Officials
The Federal Poverty Level was not correctly entered into the computer system  and
co-payments and out-of-pocket maximums were not calculated correctly.
Failure to record the correct Federal Poverty Level may result in beneficiaries
paying incorrect co-payments and out-of-pocket expenses.
We recommend the Mississippi Division of Medicaid strengthen the controls to
ensure compliance with the allowable costs requirements of the Children’s Health
Insurance Program (CHIP).
Yes, 2020-041.
Yes.
Management at the Mississippi Division of Medicaid concurs with this
finding. See additional comments in the Corrective Action Plan on page 2 of
this audit report.
Significant Deficiency
Immaterial Noncompliance
2021-040
Strengthen Controls to Ensure Compliance with the Allowable Costs
Requirements of the Medical Assistance Program.
ALN Number
93.778 – Medical Assistance Program (Medicaid; Title XIX)
Federal Award No.
All Current Active Grants
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PART 3 – Federal Award Findings and Questioned Costs – US Department of HHS (continued)
Pass-through Entity
N/A
Questioned Costs
$3,863
Criteria
Code of Federal Regulations (42 CFR § 438.2) defines a capitation payment as “a
payment the State makes periodically to a contractor on behalf of each beneficiary
enrolled under a contract and based on the actuarially sound capitation rate for the
provision of services under the state plan.”
Code of Federal Regulations (42 CFR § 438.2) defines a rate cell as a set of
mutually exclusive categories of enrollees that is defined by one or more
characteristics for the purpose of determining the capitation rate and making a
capitation payment; such characteristics may include age, gender, eligibility
category, and region or geographic area. Each enrollee should be categorized in
one of the rate cells for each unique set of mutually exclusive benefits under the
contract.
Milliman’s State Fiscal Year 2021 MississippiCAN Capitation Rate Development
Report states, “The MississippiCAN state fiscal year (SFY) 2021 capitation rates
are developed using Mississippi FFS Medicaid data, CCO encounter data, and
CCO financial reporting data for a comparable population to that enrolled in CCOs.
DOM calculates state-set rates by rate category on a statewide basis with area
adjustments based on an enrolled member’s county of residence.”
Milliman’s State Fiscal Year 2021 MississippiCAN Capitation Rate Development
Report states Coordinated Care Organizations (CCO) capitation payments will
vary based on their members’ county of residence. We assigned each county to one
of the following regions: North, Central, or South.
Condition
During testwork performed over allowable costs requirements for the Medical
Assistance Program as of June 30, 2021, the auditor tested 120 managed care
beneficiaries’ capitation rates and noted the following:
x
Three instances (or 2.5 percent) in which the incorrect county of residence
was used to determine the beneficiaries’ capitation rate. Of the three, two
instances in which the incorrect county of residence resulted in Medicaid
paying a higher capitation rate for the beneficiaries, resulting in questioned
costs of $3,863. Questioned costs were not projected for this item due to
the different locations of the instances
Cause
The county code was not changed from the default code in the computer system.
Effect
Using the incorrect county code resulted in the Mississippi Division of Medicaid
paying higher capitation rates, resulting in questioned costs.
Recommendation
We recommend the Mississippi Division of Medicaid strengthen controls to ensure
compliance with allowable cost requirements of the Medical Assistance Program.
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PART 3 – Federal Award Findings and Questioned Costs – US Department of HHS (continued)
Repeat Finding
Statistically Valid
View of Responsible
Officials
No.
Yes.
Management at the Mississippi Division of Medicaid concurs with this
finding. See additional comments in the Corrective Action Plan on page 2 of
this audit report.
_____________________________________________________________________________________
ELIGIBILITY
Material Weakness
Material Noncompliance
2021-041
Strengthen Controls to Ensure Compliance with Eligibility Requirements of the
Medical Assistance Program and the Children’s Health Insurance Program
(CHIP).
ALN Number
93.767 – Children’s Health Insurance Program (CHIP)
93.778 – Medical Assistance Program (Medicaid; Title XIX)
Federal Award No.
All Current Active Grants
Pass-through Entity
N/A
Questioned Costs
$66,926
Criteria
Code of Federal Regulations (42 CFR § 435.945(d)) states, “All State eligibility
determination systems must conduct data matching through the Public Assistance
Reporting Information System (PARIS).”
The Mississippi Division of Medicaid MAGI-Based Eligibility Verification Plan
states, “The state uses quarterly PARIS data matches to resolve duplicate Medicaid
participation in another state and residency discrepancies.”
Per the Mississippi Medicaid State Plan Attachment 4.32-A, quarterly file
transmissions of Medicaid recipients active in the previous quarter are submitted
for matching purposes with applicable federal databases (PARIS) to identify
benefit information on matching Federal civilian employees and military members,
both active and retired, and to identify duplicate participation across state lines.
Miss. Code Ann (1972) Section 43-13-116.1(2) states, “In accordance with Section
1940 of the federal Social Security Act (42 USCS Section 1396w), the Division of
Medicaid shall implement an asset verification program requiring each applicant
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PART 3 – Federal Award Findings and Questioned Costs – US Department of HHS (continued)
for or recipient of Medicaid assistance on the basis of being aged, blind or disabled,
to provide authorization by the applicant or recipient, their spouse, and by any
other person whose resources are required by law to be disclosed to determine the
eligibility of the applicant or recipient for Medicaid assistance, for the division to
obtain from any financial institution financial records and information held by any
such financial institution with respect to the applicant, recipient, spouse or such
other person, as applicable, that the division determines are needed to verify the
financial resources of the applicant, recipient or such other person in connection
with a determination or redetermination with respect to eligibility for, or the
amount or extent of, Medicaid assistance. Each aged, blind or disabled Medicaid
applicant or recipient, their spouse, and any other applicable person described in
this section shall provide authorization (as specified by 42 USCS Section
1396w(c)) to the division to obtain from any financial institution, any financial
record, whenever the division determines that the record is needed in connection
with a determination or redetermination of eligibility for Medicaid assistance.”
The Mississippi Division of Medicaid Eligibility Policy and Procedure Manual
Section 303.03 states, “Section 1940 of the Social Security Act and Mississippi
state law requires the verification of liquid assets held in financial institutions for
purposes of determining Medicaid eligibility for applicants and beneficiaries in
programs with an asset test, i.e., Aged, Blind, and Disabled (ABD) Medicaid
programs.
Per The Mississippi Division of Medicaid Eligibility Policy and Procedure Manual
Section 303.03, implementation of MDOM’s Asset Verification System (AVS) is
on/after November 1, 2018. The AVS contractor will perform electronic matches
with financial institutions to detect and verify bank accounts based on identifiers
including Social Security Numbers for the following COEs: 010 through 015, 019,
025, 045, 062 through 066, and 094 through 096. At each application and
redetermination, a request will be submitted through AVS for information on an
individual’s financial accounts. The AVS must be used as a primary data source
when verifying resources.”
Code of Federal Regulations (42 CFR § 435.948(a)(1)) states, “The agency must
in accordance with this section request the following information relating to
financial eligibility from other agencies in the State and other States and Federal
programs to the extent the agency determines such information is useful to
verifying the financial eligibility of an individual: Information related to wages,
net earnings from self-employment, unearned income and resources from the State
Wage Information Collection Agency (SWICA), the Internal Revenue Service
(IRS), the Social Security Administration (SSA), the agencies administering the
State unemployment compensation laws, the State administered supplementary
payment programs under section 1616(a) of the Act, and any State program
administered under a plan approved under Titles I, X, XIV, or XVI of the Act."
Code of Federal Regulations (42 CFR § 435.949(b)) states, "To the extent that
information related to eligibility for Medicaid is available through the electronic
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service established by the Secretary, States must obtain the information through
such service, subject to the requirements in subpart C of part 433 of this chapter,
except as provided for in §435.945(k) of this subpart."
The CMCS Informational Bulletin - Subject: MAGI-Based Eligibility Verification
Plans states, "To the extent that information related to Medicaid or CHIP eligibility
is available through the electronic data services hub established by the Secretary,
states must obtain the information through this data services hub. Subject to
Secretarial approval and the conditions described in §435.945(k) and 457.380(i),
states can obtain information through a mechanism other than the data services
hub."
Per the Mississippi Division of Medicaid MAGI based Eligibility Verification Plan,
Mississippi Division of Medicaid has determined MDES to be a useful electronic
data source.
Per the Mississippi Medicaid State Plan Attachment 4.32-A, applicants are
submitted weekly to Mississippi Department of Employment Security (MDES) to
verify wage and unemployment benefits. Renewals are submitted once per month
for the same data. Renewal files are processed in the month prior to the scheduled
review due date.
The Mississippi Division of Medicaid Eligibility Policy and Procedures Manual
Section 201.03.04A requires the use of the individual’s most recent tax return to
verify income for individuals considered self-employed, a shareholder in an S
Corporation, a partner in a business or one who has income from a partnership,
LLP, LLC or S Corporation.
Condition
During testwork performed over eligibility requirements for the Medical
Assistance Program and the Children’s Health Insurance Program (CHIP) as of
June 30, 2021, the auditor tested 300 total beneficiaries (180 Modified Adjusted
Gross Income (MAGI) beneficiaries and 120 aged, blind, and disabled (ABD)
beneficiaries) and noted the following:
x
Mississippi Division of Medicaid (MDOM) did not use federal tax and/or
state tax data to verify income, including self-employment income, out-
of-state income, and various types of unearned income. The Medicaid
State Plan requires the verification of all income for MAGI-based
eligibility determinations, and the Mississippi Division of Medicaid’s
Eligibility Policy and Procedure Manual (Section 201.03.04a) requires the
use of an individual’s most recent tax return to verify self-employment
income. This section further states, if tax returns are not filed, not
available, or if there is a change in income anticipated for the current tax
year, refer to Chapter 200, Net Earnings from Self-Employment at
200.09.08, for policy on estimating net earnings from self-employment.
The MDOM’s State Plan does not allow for accepting self-attested
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PART 3 – Federal Award Findings and Questioned Costs – US Department of HHS (continued)
income. Therefore, if an applicant indicates zero for self-employment
income, the amount of zero must be verified like any other income amount.
x
19 of the 180 MAGI beneficiaries (or 11 percent) reported self-
employment income, out-of-state income, or unearned income on the
Mississippi income tax return, but the income was not reported on the
recipient’s application. Of the 19 instances, nine instances (or 47 percent)
were noted in which the total income per the most recent tax return
available at the time of determination exceeded the applicable income
limit for the recipient’s category of eligibility.
Due to MDOM’s failure to verify self-employment income on the
applicant’s tax return, MDOM was not aware income exceeded eligibility
limits, and did not request any additional information that might have
explained why income was not self-reported; therefore, auditor could not
determine with certainty that individuals are, in fact, ineligible. However,
information that MDOM used at the time of the eligibility determination
did not support eligibility. The auditor acknowledges that the self-
employment income reported on the income tax returns does not, in and
of itself, make the nine sited beneficiaries ineligible, it does indicate that
they had self-employment income during the year of eligibility
determination that was, potentially, not accurately reported on their
application. Furthermore, MDOM did not perform any procedures to
verify that the self-employment income reported on the applications was
accurate.
MDOM’s policy requires the use of the individual’s most recent tax return
to verify income for individuals considered self-employed, a shareholder
in an S Corporation, or a partner in a business or one who has income from
a partnership, LLP, LLC or S Corporation. Due to the timing of tax returns
filings, including allowable extensions, MDOM requires the use of prior
year income verification in these circumstances. Additionally, due to the
COVID-19 pandemic, some beneficiaries did not have a redetermination
performed in FY 2021, so the auditor tested the prior year redetermination
(which made the beneficiary eligible as of June 30, 2021).  The due dates
for Mississippi tax returns were extended to May 15, 2020 for 2019 tax
returns and May 17, 2021 for 2020 tax returns.  Based on the extended due
dates, and the assumption that the beneficiaries filed their tax returns
before these due dates, the auditor used tax return data from the following
years:  2018 for determinations prior to May 15, 2020, 2019 for
determinations from May 15, 2020 to May 16, 2021, and 2020 for
determinations on or after May 17, 2021.
The fiscal year payments for these nine beneficiaries that might not have
been eligible to receive the benefits totaled $23,221 of questioned costs.
129

STATE OF MISSISSIPPI
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
PART 3 – Federal Award Findings and Questioned Costs – US Department of HHS (continued)
Based on the error rate calculated using the capitation payments of our
sample, the projected amount of capitation payments made to beneficiaries
who it is reasonably possible were ineligible would fall between
$66,046,582 (projected costs based on actual month payment sampled)
and $69,910,510 (projected costs based on average monthly payments
sampled).
The following is a breakdown of these costs by category:
CHIP: Between $11,746,594 (average monthly) to $13,800,910 (actual
monthly)
MAGI Managed Care: Between $52,245,672 (actual monthly) to
$58,163,916 (average monthly)
x
For 19 of the 180 MAGI beneficiaries (or 11 percent), income was not
verified through Mississippi Department of Employment Security
(MDES) at the time of the redetermination for the eligibility period that
covered June 30, 2021. This resulted in questioned costs of $43,705.
Questioned costs were not projected for this item due to the inability to
statistically validate the sample.
x
85 ABD beneficiaries required resource verifications through the Asset
Verification system (AVS).  Of the 85, seven instances (or 8 percent) in
which resources were not verified through AVS at the time of
redetermination.
x
293 out of 300 beneficiaries (or 98 percent) were not included on all of the
required quarterly Public Assistance Reporting Information System
(PARIS) file transmissions for fiscal year 2021.
o
Of the 293 beneficiaries, 249 beneficiaries (or 85 percent) were
not included on any quarterly PARIS file transmissions during
fiscal year 2021.
Cause
The Mississippi Division of Medicaid (MDOM) did not have adequate internal
controls to ensure compliance with eligibility requirements. Additionally, MDOM
did not have policies in place to verify certain types of income on applicant’s tax
returns, as required by its own policy and procedures, for eligibility
determinations.
Effect
Failure to comply with eligibility requirements could result in ineligible
beneficiaries being determined eligible, resulting in questioned costs and the
possible recoupment of funds by the federal granting agency.
Recommendation
We recommend the Mississippi Division of Medicaid strengthen controls to ensure
compliance with eligibility requirements of the Medical Assistance Program and
the Children’s Health Insurance Program (CHIP).
130

STATE OF MISSISSIPPI
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
PART 3 – Federal Award Findings and Questioned Costs – US Department of HHS (continued)
Repeat Finding
Statistically Valid
View of Responsible
Officials
Yes, 2020-042 and 2019-027.
Portions of these findings were based on statistically valid samples.
Management at the Mississippi Division of Medicaid does not concur with
this finding.  See additional comments in the Corrective Action Plan on page 2
of this audit report DQG WKH $XGLWRU¶V 5HVSRQVH WR WKH &RUUHFWLYH $FWLRQ
3ODQDWSDJH5DQG29
_____________________________________________________________________________________
SPECIAL TESTS AND PROVISIONS – PROVIDER ELIGIBILITY
Material Weakness
Material Noncompliance
2021-042
Strengthen Controls to Ensure Compliance with Provider Eligibility Requirements
of the Children’s Health Insurance Program (CHIP).
ALN Number
93.767 – Children’s Health Insurance Program (CHIP)
Federal Award No.
All Current Active Grants
Pass-through Entity
N/A
Questioned Costs
N/A
Criteria
Code of Federal Regulations (42 CFR 455.432) states the State Medicaid agency
must conduct pre-enrollment and post-enrollment site visits of providers who are
designated as “moderate” or “high” categorical risks to the Medicaid program. The
purpose of the site visit will be to verify that the information submitted to the State
Medicaid agency is accurate and to determine compliance with Federal and State
enrollment requirements.
Code of Federal Regulations (42 CFR 438.602(b)) states, “The State must screen
and enroll, and periodically revalidate, all network providers of MCOs, PIHPs,
and PAHPs, in accordance with the requirements of part 455, subparts B and E of
this chapter. …This provision does not require the network provider to render
services to FFS beneficiaries.”
Medicaid Provider Enrollment Compendium Section 1.4.1.A.1.a states, “Under the
requirement at 438.602, State Medicaid Agencies (SMAs) may delegate screening
activities required under Part 455 Subpart E to a network plan. However, based
upon privacy and security concerns including data breaches that include personally
identifiable information (PII), we are not allowing SMAs to delegate the collection
of disclosures under Subpart B in a manner that results in a single provider entity
131

STATE OF MISSISSIPPI
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
PART 3 – Federal Award Findings and Questioned Costs – US Department of HHS (continued)
disclosing the information to more than one entity. A provider that is providing
services on behalf of the state Medicaid plan should not be required to disclose PII
to multiple entities with which the SMA contracts. In an effort to mitigate the risk
that PII will be compromised in a data breach, we further believe the SMA should
store PII in the fewest number of locations necessary to meet the requirement of
the regulations at Subparts B and E.”
Medicaid Provider Enrollment Compendium Section 1.5.B states, “A SMA may,
but is not required to, delegate screening activities required under 455 Subpart E
to third parties, including networks. (See section 1.4.1.A.1.a. for limitations on
delegating the collection of disclosures under Subpart B). In the event the SMA
opts to delegate screening under Subpart E, the SMA should make sure third
parties are carrying out activities consistently and should make sure redundant
screening is not conducted for a provider participating in multiple networks. In
addition, the SMA should make sure the third party is documenting screening. For
those states delegating screening activities to third party entities, the State should
consider any conflicts of interest that may arise. For example, some managed care
entities (MCEs) may have delegated credentialing agreements that allow providers
to “credential themselves” and submit the appropriate certification needed to
participate in a MCE plan. Once the provider attests and submits they have
completed all credentialing requirements, the MCE determines whether they will
approve of the provider’s participation in the plan. This arrangement is not
permissible in complying with the screening requirements at 455 Subpart E as it
not only creates a conflict of interest but also we do not believe it allows the state
to maintain appropriate oversight of the screening activities.”
Medicaid Provider Enrollment Compendium Section 1.5.1.B.1 states, “Many
Medicaid-enrolled hospitals employ hospitalists or contracted emergency room
physicians who are not separately enrolled as Medicaid providers.
Services/items/prescriptions
that
are
ordered/referred/written
by
these
hospitalists/contracted physicians are ineligible for
payment unless the
hospitalist/physician is enrolled in Medicaid, to the extent the claim does not
qualify for an exception under 1.5.1.B.2. “When the SMA is not required to Enroll
ORPs.”
Condition
For the Children’s Health Insurance Program (CHIP), the Mississippi Division of
Medicaid (MDOM) delegates the screening of providers to each of the CHIP
managed care organizations (MCOs). During fiscal year 2021, MDOM had
contracts with two CHIP managed care organizations (MCOs).  United Health
Care (United) and Molina were healthcare network providers for the entire year.
Due to MDOM delegating screening for CHIP, providers were potentially required
to disclose personally identifiable information (PII) to multiple entities. Federal
regulations require that MDOM limit this disclosure of PII to only one entity for
credentialing in order to reduce the possibility of data breaches, and to eliminate
redundant screening being conducted for a provider participating in more than one
CHIP MCO and/or the Medicaid Assistance Program.
132

STATE OF MISSISSIPPI
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
PART 3 – Federal Award Findings and Questioned Costs – US Department of HHS (continued)
Per review of the Molina’s 2021 External Quality Review (EQRO) report and
discussion with Molina officials, Molina has not completed any required site visits
for moderate risk or high risk providers since becoming a CHIP MCO in 2019.
Molina has been working with contractors to establish a procedure to complete the
required site visits.
Per review of Molina policies and discussion with Molina officials, Molina is not
screening and credentialing all providers individually. Providers are screened and
credentialed by Molina, a delegated provider entity, at the facility level or not
required to be screened or credentialed.
Per Molina Healthcare Credentialing Program Policy (Policy CR 01), “Molina
does not require credentialing for some types of practitioners who are credentialed
by the organization(s) that employ or contract with them. If a practitioner meets
any one of the following criteria, Molina does not require them to be credentialed:
x
Practitioners who practice exclusively in an inpatient setting and provide
care for Molina Members due to being directed to the hospital or another
inpatient setting. Examples may include pathologists, radiologists,
anesthesiologists, neonatologists, emergency room physicians, critical
care medicine and hospitalists.
x
Practitioners who practice exclusively in freestanding facilities and
provide care for Molina Members due to being directed to the facility.”
Per Molina Healthcare Credentialing Program Policy (Policy CR 01), “When a
practitioner or organizational provider has a direct contract with Molina and is also
credentialed by and under contract with an entity Molina has delegated
credentialing to, Molina does not need to credential the practitioner or
organizational provider. The credentialing done by the delegated entity applies to
the practitioner for any location in which they are working. Molina receives regular
reports from each delegated entity and if agreement between the practitioner and
the delegated entity terminates, Molina credentials the practitioner as indicated
below.”
Delegating the credentialing allows providers to “credential themselves” which
creates a conflict of interest and does not allow the state appropriate oversight
maintain appropriate oversite of the screening and credentialing activities.
Cause
The Mississippi Division of Medicaid (MDOM) delegated the screening and
credentialing of CHIP providers to managed care organizations.
Effect
Failure to properly credential providers could result in payments being made to
ineligible providers, resulting in unallowable costs. In addition, redundant
screening can place personally identifiable information (PII) at risk for data
breaches.
133

STATE OF MISSISSIPPI
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
PART 3 – Federal Award Findings and Questioned Costs – US Department of HHS (continued)
Recommendation
Repeat Finding
Statistically Valid
View of Responsible
Officials
We recommend the Mississippi Division of Medicaid strengthen controls to ensure
compliance with the provider requirements of the Children’s Health Insurance
Program (CHIP).
Yes, 2020-043.
No.
Management at the Mississippi Division of Medicaid did not concur with this
finding.  See additional comments in the Corrective Action Plan on page 2 of
this audit report DQG WKH $XGLWRU¶V 5HVSRQVH WR WKH &RUUHFWLYH $FWLRQ
3ODQDWSDJH6DQG30
134

Auditor’s note to the Corrective Action Plan from Mississippi Division of Medicaid (MDOM)
Management
Division of Medicaid – Eligibility - Material Weakness/Material Noncompliance
2021-041
Strengthen Controls to Ensure Compliance with Eligibility Requirements of the
Medical Assistance Program and the Children’s Health Insurance Program (CHIP)
STATE OF MISSISSIPPI
OFFICE OF THE STATE AUDITOR
SHAD WHITE
STATE AUDITOR
This finding is a repeat finding for MDOM since the Fiscal Year 2019 Single Audit.  MDOM’s State Plan
requires the verification of all income for MAGI-based eligibility determinations, and, as stated in the
finding, MDOM’s Eligibility Policy and Procedure Manual requires the use of an individual’s most recent
tax return to verify self-employment income.   In multiple instances, applicants either misreported self-
employment income or failed to report self-employment income.  MDOM’s failure to adequately capture
and verify self-employment income led to 9 instances were individuals who may not have been eligible to
receive benefits were awarded benefits.  In a similar case reported in last year’s audit, two individuals
fraudulently applied for and received Medicaid benefits, namely by concealing self-employment income
on their tax returns.  These instances resulted in over $70,000 in unentitled benefits being paid.  In order to
attempt to reduce ineligible individuals from receiving benefits, MDOM should strengthen their controls
and perform due diligence to ensure that self-employment income is properly verified.  MDOM repeatedly
states that they do not have access to state tax return information; however, their own policy states that they
will use tax return data to verify self-employment income.
As explained to MDOM by auditors, the questioned costs remained even though MDOM was unable to
remove individuals from the program due to COVID-19.  The auditor asserts that, if MDOM had performed
proper due diligence when initially evaluating these individuals, they may have never been accepted into
the program; therefore, the questioned costs remain.  The auditor concurs that OSA is not able to know the
recipients were actually ineligible; conversely, MDOM is not able to know the recipients are actually
eligible due to their own failed compliance with policies.  Eligibility for these individuals is, at best,
questionable, which is why the payments made are questioned costs.
Additionally, MDOM stated that they do not concur with the section of the finding regarding MDES
verifications.  To date MDOM has offered no documentation to support their assertion that these individuals
were verified through the MDES system.
Division of Medicaid – Special Tests & Provisions – Provider Eligibility - Material
Weakness/Material Noncompliance
POST OFFICE BOX 956 • JACKSON, MISSISSIPPI 39205 • (601) 576-2800 • FAX (601) 576-2650
135

POST OFFICE BOX 956 • JACKSON, MISSISSIPPI 39205 • (601) 576-2800 • FAX (601) 576-2650
2021-042
Strengthen Controls to Ensure Compliance with Provider Eligibility Requirements
of the Children’s Health Insurance Program (CHIP)
In the corrective action plan, MDOM states “MDOM requires the MCO to conduct screenings of all
providers; however, the MCO may delegate provider credentialing activities, which includes provider
screening.” As noted in the finding, Molina delegates credentialing and allows providers to “credential
themselves”. The Medicaid Provider Enrollment Compendium (MPEC) states that allowing managed care
organizations to delegate provider credentialing activities to allow providers to “credential themselves” is
not in compliance with 42 CFR 455. This arrangement creates a conflict of interest and does not allow the
MDOM to maintain appropriate oversite.
136

STATE OF MISSISSIPPI
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
FOR THE YEAR ENDED JUNE 30, 2021
PART 3 – FEDERAL AWARD FINDINGS AND QUESTIONED COSTS
U.S. DEPARTMENT OF HOMELAND SECURITY
Finding Number
Finding and Recommendation__________________________________
DEPARTMENT OF EMPLOYMENT SECURITY
REPORTING
Material Weakness
Material Noncompliance
2021- 028
Strengthen Controls to Ensure Compliance with Reporting Requirements for Lost
Wages Assistance.
ALN Number
97.050 – Lost Wages Assistance
Federal Award No.
4528DRMSSPLW
Pass-through Entity
N/A
Questioned Costs
N/A
Criteria
Per the Federal Emergency Management Agency (FEMA) Commonly Asked
Questions of the SF-425 report, the Basis of Accounting, Cash or Accrual, should
be selected based on the type of accounting that is used. Per this guideline,
“Accrual basis of accounting refers to the accounting method in which expenses
are recorded when incurred” and “Cash basis of accounting refers to the accounting
method in which expenses are recorded when they are paid”.
Per the FEMA Lost Wages Supplemental Payment Assistance Guidelines, the
Quarter ending December 31 report is due January 30.
Per the FEMA Commonly Asked Questions of the SF-425 report, “Total Recipient
Share Required is based on the amount of lost wages benefits and administrative
costs spent, this question asks the recipient to enter the total cost-share required for
these purchases. This amount should not include cost sharing and match amounts
in excess of the amount required by the Federal agency for the cost share.”
Per the Supplemental Payments for Lost Wages guidance, “Upon receiving
approval and an initial grant award, state and territories will be required to submit
weekly reports to FEMA”. The weekly requirement additionally states “Lost
Wages Weekly Report should have been provided to FEMA and are required until
all claims were paid”.
137

STATE OF MISSISSIPPI
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
PART 3 – Federal Award Findings and Questioned Costs – Dept of Homeland Security (continued)
The Internal Control – Integrated Framework published by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO) and the U.S.
Government Accountability Office Standards for Internal Control in the Federal
Government (Green Book) specifies that a satisfactory control environment is only
effective when control activities exist. This includes but is not limited to the review
process of transactions, proper support of transactions, proper documentation and
support of methodologies used in accounting practices, proper support of
information and communication within the agency, and a commitment to
competence by management.
Condition
During review of the reporting requirements for the Lost Wages Assistance
program, the auditor noted the following:
x
Quarterly Reports were not completed accurately. More specifically the
following issues were noted:
o
The basis of accounting was incorrectly documented as cash, however the
agency actually used accrual basis for recording appropriate amounts. This
issue was determined when the January expenditures were included on the
December report. January expenditures being included is acceptable if the
agency is using accrual basis due to this report not being submitted until
February 12, 2021;
o
The December quarter ending report was not submitted timely, it was
submitted 12 days later than required; and
o
The Total Recipient Share Required was inconsistently calculated on the
two quarterly reports examined. Specifically the December quarter ending
report used 25 percent of the “total federal funds authorized” reported and
March quarter ending report used 25 percent of the budgeted “other”
amount on the cumulative budget provided by the agency.
x
There were ten instances out of 44 (23%) in which a required weekly report
was not submitted to FEMA.
Cause
The Mississippi Department of Employment Security lacks proper internal
controls over reporting requirements.
Effect
Lack of effective internal control over reporting can lead to untimely and
inaccurate reports provided to the federal awarding agency.
Recommendation
We recommend the Mississippi Department of Employment Security strengthen
controls to ensure compliance with reporting requirements for lost wages
assistance.
Repeat Finding
No.
Statistically Valid
Yes.
138

STATE OF MISSISSIPPI
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
PART 3 – Federal Award Findings and Questioned Costs – Dept of Homeland Security (continued)
View of Responsible
Officials
Management at the Mississippi Department of Employment Security concurs
with this finding.  See additional comments in the Corrective Action Plan on
page 85 of this audit report
Material Weakness
Material Noncompliance
2021- 029
Strengthen Controls to Ensure Proper Review over the Schedule of Expenditures
of Federal Awards.
ALN Number
17.225 – Unemployment Insurance
97.050 – Lost Wages Assistance
Federal Award No.
UI-34724-20-55-A-28
4528DRMSSPLW
Pass-through Entity
N/A
Questioned Costs
N/A
Criteria
The Code of Federal Regulations 2 CFR 200.508(b) states, “Prepare appropriate
financial statements, including the schedule of expenditures of Federal awards in
accordance with § 200.510.”
The Code of Federal Regulations 2 CFR 200.510(b) states, the auditee must also
prepare a schedule of expenditures of Federal awards for the period covered by the
auditee's financial statements which must include the total Federal awards
expended as determined in accordance with § 200.502”
The Internal Control – Integrated Framework, published by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO) and the U.S.
Government Accountability Office Standards for Internal Control in the Federal
Government (Green Book) specify that a satisfactory control environment is only
effective when there are adequate control activities in place. Effective control
activities dictate that a review is performed to verify the accuracy and
completeness of financial information reported. The Schedule of Expenditures of
Federal Awards contains information such as Assistance Listing Numbers (ALN)
and grant identification numbers that must be properly and accurately recorded.
Condition
During the review of the schedule of expenditures of federal awards for the
Mississippi Department of Employment Security, the auditor noted that the agency
incorrectly reported Lost Wages Assistance (ALN 97.050) financial activity as
Unemployment Insurance (ALN 17.225). The agency incorrectly classified the
139

STATE OF MISSISSIPPI
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
PART 3 – Federal Award Findings and Questioned Costs – Dept of Homeland Security (continued)
Cause
Effect
Recommendation
Repeat Finding
Statistically Valid
View of Responsible
Officials
revenue and expenditures of nearly $250,000,000 for the Lost Wages Assistance
program on the schedule of expenditures of federal awards in the 8819100000 and
5820167100 fund.
The agency did not possess or enforce proper internal control structures.
Additionally, the agency did not properly review and reconcile the schedule of
expenditures of federal awards information and did not perform review over
crucial aspects of financial reporting.
Failure to  properly ensure federal grant activity, including revenue and
expenditures, are properly recorded on the agencies Schedule of Expenditures of
Federal Awards could result in reporting errors in the State’s Master Schedule of
Expenditures of Federal Awards and/or exclusion of major programs to be audited
on the State’s Single Audit Report.
We recommend the Mississippi Department of Employment Security strengthen
controls to ensure proper review over the schedule of expenditures of federal
awards.
No.
Yes.
Management at the Mississippi Department of Employment Security concurs
with this finding.  See additional comments in the Corrective Action Plan on
page 85 of this audit report
140

STATE OF MISSISSIPPI
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
FOR THE YEAR ENDED JUNE 30, 2021
PART 3 – FEDERAL AWARD FINDINGS AND QUESTIONED COSTS
U.S. DEPARTMENT OF LABOR
Finding Number
Finding and Recommendation__________________________________
DEPARTMENT OF EMPLOYMENT SECURITY
ELIGIBILITY
Material Weakness
Material Noncompliance
2021-015
Strengthen Controls to Ensure Compliance with Eligibility Requirements for
Unemployment Insurance.
ALN Number
17.225 – Unemployment Insurance
Federal Award No.    CARES Act, 2020 and 2021
UI-34173-20-55-A-28
UI-34067-20-55-A-28
Pass-through Entity
N/A
Questioned Costs
$62,434,776
Criteria
The Mississippi State Code Annotated (1972) §71-5-511 states that one is eligible
to receive benefits that “has been unemployed for a waiting period of one (1)
week”; “participates in reemployment services, such as job search assistance
services, if, in accordance with a profiling system established by the department,
it has been determined that he is likely to exhaust regular benefits and needs
reemployment services”; “is able to work, available for work and actively seeking
work”.
The Mississippi State Code Annotated §71-5-505(1) states “For weeks beginning
on or after July 1, 1991, each eligible individual who is totally unemployed or part
totally unemployed in any week shall be paid with respect to such week a benefit
in an amount equal to his weekly benefit amount less that part of his wages, if any,
payable to him with respect to such week which is in excess of Forty Dollars
($40.00).”

The Mississippi State Code Annotated §71-5-513 describes reason for separation
that disqualifies the individual as “(a) For the week, or fraction thereof, which
immediately follows the day on which he left work voluntarily without good cause,
if so found by the department, and for each week thereafter until he has earned
remuneration for personal services performed for an employer, as in this chapter
141

STATE OF MISSISSIPPI
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
PART 3 – Federal Award Findings and Questioned Costs – US Dept of Labor (continued)
defined, equal to not less than eight (8) times his weekly benefit amount, as
determined in each case; however, marital, filial and domestic circumstances and
obligations shall not be deemed good cause within the meaning of this subsection.
Pregnancy shall not be deemed to be a marital, filial or domestic circumstance for
the purpose of this subsection. (b) For the week, or fraction thereof, which
immediately follows the day on which he was discharged for misconduct
connected with his work, if so found by the department, and for each week
thereafter until he has earned remuneration for personal services performed for an
employer, as in this chapter defined, equal to not less than eight (8) times his
weekly benefit amount, as determined in each case. (c) The burden of proof of
good cause for leaving work shall be on the claimant, and the burden of proof of
misconduct shall be on the employer.”
Unemployment Insurance Program Letter (UIPL) Number 13-20, Change 1,
Attachment 1, Question 2 states that a state must demonstrate steps it has taken or
will take to implement three elements, including (i) suspending the waiting week,
(ii) modifying or suspending the work search requirements, and (iii) non-charging
employers. For each of the three elements, the minimum requirement is to modify,
suspend, or waive for individuals or employers directly impacted by COVID-
19 due to an illness in the workplace or direction from a public health official
to isolate or quarantine workers (emphasis added by auditor).
Unemployment Insurance Program Letter (UIPL) Number 28-20 states that the
Department of Labor (DOL) included program integrity language in all of the
major pieces of guidance associated with the state implementation of the CARES
Act programs and provisions.  Unemployment Insurance Program Letter 13-20
states that program Integrity requirements for the regular unemployment program
and unemployment programs authorized by the CARES Act were to operate in
tandem, and CARES Act program requires that states must ensure that only eligible
individuals receive benefits.  Both UIPL letters 13-20 and 28-20 specify that the
states must make efforts to rapidly and proactively prevent, detect, and investigate
fraudulent activity; establish and recover fraud overpayments; and pursue criminal
and civil prosecution to deter fraud.  Specifically, states were strongly encouraged
to implement the following measures to minimize fraud in the unemployment
system:
1) Social Security Administration Cross Match
2) Systematic Alien Verification for Entitlement
3) Incarceration Cross Matches
4) Internet Protocol Address Checks
5) Data Analytics to cross reference claims for indicators of fraud.

Unemployment Insurance Program Letter (UIPL) Number 10-20 states that DOL
has a longstanding legal interpretation of federal unemployment law that
“unemployment” includes a reduction of both work hours and earnings; therefore,
an individual who is not working, but has not experienced a reduction in income
(including earnings, paid sick leave, and paid family leave), is not eligible to
receive unemployment benefits.
142

STATE OF MISSISSIPPI
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
PART 3 – Federal Award Findings and Questioned Costs – US Dept of Labor (continued)

Section 4.b. of UIPL No. 14-20, Trade Readjustment Assistance (TRA) is payable
to eligible claimants after exhaustion of Unemployment Insurance (UI) benefits,
which include (1) regular UI under state law; (2) Extended Benefits (EB); (3)
Pandemic Unemployment Assistance (PUA); (4) Pandemic Emergency
Unemployment Compensation (PEUC). Also, Per Section 3.a.v of UIPL No. 16-
20, Change 4, Continued Assistance Act “adding a requirement for individuals to
submit documentation of employment or self-employment”. This requirement
applies for all individuals receiving Pandemic Unemployment Assistance payment
after December 27, 2020.
States must provide individual notification to claimants about provisions of the
Continued Assistance for Unemployed Workers Act of 2020 (Continued
Assistance Act). This includes changes to program dates and benefit levels for the
Pandemic Emergency Unemployment Compensation (PEUC), PUA, and Federal
Pandemic Unemployment Compensation (FPUC) programs, as well as the creation
of the Mixed Earners Unemployment Compensation (MEUC) program.
Per Section 4.b.i.D of UIPL No. 16-20, Change 5, "the state could provide an
option for the individual to select 'None of the above.' However, if the individual
self-certifies that none of the COVID-19 related reasons apply, the individual will
be denied for the week in question because they no longer meet the eligibility
requirement for PUA and the state must issue a written, appealable determination.”
Per Section 4.a of UIPL No. 16-20, “PUA provides benefits to covered individuals,
who are those individuals not eligible for regular unemployment compensation or
extended benefits under state or Federal law or PEUC, including those who have
exhausted all rights to such benefits.”
Per Section D.1 of Attachment I to UIPL No. 15-20, “The state must notify a
potentially eligible individual of his or her entitlement to FPUC. Such notification
should include both the beginning and ending dates for the FPUC program.”
The Code of Federal Regulations 2 CFR 200.303 requires that 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. These internal controls should be in
compliance with guidance in ‘Standards for Internal Control in the Federal
Government’ issued by the Comptroller General of the United States or the
Internal Control – Integrated Framework, issued by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO).”
The Internal Control – Integrated Framework published by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO) specifies that a
satisfactory control environment is only effective when control activities, such as
authorization, approval, verification, and adherence to policy, procedures, and
regulations are implemented and followed. These activities are essential to
143

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PART 3 – Federal Award Findings and Questioned Costs – US Dept of Labor (continued)
minimizing the risk of fictitious claims and misstated financial position.
Condition
The Coronavirus Aid, Relief, and Economic Security (CARES) Act enacted by the
federal government in response to the COVID-19 pandemic required state
unemployment agencies to increase the amount of benefits paid to claimants.
Additionally, claimants were able to collect unemployment payments for an
expanded time frame, and claimants who would otherwise not qualify for benefits
(such as independent contractors and self-employment persons) were able to
qualify for benefits.  In order to process the multitude of claims in an expeditious
manner, the Mississippi Department of Employment Security (MDES) opted to
override the existing controls designed in the internal control system.  Proven and
tested controls over Unemployment Insurance claims were altered or disregarded
for the periods of March 2020 through December 2020. MDES did not implement
any compensating controls or additional verifications to ensure that the override of
controls would not adversely affect claims paid.  By overriding and disregarding
controls, MDES did not adequately safeguard the federal program against fraud,
waste, and abuse.  Controls altered for the claims submitted in the noted
timeframes were:

Waived; One week waiting period; March 8, 2020 – December 26, 2020;

Waived; Work Search Requirements; March 8, 2020 – August 8, 2020;

Waived; Able to work, Available to work, and Actively Seeking Work
(A&A); March 8, 2020 – September 26, 2020;

Altered; Weekly Earning Allowance increased from $40 to $200; May 3,
2020 – September 26, 2020; and

Altered; Reason for separation from ALL employers in base period
changed to separation from MOST RECENT employer; March 8, 2020 -
September 26, 2020.
Due to these controls being ignored or overridden, MDES was unable to properly
monitor the immense influx of claims and to properly vet those claims for fraud.
During fiscal year 2021, total unemployment benefit claims increased from
$2,146,060,996 (fiscal year 2020) to $2,475,899,125 (fiscal year 2021), a 15%
increase.  Overpayments of benefits was noted to increase from $117,948,403
(fiscal year 2020) to $473,787,010 (fiscal year 2021), a 301% increase.  These
payments include:

Payments made to individuals who never lost or had a reduction in wages;

Fraudulent payments due to stolen identity;

Payments made to incarcerated individuals; and

Payments made due to international unemployment fraud.
In particular, MDES inadvertently allowed incarcerated individuals to receive
payment when the control that required claimants to verify that they were “actively
seeking work” was waived.  Incarcerated individuals were then able to apply for
benefits and receive approval without any additional verification from MDES.
144

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SCHEDULE OF FINDINGS AND QUESTIONED COSTS
PART 3 – Federal Award Findings and Questioned Costs – US Dept of Labor (continued)
MDES personnel were initially overwhelmed by the influx of claims and were
unable to accurately report the amount of increased loss the State was subject too,
and were unable to adequately monitor the fraud that was reported by individuals
when they received notification of benefits received.
MDES personnel were initially overwhelmed by the influx of claims and were
unable to accurately report the amount of increased loss the State was subject too,
and were unable to adequately monitor the fraud that was reported by individuals
when they received notification of benefits received.
Federal guidance that required the easing of pre-pandemic conditions for receiving
unemployment state that the State is required to implement the minimum
requirements to modify, suspend, or waive for individuals or employers directly
impacted by COVID-19 due to an illness in the workplace or direction from a
public health official to isolate or quarantine workers; however, MDES chose to
waive or suspend requirements for the waiting week, work search requirements,
and non-charging employees as additional measures.  During testing of UI benefits
paid during fiscal year 2021, the auditor tested 60 recipients and noted that
individuals applying for unemployment during the pandemic were indeed not
subject to work search requirements, or the waiting week for benefits.
Additionally, auditor noted the following:

For DUA Claims the following occurred:
o
Five instances in which work search requirements were waived
for Compensable Week Ending (CWE) between March 8, 2020
and August 8, 2020; resulting in questioned costs of $497.
o
Four instances in which work search result was not submitted
along with the weekly certificates for the CWE after August 8,
2020; resulting in questioned costs of $391.
Total actual questioned costs - $888
Total projected questioned costs - $8,427

For PUA Claims the following occurred:
o
Due to controls being turned off from March 8, 2020 to August 8,
2020, all PUA claims during that period, totaling $62,432,862, are
being questioned.
o
Five instances in which work search results were not submitted
along with the weekly certificates for CWE after August 8, 2020;
resulting in questioned costs of $708.
It was also noted that two of these five claims also resulted in
duplicate PUA payments for the same week. The costs associated
with this are included in the above amount.
145

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SCHEDULE OF FINDINGS AND QUESTIONED COSTS
PART 3 – Federal Award Findings and Questioned Costs – US Dept of Labor (continued)
o
One instance that when the PUA claimant self-certified that “none
of the COVID-19 related reasons apply”, the claimant was still
paid for the compensable week ending which resulted in
questioned costs of $106 for PUA benefits;
o
One instance in which the “Notice for Proof of Employment” was
not generated for PUA claimant who received a payment of $106
after December 27, 2020;
o
One instance that a PUA Claimant was not registered with WIN
Job Center and benefits were paid resulting in questioned costs of
$106;
o
One instance in which a PUA claimant instead should have been
receiving PEUC benefits for the CWE; while the claimant should
have received the benefits from a different program, it did not
increase the costs overall.
Total actual questioned costs - $62,432,862
Total projected questioned costs - $86,735,470

For Trade Readjustment Allowance (TRA) Benefits, there was one claim
payment paid before extended benefits were exhausted; this however did
not result in questioned costs.

For PEUC Benefits, there was one instance in which there was no
notification to the claimant of program dates/benefit level changes for their
PEUC benefits, this did not result in questioned costs.

Six instances in which FPUC benefit determination notices were not
generated by the system and sent to the claimant; while the notification
was not sent, the claim payment amounts were not affected, therefore no
questioned costs.
Regardless of the federal requirements or Executive Orders issued, MDES is still
responsible for ensuring the accuracy of unemployment claims.  In order to assure
the accuracy of those claims, MDES should have implemented compensating
controls to safeguard the unemployment trust fund when other controls were
waived or overrode.  MDES personnel bore the ultimate responsibility to ensure
that unemployment payments were accurately paid out and that overpayments
were kept to a minimum.
Cause
Agency was overwhelmed by COVID-19 pandemic and policies and procedures
for Eligibility determinations were not followed.
MDES did not have proper internal controls in place due to overriding or waiving
existing controls.  This caused MDES the inability to verify that unemployment
claims were paid to proper claimants.
146

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PART 3 – Federal Award Findings and Questioned Costs – US Dept of Labor (continued)
Effect
Recommendation
Repeat Finding
Statistically Valid
View of Responsible
Officials
Failure to properly enable controls and follow policies and procedures increases
the risk of fraud and misappropriation of liabilities, which can result in material
misstatements of financial statements. Failure to maintain supporting
documentation for eligibility determination could result in questioned costs and
recoupment of costs by the federal granting agency.
We recommend the Mississippi Department of Employment Security strengthen
controls to ensure compliance with eligibility requirements for unemployment
insurance. Management should continue to review, monitor and enhance eligibility
procedures to detect and prevent improper and fraudulent payments.
Yes, 2020-036.
Yes.
Management at the Mississippi Department of Employment Security does not
concur with this finding.  See additional comments in the Corrective Action Plan
on page 278 of this audit report; and the Auditor's Response to the Corrective
Action plan on page 160 and 288.
MATCHING, LEVEL OF EFFORT, EARMARKING
Material Weakness
Material Noncompliance
2021-022
Strengthen Controls to Ensure Compliance with Matching Requirements for
Unemployment Insurance.
ALN Number
17.225 – Unemployment Insurance
Federal Award No.    UI-34724-20-55-A-28
Pass-through Entity
N/A
Questioned Costs
$935,077
Criteria
The Families First Coronavirus Response Act (Pub. L. 116-127), in Division D of
the Emergency Unemployment Insurance Stabilization and Access Act of 2020
(EUISAA), temporarily provides for 100% Federal funding of sharable  extended
benefits (EB) payments through December 31, 2020 for states that receive
Allotment I and II of the emergency administrative grants, as discussed in
Unemployment Insurance Program Letter (UIPL) No. 13-20. States are
reminded that Section 204(a) (3), Extended Unemployment Compensation Act
(EUCA), prohibits Federal sharing for EB attributable to employment with state
and local governments or Federally-recognized Indian tribes. This prohibition does
147

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SCHEDULE OF FINDINGS AND QUESTIONED COSTS
PART 3 – Federal Award Findings and Questioned Costs – US Dept of Labor (continued)
Condition
Cause
Effect
Recommendation
Repeat Finding
Statistically Valid
View of Responsible
Officials
not apply to EB attributable to employment with 501(c) (3) nonprofit
organizations.
The Internal Control – Integrated Framework, published by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO) and the U.S.
Government Accountability Office Standards for Internal Control in the Federal
Government (Green Book) specify that a satisfactory control environment is only
effective when there are adequate control activities in place. Effective control
activities dictate an agency should appropriately update program rules to meet
federal program guidelines.
During review of matching contributions and EB in relation to unemployment
insurance, it was noted that the Mississippi Department of Employment Security
(MDES) treated all EB claims as fully federally funded. Per discussion with MDES
personnel, the agency specifically stated that they inadvertently programmed all
employer accounts to qualify for federal sharing to extended benefits. This allowed
local and state government entities and federally recognized Indian Tribes to
qualify for extended benefits, however this was prohibited per federal guidelines.
The auditor reviewed a listing of local and state government entities and federally
recognized Indian tribes that received extended benefits and specifically verified
that six of these entities did in fact receive extended benefits that should have been
prohibited. The auditor verified the total of benefits paid to these excluded entities
and it totaled $935,077.
MDES inadvertently programmed all employer accounts to qualify for federal
sharing of Extended Benefits including the local and state government entities and
federally recognized Indian Tribes.
Prohibited entities, including state and local governments and federally recognized
Indian tribes, were allowed to receive federal funds in relation to extended benefits.
We recommend the Mississippi Department of Employment Security strengthen
controls to ensure compliance with matching requirements for unemployment
insurance.
No.
Yes.
Management at the Mississippi Department of Employment Security concurs with
this finding.  See additional comments in the Corrective Action Plan on page 280
of this audit report
148

STATE OF MISSISSIPPI
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
PART 3 – Federal Award Findings and Questioned Costs – US Dept of Labor (continued)
PERIOD OF PERFORMANCE
Material Weakness
Material Noncompliance
2021-023
Strengthen Controls to Ensure Compliance with Period of Performance
Requirements for Unemployment Insurance.
ALN Number
17.225 – Unemployment Insurance
Federal Award No.    UI-34724-20-55-A-28
Pass-through Entity
N/A
Questioned Costs
$47,701
Criteria
The start and end date of extended benefits (EB) are paid based on statutory
triggers from trigger notice number 2020-18 and 2020-48 respectively. For
Mississippi, EB was triggered on for compensable week ending (CWE) May 24,
2020 and off for CWE December 19, 2020.
Per the Federal Emergency Management Agency (FEMA) Declaration DR-4536-
MS the funding period for Disaster Unemployment Assistance (DUA) generally
covers a 26-week period after the declaration has been declared. The starting CWE
was April 25, 2020 and the ending date was October 17, 2020.
The Department of Labor UIPL Number 14-21 provides references for the period
of performance for Pandemic Unemployment Assistance (PUA), Pandemic
Emergency Unemployment Compensation (PEUC), and Federal Pandemic
Unemployment Compensation (FPUC). Specifically in regards to the conditions
listed above, PEUC began week ending April 4, 2020 and ended week ending
September 4, 2021. Also, FPUC began week ending April 4, 2020 and ended week
ending July 25, 2020.
The Internal Control - Integrated Framework published by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO) specifies that a
satisfactory control environment is only effective when control activities ensure
payments are only made during appropriate time periods.
Condition
During review of benefit payments at the Mississippi Department of Employment
Security, the auditor noted the following instance of noncompliance with period of
performance:

240 instances totaling $38,589, in which EB were paid for a CWE after
the eligibility period of December 19, 2020,

27 instances totaling $2,862, in which Disaster Unemployment Assistance
(DUA) benefits were paid for CWE’s that were outside of the Disaster
Assistance Period which is the 26 weeks that began with the first day of
149

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SCHEDULE OF FINDINGS AND QUESTIONED COSTS
PART 3 – Federal Award Findings and Questioned Costs – US Dept of Labor (continued)
the week following the date the major disaster was declared by the
President,

93 instances totaling $6,162, in which PEUC was paid for CWE’s before
the eligibility period which began for week ending April 4, 2020, and

Four instances totaling $88 in which FPUC benefits were paid for CWEs
before the eligibility period which began week ending April 4, 2020.
Cause
Effect
Recommendation
Repeat Finding
Statistically Valid
View of Responsible
Officials
The Mississippi Department of Employment security did not properly program the
ReEmployment system to reflect the correct dates or periods of performance for
unemployment benefits.
The failure to establish internal controls enabled material noncompliance to go
undetected resulting in payments being made for benefits prior to and after the
correct period of performance.
We recommend the Mississippi Department of Employment Security strengthen
controls to ensure compliance with period of performance requirements for
unemployment insurance.
No.
Yes.
Management at the Mississippi Department of Employment Security concurs with
this finding.  See additional comments in the Corrective Action Plan on page 282
of this audit report
REPORTING
Material Weakness
Material Noncompliance
2021-029
Strengthen Controls to Ensure Proper Review over the Schedule of Expenditures
of Federal Awards.
ALN Number
17.225 – Unemployment Insurance
Federal Award No.    UI-34724-20-55-A-28
4528DRMSSPLW
Pass-through Entity
N/A
Questioned Costs
N/A
150

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SCHEDULE OF FINDINGS AND QUESTIONED COSTS
PART 3 – Federal Award Findings and Questioned Costs – US Dept of Labor (continued)
Criteria
The Code of Federal Regulations 2 CFR 200.508(b) states, “Prepare appropriate
financial statements, including the schedule of expenditures of Federal awards in
accordance with § 200.510.”
The Code of Federal Regulations 2 CFR 200.510(b) states, the auditee must also
prepare a schedule of expenditures of Federal awards for the period covered by the
auditee's financial statements which must include the total Federal awards
expended as determined in accordance with § 200.502”
The Internal Control – Integrated Framework, published by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO) and the U.S.
Government Accountability Office Standards for Internal Control in the Federal
Government (Green Book) specify that a satisfactory control environment is only
effective when there are adequate control activities in place. Effective control
activities dictate that a review is performed to verify the accuracy and
completeness of financial information reported. The Schedule of Expenditures of
Federal Awards contains information such as Assistance Listing Numbers (ALN)
and grant identification numbers that must be properly and accurately recorded.
Condition
During the review of the schedule of expenditures of federal awards for the
Mississippi Department of Employment Security, the auditor noted that the agency
incorrectly reported Lost Wages Assistance (ALN 97.050) financial activity as
Unemployment Insurance (ALN 17.225). The agency incorrectly classified the
revenue and expenditures of nearly $250,000,000 for the Lost Wages Assistance
program on the schedule of expenditures of federal awards in the 8819100000 and
5820167100 fund.
Cause
The agency did not possess or enforce proper internal control structures.
Additionally, the agency did not properly review and reconcile the schedule of
expenditures of federal awards information and did not perform review over
crucial aspects of financial reporting.
Effect
Failure to properly ensure federal grant activity, including revenue and
expenditures, are properly recorded on the agencies Schedule of Expenditures of
Federal Awards could result in reporting errors in the State’s Master Schedule of
Expenditures of Federal Awards and/or exclusion of major programs to be audited
on the State’s Single Audit Report.
Recommendation
We recommend the Mississippi Department of Employment Security strengthen
controls to ensure proper review over the schedule of expenditures of federal
awards.
Repeat Finding
No.
Statistically Valid
Yes.
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PART 3 – Federal Award Findings and Questioned Costs – US Dept of Labor (continued)
View of Responsible
Officials
Management at the Mississippi Department of Employment Security concurs with
this finding.  See additional comments in the Corrective Action Plan on page 285
of this audit report
Material Weakness
Immaterial Noncompliance
2021-026
Strengthen Controls to Ensure Compliance with Reporting Requirements for
Unemployment Insurance.
ALN Number
17.225 – Unemployment Insurance
Federal Award No.    UI-34724-20-55-A-28
Pass-through Entity
N/A
Questioned Costs
N/A
Criteria
The Code of Federal Regulations 2 CFR 200.302 states each state must expend
and account for the Federal award in accordance with state laws and procedures
for expending and accounting for the state's own funds. In addition, the state's and
the other non-Federal entity's financial management systems, including records
documenting compliance with Federal statutes, regulations, and the terms and
conditions of the Federal award, must be sufficient to permit the preparation of
reports required by general and program-specific terms and conditions; and the
tracing of funds to a level of expenditures adequate to establish that such funds
have been used according to the Federal statutes, regulations, and the terms and
conditions of the Federal award.
Per the UI Reports Handbook No. 401, The Agency is required to submit quarterly
ETA 191 reports. The ETA 191 is due by the 25th of the month following the close
of the quarter.
The Agency is required to submit monthly ETA 2112 report. Per the UI Reports
Handbook No. 401 the ETA 2112 is due the 1st day of the second month following
the month of reference. The handbook also notes that all funds deposited into,
transferred, or paid from the state unemployment fund (the state clearing account,
the state account in the UTF, and the state benefit payment account) should be
reflected on the ETA 2112 except for payments/benefits paid under the Alternative
Trade Adjustment Assistance (ATAA) and Trade Adjustment Assistance (TAA)
programs.
The Agency is also required to submit monthly ETA 9050, 9052 and 9055 reports.
Per the UI Reports Handbook No. 401, the ETA 9050, 9052 and 9055 reports are
due on the 20th of the month following the month to which the data relates.
152

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SCHEDULE OF FINDINGS AND QUESTIONED COSTS
PART 3 – Federal Award Findings and Questioned Costs – US Dept of Labor (continued)
The Internal Control – Integrated Framework published by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO) and the U.S.
Government Accountability Office Standards for Internal Control in the Federal
Government (Green Book) specify that a satisfactory control environment is only
effective when there are adequate control activities in place. Effective control
activities dictate that proper review and approval procedures should be in place to
ensure accuracy and reliability of reports submitted by the agency.
Condition
The Mississippi Department of Employment Security is required to submit various
reports to federal awarding entities. Upon testing, the following issues were noted:

During review of two ETA-191 reports for the quarters ending September
2020 and June 2021, the following issues were noted:
o
No evidence of written supervisory approval could be provided
for the reports; and
o
Supporting documents could not be provided for the adjustment
amounts on the penalties and interest.

During review of eight monthly ETA 2112 reports, auditors noted:
o
Pandemic Unemployment Assistance (PUA) disbursements were
understated by $12,228,112 in the June 2021 report; and
o
Transfers from the Federal Unemployment Account (FUA) were
not reported on line 15 in four reports tested for the months of
August 2020, and March, May, and June 2021.

During review of 12 Performance Reports the following issues were noted:
o
There was no written supervisory approval before submission of
four ETA-9050 reports, four ETA-9052 reports, and four ETA-
9055 reports;
o
The data submitted for one ETA-9050 failed to pass the
Department of Labor’s data validation program for fiscal year
2021; and
o
One ETA-9052 report for the month of November was not
submitted timely. The report was due December 20, 2020 and it
was not submitted until February 9, 2021, which is 51 days late.
Cause
The Mississippi Department of Employment Security lacks adequate review
procedures and proper internal controls over reporting requirements.
Effect
Without proper review and approval, reports could be inaccurate and incomplete
which could result in improper funding by the federal entity.
Recommendation
We recommend the Mississippi Department of Employment Security strengthen
controls to ensure compliance with reporting requirements for unemployment
insurance and implement effective internal review and approval procedures to
ensure reports are submitted accurately and timely to the Department of Labor.
153

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SCHEDULE OF FINDINGS AND QUESTIONED COSTS
PART 3 – Federal Award Findings and Questioned Costs – US Dept of Labor (continued)
Repeat Finding
No.
Statistically Valid
Yes.
View of Responsible
Officials
Management at the Mississippi Department of Employment Security concurs with
this finding.  See additional comments in the Corrective Action Plan on page 283 of this
audit report
SPECIAL TESTS AND PROVISIONS – BENEFIT PAYMENTS
Material Weakness
Material Noncompliance
2021-024
Strengthen Controls to Ensure Compliance with Special Tests – Benefit Payments
Requirements for Unemployment Insurance.
ALN Number
17.225 – Unemployment Insurance
Federal Award No.    UI-34724-20-55-A-28
Pass-through Entity
N/A
Questioned Costs
N/A
Criteria
As stated in the Employment and Training Handbook No. 395, 5th Edition: Section
13: Completion of Cases and Timely Data Entry, Prompt completion of
investigations is important to ensure the integrity of the information being
collected by questioning claimant and employers before the passage of time
adversely affects recollections. Prompt entry of associated data is necessary for
both the State Workforce Agency and the Department of Labor to maintain current
databases.
Therefore, the following time limits are established for completion of all cases for
the year. (The "year" includes all batches of weeks ending in the calendar year.):

a minimum of 70 percent of cases must be completed within 60 days of
the week ending date of the batch, and 95 percent of cases must be
completed within 90 days of the week ending date of the batch; and

a minimum of 98 percent of cases for the year must be completed within
120 days of the ending date of the calendar year.
The Internal Control – Integrated Framework published by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO) and the U.S.
Government Accountability Office Standards for Internal Control in the Federal
Government (Green Book) specify that a satisfactory control environment is only
effective when there are adequate control activities in place. Effective control
154

STATE OF MISSISSIPPI
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
PART 3 – Federal Award Findings and Questioned Costs – US Dept of Labor (continued)
Condition
Cause
Effect
Recommendation
Repeat Finding
Statistically Valid
View of Responsible
Officials
activities dictate that case investigations should be timely in order to ensure
accuracy and reliability.
During review of the Benefits Accuracy Measurement (BAM) Program, the
auditor determined that the Mississippi Department of Employment Security
(MDES) was not meeting the timeliness requirement for the BAM unit’s
performance in investigating BAM paid cases. It was specifically noted that there
were ten instances in which paid case investigations were not completed within the
60 day time requirement. Further investigation of the full population resulted in
the agency not meeting the 70 percent of cases (230 out of 496, or 46%)
investigations being completed within 60 days, nor the 95 percent of cases (371
out of 496, or 75%) investigated and completed within 90 days.
Due to the increased demand during the COVID-19 Pandemic, BAM investigative
staff were reassigned to other departments for additional assistance, which caused
MDES personnel to be unable to meet the timeliness requirement for investigated
case completion.
Failure to follow federal quality control guidelines may result in a decrease and/or
loss of federal funds.
We recommended the Mississippi Department of Employment Security strengthen
controls to ensure compliance with special tests – benefit payments requirements
for unemployment insurance. These internal controls should ensure that Benefits
Accuracy Measurement (BAM) Program Case investigations are completed in a
timely manner.
No.
Yes.
Management at the Mississippi Department of Employment Security concurs with
this finding.  See additional comments in the Corrective Action Plan on page 282
of this audit report.
SPECIAL TESTS AND PROVISIONS - OVERPAYMENTS
Material Weakness
Material Noncompliance
2021-025
Strengthen Controls to Ensure Compliance with Special Tests – Program Integrity-
Overpayments Requirements for Unemployment Insurance.
ALN Number
17.225 – Unemployment Insurance
155

STATE OF MISSISSIPPI
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
PART 3 – Federal Award Findings and Questioned Costs – US Dept of Labor (continued)
Federal Award No.    UI-34724-20-55-A-28
Pass-through Entity
N/A
Questioned Costs
$633,222
Criteria
As stated in the Attachment I to Unemployment Insurance Program Letter
(UIPL) No. 16-20 Change I, Pandemic Unemployment Assistance (PUA)
payments must be reduced to recover overpayments for other states if the state has
signed the Interstate Reciprocal Overpayment Recovery Arrangement (IRORA)
agreement. However, the state may not offset more than 50 percent from the PUA
payment to recover overpayments for other programs.
As stated in the Attachment I to UIPL No. 17-20, Change I, The state may not
offset more than 50 percent from the Pandemic Emergency Unemployment
Compensation (PEUC) payment to recover an overpayment.
The Internal Control – Integrated Framework, published by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO) and the U.S.
Government Accountability Office Standards for Internal Control in the Federal
Government (Green Book) specify that a satisfactory control environment is only
effective when there are adequate control activities in place. Effective control
activities dictate agencies should correctly program systems to comply with federal
guidelines.
Condition
During testing performed on overpayments, the auditor noted that the Mississippi
Department of Employment Security had incorrect offset percentages setup in
ReEmployMS to recover overpayments. The agency was incorrectly recovering
overpayments by offsetting PUA and PEUC with other benefit programs.
Specifically the agency used:

PUA benefit payments to offset 100% of overpayments that occurred from
Mixed Earners Unemployment Compensation program (MEUC) and
Federal Pandemic Unemployment Compensation (FPUC) benefits; and

PEUC benefit payments to offset 100% of overpayments that occurred
from PUA, MEUC, FPUC, Regular Unemployment Insurance, and
Extended Benefit overpayments.
This resulted in questioned costs of $633,222.
Cause
The agency programmed the ReEmployMS system using incorrect offset
percentages and did not take into consideration that they could not take more than
50 percent of the benefit payments from claimants when recovering overpayments.
Effect
The claimant may not receive the appropriate amount of PUA and PEUC benefits
if the agency uses incorrect offset percentages to recover overpayments from the
previously mentioned unemployment programs.
156

STATE OF MISSISSIPPI
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
PART 3 – Federal Award Findings and Questioned Costs – US Dept of Labor (continued)
Recommendation
Repeat Finding
Statistically Valid
View of Responsible
Officials
We recommended the Mississippi Department of Employment Security strengthen
controls to ensure compliance with special tests – program integrity-overpayments
requirements for unemployment insurance.
No.
Yes.
Management at the Mississippi Department of Employment Security concurs with
this finding.  See additional comments in the Corrective Action Plan on page 282
of this audit report
SPECIAL TESTS – EMPLOYER EXPERIENCE RATING
Material Weakness
Immaterial Noncompliance
2021-027
Strengthen Controls to Ensure Compliance with Special Tests – Employer
Experience Rating Requirements for Unemployment Insurance.
ALN Number
17.225 – Unemployment Insurance
Federal Award No.    UI-34724-20-55-A-28
Pass-through Entity
N/A
Questioned Costs
N/A
Criteria
The Families First Coronavirus Response Act (enacted March 18, 2020), provides
that, in the context of COVID-19, states have the flexibility of determining whether
Unemployment Insurance benefits that are not federally funded will be charged to
employer accounts for experience rating purposes and should consider how to
fairly distribute these costs to employers.
In response to the Families First Coronavirus Response Act, on July 7, 2020, the
Mississippi State Legislature enacted SB 3051 which created special provisions
for both the general and individual experience rates for calendar year 2021 to
address the effects of the COVID-19 pandemic. This legislation allowed for the
following:

Mississippi to set the general experience rate for 2021 to 0%;

Excluding the charges attributed to each employer's individual experience
rate for the period March 8, 2020, through June 30, 2020, from the
employer's individual experience rate calculations for purposes of
calculating the total unemployment insurance rate for 2021 as well as
excluding these charges for calendar years 2022 and 2023; and,
157

STATE OF MISSISSIPPI
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
PART 3 – Federal Award Findings and Questioned Costs – US Dept of Labor (continued)

Excluding the charges attributed to each employer's individual experience
rate for the period July 1, 2020, through December 31, 2020, from the
employer's individual experience rate calculations for purposes of
calculating the total unemployment insurance rate for 2022 as well as
excluding these charges for calendar years 2023 and 2024.
Condition
Cause
Effect
Recommendation
Repeat Finding
Statistically Valid
View of Responsible
Officials
The Internal Control – Integrated Framework published by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO) and the U.S.
Government Accountability Office Standards for Internal Control in the Federal
Government (Green Book) specify that satisfactory control activities should exist
to ensure an effective internal control system exists. Effective internal controls
should be in place to ensure accurate calculations occur for employer experience
rating.
While testing the employer experience benefit rating, there were four instances in
which benefits charged to employer accounts were inadvertently excluded when
calculating the 2021 employer experience rate. Specifically, the agency included
these weeks as part of the noncharging weeks that should have begun after March
8, 2020. Noncharging weeks began after March 8, 2020, however the agency
inadvertently included certain charges during the second quarter of 2020 as
noncharging as well.
Certain claims with effective dates between the PUA program effective date of
February 2, 2020, and Executive Order 1462 waiting period waiver date of March
8, 2020, were waived. These waived weeks were therefore incorrectly non-charged
to the employer.
Including benefits paid for compensable weeks ending before March 8, 2020 in
non-charging benefit will cause the employer’s individual experience rating for
2021 to be incorrectly lower than it should be and therefore reduce some employers
contributions to the unemployment insurance Trust Fund and decreases the
unemployment insurance trust fund balances.
We recommended the Mississippi Department of Employment Security strengthen
controls to ensure compliance with special tests – employer experience rating
requirements for unemployment insurance.
No.
Yes.
Management at the Mississippi Department of Employment Security concurs with
this finding.  See additional comments in the Corrective Action Plan on page 284
of this audit report.
158

Auditor’s note to the Corrective Action Plan from Mississippi Department of Employment
Security (MDES) Management
Department of Employment Security – Activities Allowed/Allowable Costs - Material
Weakness/Material Noncompliance
2021-043
Strengthen Controls to Ensure Compliance with Allowable Costs and Activities
Allowed for Coronavirus Relief Funds
STATE OF MISSISSIPPI
OFFICE OF THE STATE AUDITOR
SHAD WHITE
STATE AUDITOR
Much of MDES’ argument that the questioned costs should be removed relies on Mississippi State Law
and disregards the requirements of the federal CRF grant. MDES asserts in their response that, because the
MS Legislature appropriated money to specific types of workforce development, that those expenditure
automatically became eligible for CRF funding.  While the MS Legislature has the authority to appropriate
CRF money to certain types of workforce development, those items still must have met the three allowable
cost requirements of the CRF funds.  State law authorizing equipment purchases cannot overrule the federal
program guidelines.  MDES failed to document or perform adequate due diligence to ensure that the fixed
asset purchases made by their subrecipients met the grant requirements.  These expenditures were not
properly justified with any cost comparison to ensure that the purchase was the most cost-effective solution.
Additionally, MDES could not provide any compelling evidence that these expenditures were necessary
due to the pandemic.
As stated in the finding, MDES could not provide documentation that the “student vouchers” paid for with
CRF monies were necessary due to the pandemic.  MDES could not provide compelling evidence that these
students were new students, that they completed the courses, that the courses were able to benefit the
students in the workforce, or that they were even necessary due to the pandemic.
MDES’ assertion that extensive documentation has been provided to OSA to validate these purchases is
erroneous.  MDES provided documentation to OSA, but that documentation did not support that the charges
were necessary or justified.  The justifications for necessity in some instances was nonsensical, and did not
support that the purchases were necessary due to the pandemic.  In the example noted by MDES in their
response, two lathes costing a total of $313,800 were purchased to assist with displaced internships.  Those
two lathes served 22 students, for a per student price of $14,263.  By fall of 2021, the internships had
resumed – meaning that the lathes were used for one semester.  The college in question provided no
evidence that any other method of fulfilling the internships was considered, and no other options for a more
cost-effective solution rather than buying over $300,000 in fixed assets was contemplated.  In a second
example given by MDES, the college purchased drones to assist in training drone pilots.  MDES response
notes that drones are an emerging technology and that additional drone pilots will be needed by 2025;
POST OFFICE BOX 956 • JACKSON, MISSISSIPPI 39205 • (601) 576-2800 • FAX (601) 576-2650
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however, MDES does not provide any compelling justification as to why these drones and trained drone
pilots were necessary due to the pandemic.
Department
of Employment Security
–
Eligibility
-
Material Weakness/Material
Noncompliance
2021-015
Strengthen Controls to Ensure Compliance with Eligibility Requirements for
Unemployment Insurance
The Office of the State Auditor (OSA) acknowledges that the Mississippi Department of Employment
Security (MDES) was faced with an unexpected and staggering task to ensure unemployment benefits were
paid to individuals during the pandemic.  OSA also acknowledges that certain federal guidelines were
provided that MDES had to comply with in order to receive additional federal unemployment funds.  While
MDES’ response to the finding focuses on the federal requirements and state guidance to waive or ignore
existing controls, MDES fails to identify any way that the agency mitigated any of the fraud risks or
potential for overpayments created by waiving or overriding these controls.  This failure on the part of
MDES resulted in a 301% increase in known overpayments from fiscal year 2020 to 2021.  This failure to
safeguard the state’s assets is the basis for the material weakness finding.  Additionally, MDES fails to
acknowledge that the agency was required by the same type federal guidance referenced in their response
to the finding (UIPL Letters and Change Notices) to ensure adequate and proper fraud detection and
prevention techniques were being utilized by the agency.
Moreover, while MDES did receive federal guidance on making unemployment payments more accessible
to those directly impacted by the pandemic, the options provided by the federal government were to either
modify or suspend the work search requirements for individuals or employers directly impacted by COVID-
19 due to an illness in the workplace or direction from a public health official to isolate or quarantine
workers.  States were also given the flexibility to respond to the COVID-19 emergency in a broader way,
if they chose to do so (emphasis added by auditor). (Unemployment Insurance Program Letter Number
13-20, Change 1, Attachment 1, Question 2).  MDES chose to suspend the requirement for all
unemployment claims, and not only those that arose from an illness in the workplace or from an order to
isolate or quarantine workers.  The decision to implement broader flexibility and completely waive work
search requirements were made by MDES.  By MDES’ own admission in other auditee responses to OSA,
MDES stated that they requested the Governor’s Office waive the specific requirements.  Additionally, in
each Executive Order (1462, 1481, 1502, and 1510), MDES was given flexibility to reassess and modify
these measures prior to their expiration date in the orders.
Additionally, The Department of Labor (DOL) included program integrity language in all of the major
pieces of guidance associated with the state implementation of the CARES Act programs and provisions
(Unemployment Insurance Program Letter Number 28-20).  Program Integrity requirements for the regular
unemployment program and unemployment programs authorized by the CARES Act were to operate in
tandem, and CARES Act program requires that states must ensure that only eligible individuals receive
benefits (Unemployment Insurance Program Letter Number 23-20).    Both UIPL letters 23-20 and 28-20
specify that the states must make efforts to rapidly and proactively prevent, detect, and investigate
fraudulent activity; establish and recover fraud overpayments; and pursue criminal and civil prosecution to
deter fraud.  Specifically, states were strongly encouraged to implement the following measures to minimize
fraud in the unemployment system:
1) Social Security Administration Cross Match
2) Systematic Alien Verification for Entitlement
3) Incarceration cross matches
4) Internet Protocol Address checks
5) Data Analytics to cross reference claims for indicators of fraud.
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POST OFFICE BOX 956 • JACKSON, MISSISSIPPI 39205 • (601) 576-2800 • FAX (601) 576-2650
Furthermore, many of the most effective tools to deter and detect fraud were available to MDES in the
Integrity Data Hub (IDH), and were available to states for well over a year.  These included:
1) Interstate Suspicious Actor Repository to match claims across states
2) Foreign IP Address verification to receive flags on claims filed from IP addresses outside of
the United States
3) Data Analytic tools
4) Fraud Alert Systems
5) Identify Verification for fraud scoring information, including flagging synthetic identities.
MDES has stated that they utilize the IDH; however, auditors cannot determine how effectively these
programs were utilized considering the high amount of overpayments that were made during fiscal year
2021.
Additionally, one of the specific fraud risks the UIPL, incarceration cross matches, were not
performed by MDES, and resulted in overpayments to incarcerated individuals.  These incarcerated
individuals were able to apply for benefits when MDES overrode or turned off the automated controls and
did not implement any compensating controls to ensure payments were proper.
In summary, regardless of the federal requirements or Executive Orders issued, MDES is still responsible
for ensuring the accuracy of unemployment claims.  In order to assure the accuracy of those claims, MDES
should have implemented compensating controls to safeguard the unemployment trust fund when other
controls were waived or overrode.  The ultimate responsibility to ensure that unemployment payments were
accurately paid out and that overpayments were kept to a minimum is the responsibility of MDES personnel.
Department
of
Employment
Security
–
Subrecipient
Monitoring
-
Material
Weakness/Material Noncompliance
2021-045
Strengthen Controls to Ensure Compliance with Subrecipient Monitoring
Requirements
When documentation of pre-award risk assessments was requested during the audit process, MDES did not
provide any auditable documentation to the auditors.  While MDES stated that they relied upon the same
pre-award risk assessment for the CRF grants as the Workforce Innovation and Opportunity Act (WIOA)
grants, none of the WIOA pre-award risk assessments were provided.  Personnel at MDES stated, when
this documentation was requested, that “there was no risk assessment of the four local areas performed prior
to the awarding of the CRF funds…We work closely with the local areas on a daily basis, perform yearly
subrecipient monitoring, and regularly conduct technical assistance all of which are closely monitored by
MDES management for any indication that we should reassess the locals as anything but low risk. We
understand that this is not documented and therefore does not meet the risk assessment requirement but
wanted to give the context of our actions.”
MDES appears to concur that they did not provide documented evidence to auditors that all required grant
elements were presented to grantees.  It should be noted that this evidence has still not been provided to
auditors as of the date of this report.
Lastly, the questioned costs as outlined in finding 2021-043 verify that MDES did not have proper
monitoring procedures in place to monitor subrecipients of the CRF grant program.  MDES disagrees that
these costs should be questioned (as noted in their response to finding 2021-043); therefore, they do not
concur that their monitoring procedures and controls failed.  OSA has explained, in detail, both in finding
161
2021-043 and in the rebuttal to MDES’ response above why the auditor questioned these expenses.  Please
refer to finding 2021-043 for further information.

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STATE OF MISSISSIPPI
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
FOR THE YEAR ENDED JUNE 30, 2021
PART 3 – FEDERAL AWARD FINDINGS AND QUESTIONED COSTS
U.S. DEPARTMENT OF TRANSPORTATION
Finding Number
Finding and Recommendation__________________________________
DEPARTMENT OF TRANSPORTATION
SUBRECIPIENT MONITORING
Material Weakness
Material Noncompliance
2021-019
Strengthen Controls to Ensure Compliance with Subrecipient Monitoring
Requirements.
ALN Number
20.205 – Highway Planning and Construction
Federal Award No.
All Current Active Grants
Pass-through Entity
N/A
Questioned Costs
N/A
Criteria
Code of Federal Regulations (2 CFR §200.331(f)) states all pass-through entities
(PTE’s) must verify that every subrecipient is audited as required by Subpart F -
Audit Requirements when it is expected that the subrecipient's Federal awards
expended during the fiscal year equaled or exceeded the threshold—a non-Federal
entity that expends $750,000 or more during the non-Federal entity’s fiscal year in
Federal awards must have a single audit conducted—set forth in § 200.501 Audit
requirements.
Code of Federal Regulations (2 CFR § 200.512(a)(1)) states the audit must be
completed and the data collection form and reporting package must be submitted
within the earlier of 30 calendar days after receipt of the auditor's report(s), or
nine months after the end of the audit period. If the due date falls on a Saturday,
Sunday, or Federal holiday, the reporting package is due the next business day.
Code of Federal Regulations (2 CFR § 200.512(a)(2)(b)) states the Federal Audit
Clearinghouse (FAC) is the repository of record for Subpart F – Audit
Requirements reporting packages and the data collection form.  All Federal
agencies, pass-through entities and others interested in a reporting package and
data collection form must obtain it by accessing the FAC.
Code of Federal Regulations (2 CFR § 200.332(d)(2)) states the PTE must follow
up ensuring that the Subrecipient takes timely and appropriate action on all
163

STATE OF MISSISSIPPI
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
PART 3 – Federal Award Findings and Questioned Costs – US Dept of Transportation (continued)
Condition
Cause
Effect
Recommendation
Repeat Finding
Statistically Valid
View of Responsible
Officials
deficiencies pertaining to the Federal award provided to the subrecipient from the
PTE detected through audits, on-site reviews, and written confirmation from the
subrecipient, highlighting the status of actions planned or taken to address Single
Audit findings related to the particular subaward.
Code of Federal Regulations (2 CFR § 200.332(d)(3)) states the PTE must issue a
management decision for applicable audit findings pertaining only to the Federal
award provided to the Subrecipient from the PTE as required by § 200.521.
Based on conversations with management, MDOT is not reviewing Single Audits
submitted by subrecipients within six months of acceptance to the FAC.  MDOT
only reviews Single Audit reports available at the time of application and awarding
federal funds to LPAs.
During review of one 2019 Federal Year End submitted Single Audit Report of a
subrecipient with MDOT as the PTE, we noted the Single Audit report identified
a material weakness for Assistance Listing Number 20.205 due to the subrecipient
requesting reimbursements prior to actual payment of project costs. MDOT did not
issue a management decision regarding a material weakness noted.
MDOT’s current policy is to only review submitted Single Audit reports submitted
by subrecipients during the request of future funding by LPAs.  Due to timing of
the request of future funding, MDOT may not review submitted Single Audit
reports during the required six month period after subrecipient files single audit to
the FAC.
Without proper monitoring of subrecipients’ submitted federal reports,
subrecipients may participate in unallowable activities that go undetected by
MDOT, the grantor.
We recommend that the Mississippi Department of Transportation strengthen
controls to ensure compliance with the Subrecipient Monitoring requirements.
No.
No.
Management at the Mississippi Department of Transportation concurs with
this finding.  See additional comments in the Corrective Action Plan on page
13 of this audit report.
SPECIAL TEST AND PROVISIONS – WAGE RATE
Material Weakness
Material Noncompliance
164

STATE OF MISSISSIPPI
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
PART 3 – Federal Award Findings and Questioned Costs – US Dept of Transportation (continued)
2021-020
Strengthen Controls to Ensure Compliance with Wage Rate Requirements.
ALN Number
20.205 – Highway Planning and Construction
Federal Award No.
All Current Active Grants
Pass-through Entity
N/A
Questioned Costs
N/A
Criteria
Code of Federal Regulations (29 CFR § 3.3(b) Labor) requires each contractor or
subcontractor engaged in the construction, prosecution, completion, or repair of
any public building or public work, or building or work financed in whole or in
part by loans or grants from the United States, shall furnish each week a statement
with respect to the wages paid each of its employees engaged on work covered by
part 3 and part 5 of this title during the preceding weekly payroll period. This
statement shall be executed by the contractor or subcontractor or by an authorized
officer or employee of the contractor or subcontractor who supervises the payment
of wages, and shall be on the back of Form WH 347, “Payroll (For Contractors
Optional Use)” or on any form with identical wording.
Code of Federal Regulations (29 CFR § 3.4(a) Labor) requires each weekly
statement required under §3.3 shall be delivered by the contractor or subcontractor,
within seven days after the regular payment date of the payroll period, to a
representative of a Federal or State agency in charge at the site of the building or
work, or, if there is no representative of a Federal or State agency at the site of the
building or work, the statement shall be mailed by the contractor or subcontractor,
within such time, to a Federal or State agency contracting for or financing the
building or work.
Condition
MDOT is not requiring contractors or subcontractors to submit within seven days
after the regular payment date of the payroll period a statement with respect to the
wages paid to each of its employees engaged in federal projects.
MDOT was unable to correct prior year finding 2020-034 due to timing of
MDOT’s submitted corrective action plan dated June 29, 2021.  MDOT denoted
in submitted corrective action plan that estimated completion of corrective action
would occur by August 1, 2021.  MDOT also stated in submitted summary
schedule of prior federal audit findings dated June 21, 2022, that the prior year
finding was fully corrected.  However, due to the corrective action occurring after
fiscal year 2021 year-end, Auditor was unable to determine if MDOT’s corrective
action was properly implemented for fiscal year 2021.
Cause
Before submission of MDOT’s corrective action plan dated June 29, 2021,
MDOT’s current standard practice of requiring payroll submissions to be current
by the first week of monthly estimates allows contractor submissions to be later
than the seven-day submission requirement.
165

STATE OF MISSISSIPPI
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
PART 3 – Federal Award Findings and Questioned Costs – US Dept of Transportation (continued)
Effect
Recommendation
Repeat Finding
Statistically Valid
View of Responsible
Officials
Failure to review contractor or subcontractor submitted payroll forms timely may
result in improper payment of wage rates, work performed, and/or abuse of federal
funds.
We recommend MDOT strengthen controls to ensure compliance with federal
wage rate requirements.
Yes, 2020-034.
No.
Management at the Mississippi Department of Transportation does not concur
with this finding.  See additional comments in the Corrective Action Plan on page
14 of this audit report DQG WKH $XGLWRU¶V 5HVSRQVH WR WKH &RUUHFWLYH
$FWLRQ 3ODQDWSDJH9DQG9
_____________________________________________________________________________________
SPECIAL TEST AND PROVISIONS – QUALITY ASSURANCE PROGRAM
Significant Deficiency
Immaterial Noncompliance
2021-021
Strengthen Controls to Ensure Compliance With Special Test Requirements
Related to the Quality Assurance Program.
ALN Number
20.205 – Highway Planning and Construction
Federal Award No.
All Current Active Grants
Pass-through Entity
N/A
Questioned Costs
N/A
Criteria
The Code of Federal Regulations (23 CFR § 637.205(a) Quality assurance
program) requires each State Transportation Department shall develop a quality
assurance program which will assure that the materials and workmanship
incorporated into each Federal-aid highway construction project on the National
Highway System are in conformity with the requirements of the approved plans
and specifications, including approved changes. The program must meet the
criteria in § 637.207 and be approved by the Federal Highway Administration.
MDOT’s Independence Assurance Sampling (IAS) personnel are to follow the
schedule set for sample size, frequency of sampling and the designation of
responsibility for sampling and testing set by MDOT’s S.O.P. No.: TMD-06-02-
00-000.
166

STATE OF MISSISSIPPI
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
PART 3 – Federal Award Findings and Questioned Costs – US Dept of Transportation (continued)
The Internal Control – Integrated Framework, published by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO) and the U.S.
Government Accountability Office Standards for Internal Control in the Federal
Government (Green Book) specify control activities- “As part of delegating
authority, management evaluates the delegation for proper segregation of duties
within the unit and in the organizational structure. Segregation of duties helps
prevent fraud, waste, and abuse.”
Condition
During review of MDOT’s Quality Assurance Program, we identified the
following:
x
Twenty (20) instances, out of 100 sampling records selected for
testing, in which the selected sample was completed, reviewed, and
authorized by the same employee.
x
Four (4) instances, out of fifty (50) sampling records selected for
testing, in which the sample did not appear on the TMD-891 report.
The TMD-891 report denotes all IAS samples taken for a project and
states whether the sample was favorable or non-favorable when
compared to the appropriate Job Control Acceptance sample.
x
Four (4) instances, out of fifty (50) IAS sample records selected for
testing, in which IAS personnel did not meet the minimum sampling
guidelines.
Cause
Effect
Recommendation
Repeat Finding
Statistically Valid
View of Responsible
Officials
MDOT staff failed to follow the policies and procedures related to the sampling
rates of materials used in federal projects. Also, MDOT staff failed to adhere to
proper segregation of duties, relating to review and authorization of lab reports.
If the minimum sampling rate is not met as required by MDOT policies that are
approved by FHWA, materials used in federal projects may fail to meet required
federal standards. Also, lab reports being completed, reviewed, and authorized by
the same employee could result in improper sampling, or incomplete tests or
inaccurate tests.
We recommend MDOT strengthen controls over their Quality Assurance Program.
Yes, OTH-20-06.
No.
Management at the Mississippi Department of Transportation does not concur
with this finding.  See additional comments in the Corrective Action Plan on page
16 of this audit report DQG WKH $XGLWRU¶V 5HVSRQVH WR WKH &RUUHFWLYH
$FWLRQ 3ODQDWSDJH9DQG9
_____________________________________________________________________________________
167

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Auditor’s note to the Corrective Action Plan from Mississippi Department of Transportation
(MDOT) Management
Department of Transportation – Special Test & Provisions – Wage Rate - Material
Weakness/Material Noncompliance
2021-020
Strengthen Controls to Ensure Compliance with Wage Rate Requirements
MDOT states that their Contract Administration Department (CAD) does not have control over when the
contractors or subcontractors submit their weekly statements or when the warrants are issued to contractors.
However, the Code of Federal regulations (as quoted in the finding) requires that MDOT retain control over
those very things.  Even though MDOT did not concur with the finding, they provided some type of
corrective action to help mitigate the issue and OSA will verify that these actions were taken by MDOT in
a future audit.
Department of Transportation – Special Test & Provisions – Quality Assurance Program -
Significant Deficiency/Immaterial Noncompliance
2021-021
Strengthen Controls to Ensure Compliance with Special Test Requirements Related
to the Quality Assurance Program
STATE OF MISSISSIPPI
OFFICE OF THE STATE AUDITOR
SHAD WHITE
STATE AUDITOR
Based on the Corrective Action Plan, MDOT provided pending corrective action for part of the finding and
appeared to concur, even though they stated they did not concur with the finding.  They did not provide
pending corrective action for the portion of the finding for the 20 instances in which the sample was
completed, reviewed, and authorized by the same employee.
MDOT states that the review and authorization of the sample items are not practicable to be segregated;
however, MDOT provided no compensating controls to help ensure that sampling records are accurate,
complete, authorized, or entered into the database correctly.  It should be noted that MDOT personnel
incorrectly coded sampling information four times out of 20.  Some type of additional control procedure to
ensure that the sampling information is correct could prevent further errors.
POST OFFICE BOX 956 • JACKSON, MISSISSIPPI 39205 • (601) 576-2800 • FAX (601) 576-2650
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STATE OF MISSISSIPPI
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
FOR THE YEAR ENDED JUNE 30, 2021
PART 3 – FEDERAL AWARD FINDINGS AND QUESTIONED COSTS
U.S. DEPARTMENT OF THE TREASURY
Finding Number
Finding and Recommendation__________________________________
DEPARTMENT OF FINANCE AND ADMINISTRATION/DEPARTMENT OF AGRICULTURE
AND COMMERCE
ACTIVITIES ALLOWED AND ALLOWABLE COSTS
Material Weakness
Material Noncompliance
2021-050
Strengthen Controls to Ensure Compliance with Allowable Costs and Activities
Allowed Requirements for Coronavirus Relief Funds.
ALN Number
21.019 Coronavirus Relief Fund (CRF)
Federal Award No.    N/A
Pass-through Entity
Department of Finance and Administration (Prime Recipient) to Department of
Agriculture and Commerce (part of the Prime Recipient)
Questioned Costs
$244,457
Background
The United States Treasury, as part of the Coronavirus Aid, Relief, and Economic
Security (CARES) Act, granted the Mississippi Department of Finance and
Administration (DFA), as the State’s Fiscal Agent, $1.25 billion in Coronavirus
Relief Funds (CRF) (ALN 21.019).  In order to expedite the spending of the funds
to abide by the initial period of performance end date of December 30, 2020, the
Mississippi State Legislature passed several pieces of legislation that directed the
Mississippi Department of Finance and Administration to allocate the CRF grant
funds to various other state agencies.  These state agencies are considered part of
the “prime recipient” along with DFA; therefore, no subrecipient relationship
existed within the regulations of the CRF grant.  In order to audit these funds,
audits of expenditures were performed at each state agency that received CRF
monies, and the management of those agencies responded to the findings and
provided corrective action plans in lieu of DFA providing them.
Criteria
The Mississippi State Legislature established the Mississippi Agriculture
Stabilization Act (MASA) to be administered by the Mississippi Department of
Agriculture and Commerce (MDAC) to assist Mississippi:
171

STATE OF MISSISSIPPI
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
PART 3 – Federal Award Findings and Questioned Costs – US Dept of Treasury (continued)

Poultry farmers who have experienced a loss of at least one full flock of
production due to the COVID-19 pandemic,

Commodity producers who qualified for the USA Coronavirus Food
Assistance Program (CFAP), and

Sweet potato farmers for expenses due to the COVID-19 pandemic.
The CARES Act provides that payments from the Fund may only be used to cover
costs that are: 1) necessary expenditures incurred due to the public health
emergency with respect to COVID–19; 2) were not accounted for in the budget
most recently approved as of March 27, 2020 (the date of enactment of the CARES
Act) for the State or government; and 3) were incurred during the period that begins
on March 1, 2020, and ends on December 30, 2020 (later amended to 12/31/2021).
Grant applications require the grantee to confirm understanding that claims must
be substantiated by independent evidence of costs associated with losses directly
attributable to the COVID-19 pandemic.
Condition
During allowable costs testing for the Mississippi Department of Agriculture and
Commerce, the auditor noted the following:

39 Coronavirus Food Assistance Program (CFAP) grant amounts totaling
$803,935 were selected for audit.  Eighteen of the grants were either not
substantiated by adequate support, support was not related to COVID-19,
or were incurred outside of the grant period resulting in actual known
questioned costs of $188,351.  When extrapolated against the entire
population of CFAP grant payments, projected questioned costs of
$982,100 were noted.

Four of the eight sweet potato grant payments audited were not properly
supported.  The grantee provided utility/storage fees for the period, but no
documentation as to how much additional fees were incurred due to the
pandemic.  This resulted in actual known questioned costs of $56,106.  The
auditor extrapolated the costs across the entire population of 19 sweet
potato grants resulting in $262,795 of projected questioned costs.

The auditor selected 15 poultry grants totaling $503,837 for testing.
Wording in the Mississippi Agriculture Stabilization Act (MASA) were
ambiguous and did not clearly define “full flock loss”.  As a result, the
auditor was unable to calculate the appropriate grant amount.  As the “full
flock loss” was a state requirement only, the auditor is not questioning the
costs related to the poultry farmers.
Cause
The contractor responsible for reviewing documentation and supporting
documentation for the grants relied primarily of “self-attestation” of the grantee.
Effect
Failure to maintain supporting documentation for eligibility determination could
result in questioned costs and recoupment of costs by the federal granting agency.
172

STATE OF MISSISSIPPI
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
PART 3 – Federal Award Findings and Questioned Costs – US Dept of Treasury (continued)
Recommendation
Repeat Finding
Statistically Valid
View of Responsible
Officials
We recommend the Mississippi Department of Agriculture and Commerce
strengthen controls to ensure compliance with allowable costs and activities
allowed requirements for Coronavirus Relief Funds.
No.
Yes.
Management at the Mississippi Department of Agriculture concurs with
this  finding.  See additional comments in the Corrective Action Plan on page
241 of this audit report.
DEPARTMENT OF FINANCE AND ADMINISTRATION/DEPARTMENT OF EDUCATION
ACTIVITIES ALLOWED AND ALLOWABLE COSTS
Material Weakness
Material Noncompliance
2021-044
Strengthen Controls to Ensure Compliance with Allowable Costs Requirements of
the Coronavirus (COVID) Relief Funds (CRF) and Elementary and Secondary
School Emergency Relief Fund (ESSER).
ALN Number
21.019 Coronavirus Relief Fund (CRF)
84.425D Elementary and Secondary School Emergency Relief Fund (ESSER)
Federal Award No.    All Current Active Grants
Pass-through Entity
Department of Finance and Administration (Prime Recipient) to Department of
Education (part of the Prime Recipient)
Questioned Costs
N/A
Background
The United States Treasury, as part of the Coronavirus Aid, Relief, and Economic
Security (CARES) Act, granted the Mississippi Department of Finance and
Administration (DFA), as the State’s Fiscal Agent, $1.25 billion in Coronavirus
Relief Funds (CRF) (ALN 21.019).  In order to expedite the spending of the funds
to abide by the initial period of performance end date of December 30, 2020, the
Mississippi State Legislature passed several pieces of legislation that directed the
Mississippi Department of Finance and Administration to allocate the CRF grant
funds to various other state agencies.  These state agencies are considered part of
the “prime recipient” along with DFA; therefore, no subrecipient relationship
existed within the regulations of the CRF grant.  In order to audit these funds,
173

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PART 3 – Federal Award Findings and Questioned Costs – US Dept of Treasury (continued)
audits of expenditures were performed at each state agency that received CRF
monies, and the management of those agencies responded to the findings and
provided corrective action plans in lieu of DFA providing them.
Criteria
Per Section 31-7-9, Mississippi Code of 1972, Annotated, “Procurement
regulations shall be promulgated by the Office of Purchasing, Travel, and Fleet
Management, with approval of the Public Procurement Review Board.”
Per the Mississippi Procurement Manual, Section 1.103, “All procurement
regulations require all parties involved in the negotiation, performance or
administration of Mississippi contracts to act in good faith.”
Per the Mississippi Procurement Manual, Section 1.104 (2), “The procurement
regulations shall apply to every expenditure of public funds irrespective of their
source, when such expenditures are made in compliance with or are designated by
Section 31-7-1, et seq. Mississippi Code of 1972, Annotated. However, in the event
of a conflict, the guidelines of the grant, gift, or self-generated funds shall prevail;
and in any case, violation of these regulations shall carry such penalties as may be
applicable under state laws.”
Per the Mississippi Procurement Manual, Section 3.110, “Notwithstanding any
other provisions of this regulation, the Chief Procurement Officer, the head of a
purchasing agency, or a designee of either officer may make or authorize others to
make emergency procurements under emergency conditions … provided, that such
emergency procurements shall be made with such competition as is practicable
under the circumstances.”
Condition
Mississippi Senate Bill 3044, adopted during the 2020 legislative session,
otherwise known as the “Equity in Distance Learning Act (the Act)”, provided
funding for devices and other technology for the students, teachers, and
administrators in the schools of Mississippi.    The Act authorized MDE to prepare
an Express Product Listing (EPL) for computer equipment.  The Act further
authorized MDE to utilize emergency procurement procedures to solicit bids for
the EPL.  MDE signed contracts with Apple, Inc. to provide Apple devices to
schools without any competitive bidding process.  However, MDE opted to use a
competitive bidding process with bid solicitations for other computer and
technology needs.
During our audit, auditors noted that MDE staff conducted regular meetings with
individuals from the winning bidder of the authorized Express Product Listing
prior to publishing the official Request For Quote (RFQ) to vendors.  Additionally,
MDE’s Chief Information Officer forwarded a draft of the “Prime Contractor
Requirements” or specifications to a member of the winning bidder 20 days before
the RFQ was officially released.  The winning bidder made modifications to the
specifications before they were submitted in the RFQ.
MDE stated that all vendors that were solicited for bids were provided the
specifications in advance; however, only the winning bidder was given the
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PART 3 – Federal Award Findings and Questioned Costs – US Dept of Treasury (continued)
opportunity to make suggestions to edits to the specifications.  According to
documentation provided to auditors, the following serves as a timeline of
communication:
July 2, 2020 – Email to future winning bidder with listed specifications as “draft”.
July 9, 2020 – Email from future winning bidder to MDE with changes in
specifications marked in red.
July 21, 2020 – Microsoft “Teams” chat with second bidder where specifications
(with some of future winning bidder edits) are provided.
July 22, 2020 – Email to third bidder where specifications (with some of future
winning bidder edits) are provided.
July 29, 2020 – Official RFQ was provided to vendors.
July 31, 2020 – Deadline for vendor questions.
August 1, 2020 – Deadline for questions answered.
August 3, 2020 – Deadline for submissions of responses to RFQ.
August 3, 2020 – Evaluation of Responses.
August 4, 2020 – Vendor interviews.
August 4, 2020 – Review of submissions by MDE panel.
August 5, 2020 – Contract negotiations.
August 6, 2020 – Board Approval.
August 18, 2020 – Contract Awarded (no later than date).
It should be noted that four vendors submitted proposals and were evaluated.
However, MDE did not present documentation that showed the fourth vendor was
provided specifications in advance.  The memorandum on August 4, 2020 that
describes the selection process in broad terms only references three vendors, but
does show a scored rubric for four vendors, illustrating inconsistencies in the
procurement process.
The winning bidder was provided the ability to edit specifications and was
provided the specifications approximately 30 days in advance while the other
vendors were only given approximately two weeks to prepare bids.  The winning
bidder suggested extensive “prime contractor requirements” for the specifications,
including information suggesting how many square feet distribution centers
needed to be sized, financing options, experience with specific programs, etc.
Auditors could not see evidence that these specific requirements were added to the
specifications provided to other vendors; however, the winning bidder was
provided an unfair advantage in suggesting that these requirements would aid in
the deployment process.  Additionally, similar requirements and experience factors
were noted by MDE and the procurement reviewers during the proposal analysis
phase.
When comparing prices on the RFQ, the winning bidder received 35 points for the
category of “Devices, including price considerations.”  However, when price was
compared, the winning bidder was not the lowest bidder, nor the second lowest
bidder.  The next highest score in the category was “25” but the prices of the
competitor were significantly lower.  MDE failed to provide any information on
why the points were assigned and calculated other than an overall memorandum
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PART 3 – Federal Award Findings and Questioned Costs – US Dept of Treasury (continued)
Cause
Effect
Recommendation
Repeat Finding
Statistically Valid
View of Responsible
Officials
of the scores and process.  Based on information provided, it does not appear that
the procurement process was designed to promote fair and open competition; nor
does it appear that all parties negotiated the agreements in good faith.
MDE failed to act in good faith in obtaining requisitions of equipment related to
CRF and ESSER funds.
Failure to act in good faith during procurement negotiations can open MDE to civil
litigation claims.  Additionally, implied preference to vendors could result in
public distrust in the procurement process.  Lastly, implied preference could result
in fraud, waste, or abuse during the procurement process.
  We recommend the Mississippi Department of Education strengthen controls to
ensure compliance with allowable costs requirements of the Coronavirus (COVID)
Relief Funds (CRF) and Elementary and Secondary School Emergency Relief
Fund (ESSER).
No.
No.
Management at the Mississippi Department of Education does not concur with
this finding.  See additional comments in the Corrective Action Plan on page 249
of this audit report; and the Auditor's Response to the Corrective Action Plan on
page 199 and 261.
DEPARTMENT OF FINANCE AND ADMINISTRATION/DEPARTMENT OF EMPLOYMENT
SECURITY
ACTIVITIES ALLOWED AND ALLOWABLE COSTS
Material Weakness
Material Noncompliance
2021- 043
Strengthen Controls to Ensure Compliance with Allowable Costs and Activities
Allowed Requirements for Coronavirus Relief Funds.
ALN Number
21.019 Coronavirus Relief Fund (CRF)
Federal Award No.    N/A
Federal Agency
Department of Treasury
Pass-through Entity
Department of Finance and Administration (Prime Recipient) to Department of
Employment Security (part of the Prime Recipient)
176

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PART 3 – Federal Award Findings and Questioned Costs – US Dept of Treasury (continued)
Questioned Costs
$2,787,558
Background
The United States Treasury, as part of the Coronavirus Aid, Relief, and Economic
Security (CARES) Act, granted the Mississippi Department of Finance and
Administration (DFA), as the State’s Fiscal Agent, $1.25 billion in Coronavirus
Relief Funds (CRF) (ALN 21.019).  In order to expedite the spending of the funds
to abide by the initial period of performance end date of December 30, 2020, the
Mississippi State Legislature passed several pieces of legislation that directed the
Mississippi Department of Finance and Administration to allocate the CRF grant
funds to various other state agencies.  These state agencies are considered part of
the “prime recipient” along with DFA; therefore, no subrecipient relationship
existed within the regulations of the CRF grant.  In order to audit these funds,
audits of expenditures were performed at each state agency that received CRF
monies, and the management of those agencies responded to the findings and
provided corrective action plans in lieu of DFA providing them.
Criteria
Office of the Inspector General Memorandum OIG-CA-20-021 “Coronavirus
Relief Fund Reporting and Record Retention Requirements” states that Recipients
of Coronavirus Relief Fund payments shall maintain … all documents and
financial records sufficient to establish compliance with subsection 601(d) of the
Social Security Act, as amended, (42 U.S.C. 801(d)), which provides:
(d) USE OF FUNDS.—A State, Tribal government, and unit of local
government shall use the funds provided under a payment made under this
section to cover only those costs of the State, Tribal government, or unit
of local government that—
1.
Are necessary expenditures incurred due to the public health
emergency with respect to COVID-19;
2. Were not accounted for in the budget most recently approved as of
the date of enactment of this section for the State or government;
and
3. Were incurred during the period that begins on March 1, 2020, and
ends on December 30, 2021.
Per the Federal Register / Vol. 86, No. 10, “As with all uses of payments from the
Fund, the use of payments to acquire or improve property is limited to that which
is necessary due to the COVID-19 public health emergency. In the context of
acquisitions of real estate and acquisitions of equipment, this means that the
acquisition itself must be necessary. In particular, a government must (i) determine
that it is not able to meet the need arising from the public health emergency in a
cost-effective manner by leasing property or equipment or by improving property
already owned and (ii) maintain documentation to support this determination.”
Condition
During review of Coronavirus Relief Fund payments at the Mississippi
Department of Employment Security, the auditor noted the following instances
where it could not be determined from the documentation provided that these
expenses were necessary due to the public health emergency:
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PART 3 – Federal Award Findings and Questioned Costs – US Dept of Treasury (continued)

11 instances of “student vouchers” to pay for tuition of courses taught at
varying Community Colleges.   Auditors were unable to determine from
the documentation provided that these expenses were considered
necessary due to the public health emergency.  Vouchers were for a wide-
range of programs including welding, construction, general business,
heavy equipment, student fees, etc.  Subgrantees (community colleges) did
not provide adequate documentation to address how these classes were
related to the public health emergency; nor did they establish any type of
program guidelines that would dictate that the fees covered only classes
performed during the grant’s period of performance.  Documentation
could not substantiate that these classes were new classes added due to the
pandemic, or that the voucher support aided those in need due to the
pandemic.
Total actual questioned costs - $13,263
Total projected questioned costs - $1,825,345

18 instances, totaling $2,735,144 of equipment purchases for various
equipment used for instruction of classes during the period of
performance.  Two of the 19 instances also fell outside of the period of
performance.
Equipment purchases include:
o
Professional drones ($6,299)
o
Cutting tables ($44,518)
o
Tractors ($42,201)
o
Welding kits ($15,309)
o
Hydraulic learning systems ($133,870)
o
HVAC trainers ($104,720)
o
PLC modules for trainers ($130,000)
o
Virtual Reality simulator ($61,800)
o
Welding simulators ($245,500)
o
Front End Loader ($161,231)
o
SmartLabs ($182,414)
o
HVAC System for teaching ($24,950)
o
Opthamalic Technology – Edger ($24,495)
o
Twin spindle lathes ($313,800)
o
Heavy equipment simulators ($172,247)
o
Robot intelligent manufacturing system ($1,071,790)
Auditors were unable to determine from the documentation provided that
these expenses were considered necessary due to the public health
emergency.  Subgrantees (community colleges) did not provide adequate
documentation to address how these purchases were directly related to the
public health emergency; nor did they establish any type of program
guidelines that would dictate that the equipment would be used during the
grant’s period of performance.  Documentation could not substantiate that
178

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PART 3 – Federal Award Findings and Questioned Costs – US Dept of Treasury (continued)
these equipment purchases were due to new classes added due to the
pandemic; nor could the documentation substantiate that these purchases
were not accounted for in the most recently approved budget as per the
date of enactment of the grant.
While the guidelines of the grant allowed governments to determine what
items were necessary for the pandemic, the government is still responsible
for demonstrating how items purchased addressed that need, and how the
need was directly related to the COVID-19 pandemic.  Additionally,
governments were responsible for ensuring that any equipment purchased
was the most cost effective method of addressing any needs that arose.
For example, rather than purchasing new equipment, a government could
rent equipment until the COVID-19 necessity passed.  Auditors could find
no documentation to support how MDES assessed that these equipment
purchases were necessary directly due to the pandemic, and if any more
cost effective methods of addressing those needs were considered.
State legislation granting MDES these CRF monies did dictate that the
purpose of the funds were for “short-term training programs and the
equipment and supplies necessary to support such short-term training
programs and to increase the capacity of training programs that are already
in place so that employees and others who have been displaced due to the
Covid-19 public health emergency can be more competitive and trained
for the job market that emerges after the Covid-19 public health
emergency, for on-the-job training and for certain administrative fees.”
However, preparing individuals for a “post Covid-19 job market” does not
meet the requirements that grant monies be utilized to meet expenditures
necessary for the “current Covid-19 emergency”.  Additionally, MDES is
required to ensure that expenditures paid for by grant monies met the
federal guidelines before determining if the expenditures met the
requirements of any additional state imposed restrictions on how to spend
grant monies.

One instance, totaling $37,099, in which equipment purchased was put
into service outside of the period of performance (December 31, 2021).
Auditors were also unable to determine from the documentation provided
that these expenses were considered necessary due to the public health
emergency.  Subgrantee (community colleges) did not provide adequate
documentation to address how this purchase was directly related to the
public health emergency; nor did they establish any type of program
guidelines that would dictate that the equipment would be used during the
grant’s period of performance.  Documentation could not substantiate that
these equipment purchases were due to new classes added due to the
pandemic; nor could the documentation substantiate that these purchases
were not accounted for in the most recently approved budget as per the
date of enactment of the grant.
179

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PART 3 – Federal Award Findings and Questioned Costs – US Dept of Treasury (continued)
According to the subgrantee, the equipment was purchased, but no
instructor was available to teach the class; therefore, the equipment was
not used during the period of performance.
Total actual questioned costs - $2,774,295
Total projected questioned costs - $17,999,485
Cause
Effect
Recommendation
Repeat Finding
Statistically Valid
View of Responsible
Officials
MDES did not appropriately monitor or review expenditures at the subrecipient
level to ensure adherence to allowable costs and activities allowed guidelines.
Failure to monitor or review expenditures at the subrecipient level could result in
MDES purchasing items that are unallowable, and the grantor requesting
recoupment of those costs disallowed.
We recommend the Mississippi Department of Employment Security strengthen
controls to ensure compliance with allowable costs and activities allowed
requirements for Coronavirus Relief Funds.
No.
Yes.
Management at the Mississippi Department of Employment Security does not
concur with this finding.  See additional comments in the Corrective Action Plan
on page 273 of this audit report; and the Auditor's Response to the Corrective
Action Plan on page 201 and 287.
SUBRECIPIENT MONITORING
Material Weakness
Material Noncompliance
2021-045
Strengthen Controls to Ensure Compliance with Subrecipient Monitoring
Requirements.
ALN Number
21.019 Coronavirus Relief Fund (CRF)
Federal Award No.    N/A
Pass-through Entity
Department of Finance and Administration (Prime Recipient) to Department of
Employment Security (part of the Prime Recipient)
Questioned Costs
N/A
Background
The United States Treasury, as part of the Coronavirus Aid, Relief, and Economic
Security (CARES) Act, granted the Mississippi Department of Finance and
180

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PART 3 – Federal Award Findings and Questioned Costs – US Dept of Treasury (continued)
Administration (DFA), as the State’s Fiscal Agent, $1.25 billion in Coronavirus
Relief Funds (CRF) (ALN 21.019).  In order to expedite the spending of the funds
to abide by the initial period of performance end date of December 30, 2020, the
Mississippi State Legislature passed several pieces of legislation that directed the
Mississippi Department of Finance and Administration to allocate the CRF grant
funds to various other state agencies.  These state agencies are considered part of
the “prime recipient” along with DFA; therefore, no subrecipient relationship
existed within the regulations of the CRF grant.  In order to audit these funds,
audits of expenditures were performed at each state agency that received CRF
monies, and the management of those agencies responded to the findings and
provided corrective action plans in lieu of DFA providing them.
Criteria
The Code of Federal Regulations 2 CFR 200.332(a) requires that a pass-through
entity must ensure that every subaward is clearly identified to the subrecipient as
a subaward and includes the following information at the time of the subaward and
if any of these data elements change, include the changes in subsequent subaward
modification. When some of this information is not available, the pass-through
entity must provide the best information available to describe the Federal award
and subaward. This required information includes:

Subrecipient name (which must match the name associated with its unique
entity identifier);

Subrecipient's unique entity identifier;

Federal Award Identification Number (FAIN);

Federal Award Date of award to the recipient by the Federal agency;

Subaward Period of Performance Start and End Date;

Subaward Budget Period Start and End Date;

Amount of Federal Funds Obligated by this action by the pass-through
entity to the subrecipient;

Total Amount of Federal Funds Obligated to the subrecipient by the pass-
through entity including the current financial obligation;

Total Amount of the Federal Award committed to the subrecipient by the
pass-through entity;

Federal award project description, as required to be responsive to the
Federal Funding Accountability and Transparency Act (FFATA);

Name of Federal awarding agency, pass-through entity, and contact
information for awarding official of the Pass-through entity;

Assistance Listings number and Title; the pass-through entity must
identify the dollar amount made available under each Federal award and
the Assistance Listings Number at time of disbursement;

Identification of whether the award is R&D; and

Indirect cost rate for the Federal award.
Additionally, The Code of Federal Regulations 2 CFR 200.332(b) requires that the
pass-through entity evaluate each subrecipient’s risk of noncompliance with
Federal statutes, regulations, and the terms and conditions of the subaward for
purposes of determining the appropriate subrecipient monitoring requirements.
181

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SCHEDULE OF FINDINGS AND QUESTIONED COSTS
PART 3 – Federal Award Findings and Questioned Costs – US Dept of Treasury (continued)
These “pre-award risk assessments” should be performed prior to grant
performance, and can include considerations such as the grantee’s prior experience
with federal awards, the results of prior audits, new grantee personnel or systems,
and the extent and results of federal awarding agency monitoring.
The Code of Federal Regulations 2 CFR 200.332(d) states that the pass-through
entity should monitor the activities of the subrecipient as necessary to ensure that
the grantee uses the award for the authorized purposes and in compliance with
federal statutes, regulations, and the terms and conditions of the award.
Condition
During review of the subrecipient monitoring requirements at the Mississippi
Department of Employment Security, the auditor noted the following:

MDES did not document pre-award risk assessments for the subrecipients
of the CRF grant funds.  According to MDES personnel, the agency
regularly interacts with the subrecipients (Planning and Development
Districts (PDDs), the Local Workforce Development Areas (LWDA) and
community colleges), and that these same PDD’s are utilized for the
Workforce Innovation and Opportunity Act (WIOA) grants, and are
monitored as part of that grant process.  Further, MDES states that state
law governs the creation of the LWDA’s, and the roles and responsibilities
of each.  Due to this relationship, MDES states that the entities are low
risk, but does not have any documented support of these assessments –
including why or how these low-risk assessments were determined.

MDES did not include all the required grant elements to the PDDs upon
the initial grant award notices.  The PDDs then awarded the state’s
community colleges grant awards based on state legislation, but also did
not include all the required elements.
o
Of the four PDD subawards, three (or 75%) did not include the
federal award identification number, the unique identity identifier,
the federal award date, or the assistance listing number.

MDES did not properly monitor allowable cost spending at the
subrecipient level.  Due to this failure to properly monitor, auditors noted
the following questioned costs:
o
$13,263 in student voucher payments that are not supported by
documentation;
o
$2,735,144 in equipment purchases that are  not supported by
documentation;
o
$37,099 in equipment purchases for equipment that were not put
into service during the period of performance.
More detail about these questioned costs, including the projections, are
described in finding 2021-043 of this report.
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PART 3 – Federal Award Findings and Questioned Costs – US Dept of Treasury (continued)
Cause
Effect
Recommendation
Repeat Finding
Statistically Valid
View of Responsible
Officials
The Mississippi Department of Employment security did not feel it was necessary
to document the pre-award risk assessment due to their familiarity with the
subrecipients.  Additionally, detailed subrecipient monitoring was not performed
by MDES when reviewing subrecipient purchases for reimbursement to determine
if the costs met the allowable costs requirements.
The failure to properly perform a documented risk assessment and to monitor
subrecipient’s adherence to allowable cost guidelines could result in misspending
of the grant funds.
We recommend the Mississippi Department of Employment Security strengthen
controls to ensure compliance with subrecipient monitoring requirements.
No.
N/A
Management at the Mississippi Department of Employment Security does not
concur with this finding.  See additional comments in the Corrective Action Plan
on page 281 of this audit report; and the Auditor's Response to the Corrective
Action Plan at page 203 and 289.
DEPARTMENT
OF
FINANCE
AND
ADMINISTRATION/MISSISSIPPI
EMERGENCY
MANAGEMENT AGENCY
ACTIVITIES ALLOWED AND ALLOWABLE COSTS
Material Weakness
Material Noncompliance
2021-046
Strengthen Controls to Ensure Compliance with Allowable Costs and Activities
Allowed Requirements for Coronavirus Relief Funds.
ALN Number
21.019 Coronavirus Relief Fund (CRF)
Federal Award No.    N/A
Federal Agency
Department of Treasury
Pass-through Entity
Department of Finance and Administration (Prime Recipient) to Mississippi
Emergency Management Agency (part of the Prime Recipient)
Questioned Costs
$2,878,402
183

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PART 3 – Federal Award Findings and Questioned Costs – US Dept of Treasury (continued)
Background
The United States Treasury, as part of the Coronavirus Aid, Relief, and Economic
Security (CARES) Act, granted the Mississippi Department of Finance and
Administration (DFA), as the State’s Fiscal Agent, $1.25 billion in Coronavirus
Relief Funds (CRF) (ALN 21.019).  In order to expedite the spending of the funds
to abide by the initial period of performance end date of December 30, 2020, the
Mississippi State Legislature passed several pieces of legislation that directed the
Mississippi Department of Finance and Administration to allocate the CRF grant
funds to various other state agencies.  These state agencies are considered part of
the “prime recipient” along with DFA; therefore, no subrecipient relationship
existed within the regulations of the CRF grant.  In order to audit these funds,
audits of expenditures were performed at each state agency that received CRF
monies, and the management of those agencies responded to the findings and
provided corrective action plans in lieu of DFA providing them.
Criteria
Per the Federal Register / Vol. 86, No. 10, “As with all uses of payments from the
Fund, the use of payments to acquire or improve property is limited to that which
is necessary due to the COVID-19 public health emergency. In the context of
acquisitions of real estate and acquisitions of equipment, this means that the
acquisition itself must be necessary. In particular, a government must (i) determine
that it is not able to meet the need arising from the public health emergency in a
cost-effective manner by leasing property or equipment or by improving property
already owned and (ii) maintain documentation to support this determination.”
The Coronavirus Aid, Relief, and Economic Security Act (CARES Act), provides
that payments from Coronavirus Relief Funds (CRF) may only be used to cover
costs that are: 1) necessary expenditures incurred due to the public health
emergency with respect to COVID–19; 2) were not accounted for in the budget
most recently approved as of March 27, 2020 (the date of enactment of the CARES
Act) for the State or government; and 3) were incurred during the period that begins
on March 1, 2020, and ends on December 30, 2020 (later amended to 12/31/2021).
Condition
Mississippi Emergency Management Agency (MEMA) incurred costs to purchase
and refurbish a building using CRF monies.  The stated purpose of the building
was store personal protective equipment (PPE) to allow for better distribution
throughout the State of Mississippi. However, during testing, auditors noted that
PPE storage only utilized a small portion of the 8,800 square feet of the building,
which sits on 16 acres of land.  A press release issued by MEMA on September
23, 2020 states that while the building, known as the State Emergency Logistical
Operations Center (SELOC), “… will be an immense asset to the state’s COVID-
19 response, MEMA’s vision for the logistical operations center extends past the
pandemic.  In the future, the facility will serve as a permanent space to hold disaster
response and relief supplies in addition to emergency management equipment.  It
will also be the permanent location for MEMA’s procurement and allocation
branches.  Overall, this new facility will help support MEMA’s future growth in
all aspects of the agency’s operations.”  These statements, along with the lack of
documentation of consideration of alternate, more cost efficient methods of PPE
storage (such as short term rentals, existing usable space, etc. resulted in a
potentially unnecessary expenditure of CRF monies, thereby violating grant
184

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PART 3 – Federal Award Findings and Questioned Costs – US Dept of Treasury (continued)
Cause
Effect
Recommendation
Repeat Finding
Statistically Valid
View of Responsible
Officials
allowable costs.  While the costs indirectly help MEMA respond to COVID-19,
we have determined them to not be necessary as the costs will primarily benefit
future emergencies.
The building purchase resulted in known questioned costs of $2,360,000.
Additionally, during the testing of 60 other expenditures items, 21 items (or 35%)
were noted to be payments for the purchase of items related to the building and for
refurbishment of the building.  Since the purchase of the building itself is
questioned (the underlying asset), any additional expenses related to preparing the
asset for service are also questioned.  The 21 items identified as expenses related
to the SELOC during testing resulted in $518,402 of actual questioned costs.
In total, the building purchase resulted in known questioned costs of $2,878,402.
An additional $3,152,390 in likely questioned costs was also noted.
The Agency purchased a building and paid additional costs to put the building into
service that violated the grant requirements that purchases be necessary, and for
the current COVID-19 pandemic.  While a portion of the building was used for
PPE storage, the majority of the asset will benefit MEMA in future disaster events.
Additionally, MEMA did not properly document more cost-effective means of
storing PPE equipment to establish necessity of purchase.
Failure to comply with allowable costs and activities allowed requirements could
result in the grantor requesting recoupment of costs disallowed.
We recommend the Mississippi Emergency Management Agency strengthen
controls to ensure compliance with allowable costs and activities allowed
requirements for Coronavirus Relief Funds.
No.
No.
Management at the Mississippi Emergency Management Agency does not concur
with this finding.  See additional comments in the Corrective Action Plan on
page 331 of this audit report; and the Auditor's Response to the Corrective Action
Plan on page 205 and 337.
SUBRECIPIENT MONITORING
Material Weakness
Material Noncompliance
2021-047
Strengthen Controls to Ensure Terms and Conditions are stated in Subrecipient
185

STATE OF MISSISSIPPI
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
PART 3 – Federal Award Findings and Questioned Costs – US Dept of Treasury (continued)
Subaward Documents.
ALN Number
21.019 Coronavirus Relief Fund (CRF)
Federal Award No.    N/A
Pass-through Entity
Department of Finance and Administration (Prime Recipient) to Mississippi
Emergency Management Agency (part of the Prime Recipient)
Questioned Costs
N/A
Background
The United States Treasury, as part of the Coronavirus Aid, Relief, and Economic
Security (CARES) Act, granted the Mississippi Department of Finance and
Administration (DFA), as the State’s Fiscal Agent, $1.25 billion in Coronavirus
Relief Funds (CRF) (ALN 21.019).  In order to expedite the spending of the funds
to abide by the initial period of performance end date of December 30, 2020, the
Mississippi State Legislature passed several pieces of legislation that directed the
Mississippi Department of Finance and Administration to allocate the CRF grant
funds to various other state agencies.  These state agencies are considered part of
the “prime recipient” along with DFA; therefore, no subrecipient relationship
existed within the regulations of the CRF grant.  In order to audit these funds,
audits of expenditures were performed at each state agency that received CRF
monies, and the management of those agencies responded to the findings and
provided corrective action plans in lieu of DFA providing them.
Criteria
The Code of Federal Regulations 2 CFR 200.332(a) requires that a pass-through
entity must ensure that every subaward is clearly identified to the subrecipient as
a subaward and includes the following information at the time of the subaward
(and if any of these data elements change, include the changes in subsequent
subaward modification). When some of this information is not available, the pass-
through entity must provide the best information available to describe the Federal
award and subaward. This required information includes:

Subrecipient name (which must match the name associated with its unique
entity identifier);

Subrecipient's unique entity identifier;

Federal Award Identification Number (FAIN);

Federal Award Date of award to the recipient by the Federal agency;

Subaward Period of Performance Start and End Date;

Subaward Budget Period Start and End Date;

Amount of Federal Funds Obligated by this action by the pass-through
entity to the subrecipient;

Total Amount of Federal Funds Obligated to the subrecipient by the pass-
through entity including the current financial obligation;

Total Amount of the Federal Award committed to the subrecipient by the
pass-through entity;

Federal award project description, as required to be responsive to the
Federal Funding Accountability and Transparency Act (FFATA);
186

STATE OF MISSISSIPPI
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
PART 3 – Federal Award Findings and Questioned Costs – US Dept of Treasury (continued)

Name of Federal awarding agency, pass-through entity, and contact
information for awarding official of the Pass-through entity;

Assistance Listings number and Title; the pass-through entity must
identify the dollar amount made available under each Federal award and
the Assistance Listings Number at time of disbursement;

Identification of whether the award is R&D; and

Indirect cost rate for the Federal award.
Condition
Cause
Effect
Recommendation
Repeat Finding
Statistically Valid
View of Responsible
Officials
During testwork performed for subrecipient monitoring for year ended June 30,
2021, the auditor noted that 100% of the 60 sampled subawards issued to
subrecipients of CRF grants did not include all of the required data elements such
as the Assistance Listing Number (ALN), award name and number, whether the
award is research and development, and the name of the federal awarding agency.
An abbreviated application agreement was the only form of subrecipient
agreement entered into between MEMA and the subrecipients of the CRF grants.
Failure to include required information about the grant to subrecipients could
increase the likelihood that subrecipients will not comply with single audit
requirements; and that MEMA could be required to pay back grant funds.
We recommend the Mississippi Emergency Management Agency strengthen
controls to ensure terms and conditions are stated in subrecipient subaward
documents as required by Uniform Grant Guidance.
No.
Yes.
Management at the Mississippi Emergency Management Agency does not concur
with this finding.  See additional comments in the Corrective Action Plan on
page 333 of this audit report; and the Auditor's Response to the Corrective Action
Plan on page 206 and 338.
Material Weakness
Material Noncompliance
2021-048
Strengthen Controls to Ensure Compliance with Subrecipient Monitoring
Requirements.
ALN Number
21.019 Coronavirus Relief Fund (CRF)
Federal Award No.    N/A
Pass-through Entity
Department of Finance and Administration (Prime Recipient) to Mississippi
Emergency Management Agency (part of the Prime Recipient)
187

STATE OF MISSISSIPPI
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
PART 3 – Federal Award Findings and Questioned Costs – US Dept of Treasury (continued)
Questioned Costs
N/A
Background
The United States Treasury, as part of the Coronavirus Aid, Relief, and Economic
Security (CARES) Act, granted the Mississippi Department of Finance and
Administration (DFA), as the State’s Fiscal Agent, $1.25 billion in Coronavirus
Relief Funds (CRF) (ALN 21.019).  In order to expedite the spending of the funds
to abide by the initial period of performance end date of December 30, 2020, the
Mississippi State Legislature passed several pieces of legislation that directed the
Mississippi Department of Finance and Administration to allocate the CRF grant
funds to various other state agencies.  These state agencies are considered part of
the “prime recipient” along with DFA; therefore, no subrecipient relationship
existed within the regulations of the CRF grant.  In order to audit these funds,
audits of expenditures were performed at each state agency that received CRF
monies, and the management of those agencies responded to the findings and
provided corrective action plans in lieu of DFA providing them.
Criteria
The Code of Federal Regulations (2 CFR §200.331(f)) states all pass-through
entities (PTE’s) must verify that every subrecipient is audited as required by
Subpart F - Audit Requirements when it is expected that the subrecipient's Federal
awards expended during the fiscal year equaled or exceeded the threshold—a non-
Federal entity that expends $750,000 or more during the non-Federal entity’s fiscal
year in Federal awards must have a single audit conducted—set forth in § 200.501
Audit requirements.
Condition
During testwork performed for Subrecipient Monitoring for CRF, the auditor noted
55 of the 60 subrecipients tested (91.7%) were noted as not monitored by MEMA.
MEMA’s policies and procedures for monitoring subrecipients’ filing of a single
audit report only required monitoring of those subrecipients that received more
than $750,000 directly from MEMA, and not subrecipients that received more than
$750,000 in the aggregate for the fiscal year among a variety of sources.
Cause
MEMA's subrecipient monitoring policy incorrectly references Uniform Guidance
§ 200.501 as the requirements that MEMA should follow to comply with its
subrecipient monitoring requirements.
Effect
Failure to consider if subrecipients were required to file an audit report for
aggregated federal expenditures of over $750,000 resulted in MEMA not properly
monitoring subrecipients for adherence to federal audit guidelines.
Recommendation
We recommend the Mississippi Emergency Management Agency strengthen
controls to ensure compliance with subrecipient monitoring requirements.
Repeat Finding
No.
Statistically Valid
Yes.
188

STATE OF MISSISSIPPI
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
PART 3 – Federal Award Findings and Questioned Costs – US Dept of Treasury (continued)
View of Responsible
Officials
Management at the Mississippi Emergency Management Agency concurs with
this finding.  See additional comments in the Corrective Action Plan on page 335
of this audit report.
DEPARTMENT OF FINANCE AND ADMINISTRATION/MISSISSIPPI PUBLIC UTILITIES
STAFF
SUBRECIPIENT MONITORING
Material Weakness
Material Noncompliance
2021-049
Strengthen Controls to Ensure Compliance with Subrecipient Monitoring
Requirements.
ALN Number
21.019 Coronavirus Relief Fund (CRF)
Federal Award No.    N/A
Pass-through Entity
Department of Finance and Administration (Prime Recipient) to Mississippi Public
Utilities Staff (part of the Prime Recipient)
Questioned Costs
N/A
Background
The United States Treasury, as part of the Coronavirus Aid, Relief, and Economic
Security (CARES) Act, granted the Mississippi Department of Finance and
Administration (DFA), as the State’s Fiscal Agent, $1.25 billion in Coronavirus
Relief Funds (CRF) (ALN 21.019).  In order to expedite the spending of the funds
to abide by the initial period of performance end date of December 30, 2020, the
Mississippi State Legislature passed several pieces of legislation that directed the
Mississippi Department of Finance and Administration to allocate the CRF grant
funds to various other state agencies.  These state agencies are considered part of
the “prime recipient” along with DFA; therefore, no subrecipient relationship
existed within the regulations of the CRF grant.  In order to audit these funds,
audits of expenditures were performed at each state agency that received CRF
monies, and the management of those agencies responded to the findings and
provided corrective action plans in lieu of DFA providing them.
Criteria
The Code of Federal Regulations 2 CFR 200.332(a) requires that a pass-through
entity must ensure that every subaward is clearly identified to the subrecipient as
a subaward and includes the following information at the time of the subaward and
if any of these data elements change, include the changes in subsequent subaward
modification. When some of this information is not available, the pass-through
entity must provide the best information available to describe the Federal award
189

STATE OF MISSISSIPPI
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
PART 3 – Federal Award Findings and Questioned Costs – US Dept of Treasury (continued)
and subaward. This required information includes:

Subrecipient name (which must match the name associated with its
unique entity identifier);

Subrecipient's unique entity identifier;

Federal Award Identification Number (FAIN);

Federal Award Date of award to the recipient by the Federal agency;

Subaward Period of Performance Start and End Date;

Subaward Budget Period Start and End Date;

Amount of Federal Funds Obligated by this action by the pass-through
entity to the subrecipient;

Total Amount of Federal Funds Obligated to the subrecipient by the
pass-through entity including the current financial obligation;

Total Amount of the Federal Award committed to the subrecipient by the
pass-through entity;

Federal award project description, as required to be responsive to the
Federal Funding Accountability and Transparency Act (FFATA);

Name of Federal awarding agency, pass-through entity, and contact
information for awarding official of the Pass-through entity;

Assistance Listings number and Title; the pass-through entity must
identify the dollar amount made available under each Federal award and
the Assistance Listings Number at time of disbursement;

Identification of whether the award is R&D; and

Indirect cost rate for the Federal award.
Condition
During review of the subrecipient monitoring requirements at the Mississippi
Public Utilities Staff, the auditor noted the following:
Of the six subaward agreements tested, six (or 100%) did not include the assistance
listing number, period of performance, and the federal awarding agency
Cause
The Mississippi Public Utilities Staff used subrecipient agreements that lacked the
proper information sufficient to ensure the pass-through entities to comply with
federal statutes.
Effect
The failure to properly communicate to subrecipients the required information
could result in the failure to comply with award federal statutes, regulations, and
the terms and conditions of the award.
Recommendation
We recommend the Mississippi Department of Employment Security strengthen
controls to ensure compliance with subrecipient monitoring requirements.
Repeat Finding
No.
Statistically Valid
N/A
190

STATE OF MISSISSIPPI
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
PART 3 – Federal Award Findings and Questioned Costs – US Dept of Treasury (continued)
View of Responsible
Officials
Management at the Mississippi Public Utilities Staff concurs with this finding.
See additional comments in the Corrective Action Plan on page 339 of this
audit report.
DEPARTMENT OF FINANCE AND ADMINISTRATION/MISSISSIPPI VETERANS AFFAIRS
REPORTING
Material Weakness
Material Noncompliance
2021-052
Strengthen Controls Over the Preparation, Recording, and Review of the
Schedule of Expenditures of Federal Awards.
ALN Number
21.019 Coronavirus Relief Funds (CRF)
Federal Award No.    N/A
Pass-through Entity
Department of Finance and Administration (Prime Recipient) to Mississippi
Veterans Affairs (part of the Prime Recipient)
Questioned Costs
Unable to determine due to disclaimer audit opinion
Background
The United States Treasury, as part of the Coronavirus Aid, Relief, and Economic
Security (CARES) Act, granted the Mississippi Department of Finance and
Administration (DFA), as the State’s Fiscal Agent, $1.25 billion in Coronavirus
Relief Funds (CRF) (ALN 21.019).  In order to expedite the spending of the funds
to abide by the initial period of performance end date of December 30, 2020, the
Mississippi State Legislature passed several pieces of legislation that directed the
Mississippi Department of Finance and Administration to allocate the CRF grant
funds to various other state agencies.  These state agencies are considered part of
the “prime recipient” along with DFA; therefore, no subrecipient relationship
existed within the regulations of the CRF grant.  In order to audit these funds,
audits of expenditures were performed at each state agency that received CRF
monies, and the management of those agencies responded to the findings and
provided corrective action plans in lieu of DFA providing them.
Criteria
The Code of Federal Regulations (2 cfr §200.510(b)) states, in part “the auditee
must prepare a schedule of expenditures of federal awards for the period covered
by the auditee's financial statements which must include the total Federal awards
expended as determined in accordance with §200.502.”
Code of Federal Regulations (2 cfr §200.502(a)) states, in part, “the determination
of when a federal award is expended must be based on when the activity related to
the Federal award occurs.”
191

STATE OF MISSISSIPPI
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
PART 3 – Federal Award Findings and Questioned Costs – US Dept of Treasury (continued)
The Internal Control – Integrated Framework, published by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO) and the U.S.
Government Accountability Office Standards for Internal Control in the Federal
Government (Green Book) specify that a satisfactory control environment is only
effective when there are adequate control activities in place. Effective control
activities dictate that a review is performed to verify the accuracy and
completeness of financial information reported. The Federal Grant Activity
Schedule captures amounts that must be accurate and complete in order to ensure
the accuracy of financial and federal information reported on such schedule to
verify the accuracy and completeness of financial information reported.
The Mississippi Agency Accounting Policies and Procedures (MAAPP) manual
Section 27.30.60 states, “The Federal Grant Activity schedule supports amounts
reported on the GAAP packet for federal grant revenues, receivables, deferred
revenues and expenditures. The schedule is also used for preparing the Single
Audit Report required by the Single Audit Act, Office of Management and Budget
Uniform Grant Guidance and the State’s audit requirements. The amounts on this
schedule should be reconciled by the agency with amounts reported on federal
financial reports.”
Condition
During the audit of Mississippi Veterans Affairs (MVA) for fiscal year ended June
30, 2021, auditors noted that MVA recorded expenditures related to the
Coronavirus Relief Funds based on an allocation of all expenditures and revenues
for the months of October, November and December. When the auditors inquired
of the rational or justification of how the expenditures were selected and allocated
no justification could be provided.
Since amounts were based on an allocation of all payments and payroll amounts
there were no specific invoices or employee payroll that were identified as
qualifying under the grant.  Due to this inability to define which expenditures were
paid with grant funds, and an inability to separate allowable costs in the allocation
from unallowable costs, auditors could not determine, with any reasonable
accuracy, what the questioned costs are from the grant.  Furthermore, due to the
lack of methodology justification maintained by the agency, auditors were overall
unable to audit the CRF funds.
Cause
Management at MVA is relatively new and made adjustments to internal
expenditures without communication to SFA and the need to adjust the SEFA.
Effect
Failure to properly communicate the justification for expenditures to be included
in the SEFA could result in some or all the costs to be questioned. With no
identification of specific invoices or specific employee payroll that qualified for
reimbursement all costs could be brought into question.
Recommendation
We recommend Mississippi Veterans Affairs strengthen controls over the
documentation maintained to justify amounts are properly charged to grants.
192

STATE OF MISSISSIPPI
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
PART 3 – Federal Award Findings and Questioned Costs – US Dept of Treasury (continued)
Repeat Finding
Statistically Valid
View of Responsible
Officials
No.
N/A
Management at the Mississippi Veterans Affairs concurs with this finding.  See
additional comments in the Corrective Action Plan on page 342 of this audit
report.
DEPARTMENT OF FINANCE AND ADMINISTRATION
REPORTING
Material Weakness
Material Noncompliance
2021-030
Strengthen Controls to Ensure Proper Review over the Schedule of Expenditures
of Federal Awards.
ALN Number
21.023 Emergency Rental Assistance
Federal Award No.
N/A
Pass-through Entity
N/A
Questioned Costs
N/A
Criteria
The Code of Federal Regulations (2 cfr 200.302(b)) states in part that the financial
management system of each non-Federal entity must provide for the “identification, in
its accounts, of all Federal awards received and expended and the Federal programs
under which they were received. Federal program and Federal award identification
must include, as applicable, the Assistance Listings title and number, Federal award
identification number and year, name of the Federal agency, and name of the pass-
through entity, if any…..”
The Code of Federal Regulations 2 CFR 200.508(b) states, “Prepare appropriate
financial statements, including the schedule of expenditures of Federal awards in
accordance with § 200.510.”
The Code of Federal Regulations 2 CFR 200.510(b) states, the auditee must also
prepare a schedule of expenditures of Federal awards for the period covered by the
auditee's financial statements which must include the total Federal awards
expended as determined in accordance with § 200.502”
Additionally, the Internal Control – Integrated Framework published by the
Committee of Sponsoring Organizations of the Treadway Commission (COSO)
193

STATE OF MISSISSIPPI
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
PART 3 – Federal Award Findings and Questioned Costs – US Dept of Treasury (continued)
Condition
Cause
Effect
Recommendation
Repeat Finding
Statistically Valid
View of Responsible
Officials
and the U.S. Government Accountability Office Standards for Internal Control in
the Federal Government (Green Book) specifies that a satisfactory control
environment is only effective when control activities exist. Effective control
activities dictate that a review is performed to verify the accuracy and
completeness of financial information reported. The Schedule of Expenditures of
Federal Awards contains information such as Assistance Listing Numbers (ALN)
and grant identification numbers that must be properly and accurately recorded.
During the review of the schedule of expenditure of federal awards (SEFA) as
obtained from the Mississippi Department of Finance and Administration (DFA),
auditor noted that DFA incorrectly reported Homeowners Assistance (ALN
21.026) to Rental Assistance (ALN 21.023).
The agency did not possess or enforce proper internal control structures.
Additionally, the agency did not properly review and reconcile the schedule of
expenditures of federal awards information and did not perform review over
crucial aspects of financial reporting.
Failure to properly ensure federal grant activity, including revenue and
expenditures, are properly recorded on the agencies Schedule of Expenditures of
Federal Awards could result in reporting errors in the State’s Master Schedule of
Expenditures of Federal Awards and/or exclusion of major programs to be audited
on the State’s Single Audit Report.
We recommend the Department of Finance and Administration strengthen controls
to ensure proper review over the schedule of expenditures of federal awards.
No.
 N/A.
Management at the Mississippi Department of Finance and Administration
concurs with this finding.  See additional comments in the Corrective Action
Plan on page 295 of this audit report.
Material Weakness
Material Noncompliance
2021-031
Strengthen Controls to Ensure Compliance with Reporting Requirements for
Emergency Rental Assistance.
CFDA Number
21.023 Emergency Rental Assistance
Federal Award No.
N/A
194

STATE OF MISSISSIPPI
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
PART 3 – Federal Award Findings and Questioned Costs – US Dept of Treasury (continued)
Questioned Costs
N/A
Criteria
The Code of Federal Regulations (2 CFR 200.303(a)) States that 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. These internal controls should be in
compliance with guidance in “Standards for Internal Control in the Federal
Government” issued by the Comptroller General of the United States or the
“Internal Control Integrated Framework”, issued by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO).”
Additionally, the Code of Federal Regulations (2 cfr 170.200), reporting
requirements are “(a) federal awarding agencies are required to publicly report
Federal awards that equal or exceed the micro-purchase threshold and publish the
required information on a public-facing, OMB-designated, government wide
website and follow OMB guidance to support Transparency Act implementation.
(b) Federal awarding agencies that obtain post-award data on subaward obligations
outside of this policy should take the necessary steps to ensure that their recipients
are not required, due to the combination of agency-specific and Transparency Act
reporting requirements, to submit the same or similar data multiple times during a
given reporting period.”
Furthermore, the Internal Control – Integrated Framework published by the
Committee of Sponsoring Organizations of the Treadway Commission (COSO)
and the U.S. Government Accountability Office Standards for Internal Control in
the Federal Government (Green Book) specifies that a satisfactory control
environment is only effective when control activities exist. This includes but is not
limited to, maintaining proper segregation of duties within the entity and
determining which laws and regulations apply to the entity and setting objectives
that incorporate these requirements.
Condition
Mississippi Home Corporation (MHC), a subrecipient of DFA, did not have
controls in place for multi-level review and approval of federal reports to ensure
the Emergency Rental Assistance program was reported correctly to the
Department of the Treasury.
Additionally, auditors could not verify that Mississippi Home Corporation
maintained segregation of duties in regards to the preparation, approval, and
submission of federal reports.
Furthermore, DFA did not file a FFATA Subaward Report with the Federal
Funding Accountability and Transparency Act Subaward Reporting System as
required by the Federal Funding Accountability and Transparency Act.
195

STATE OF MISSISSIPPI
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
PART 3 – Federal Award Findings and Questioned Costs – US Dept of Treasury (continued)
Cause
Effect
Recommendation
Repeat Finding
Statistically Valid
View of Responsible
Officials
DFA relied on MHC to fulfill all the reporting requirements of the grant; therefore,
MHC’s failure to appropriately segregate controls and to submit required reports
results in DFA receiving the findings.
Lack of proper internal controls could result in erroneous reports being submitted
to the federal cognizant agency
We recommend the Department of Finance and Administration strengthen controls
in order to ensure adequate segregation of duties exist and reporting requirements
are being met.
No.
N/A
Management
at
the
Mississippi
Department
of
Finance
and
Administration concurs with this finding.  See additional comments in the
Corrective Action Plan on page 296 of this audit report.
SUBRECIPIENT MONITORING
Material Weakness
Material Noncompliance
2021-032
Strengthen Controls to Ensure Compliance with Subrecipient Monitoring
Requirements.
CFDA Number
21.023 Emergency Rental Assistance
Federal Award No.
N/A
Questioned Costs
N/A
Criteria
The Code of Federal Regulations (2 CFR 200.328) states that:
(a) Monitoring by the non-Federal entity. The non-Federal entity is responsible for
oversight of the operations of the Federal award supported activities. The non-
Federal entity must monitor its activities under Federal awards to assure
compliance with applicable Federal requirements and performance expectations
are being achieved. Monitoring by the non-Federal entity must cover each
program, function or activity. See also § 200.331 Requirements for pass-through
entities.
(b)(2) The non-Federal entity must submit performance reports using OMB-
approved government-wide standard information collections when providing
performance information. As appropriate in accordance with above mentioned
196

STATE OF MISSISSIPPI
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
PART 3 – Federal Award Findings and Questioned Costs – US Dept of Treasury (continued)
information collections, these reports will contain, for each Federal award, brief
information on the following unless other collections are approved by OMB:
(i) A comparison of actual accomplishments to the objectives of the
Federal award established for the period. Where the accomplishments of
the Federal award can be quantified, a computation of the cost (for
example, related to units of accomplishment) may be required if that
information will be useful. Where performance trend data and analysis
would be informative to the Federal awarding agency program, the Federal
awarding agency should include this as a performance reporting
requirement.
(ii) The reasons why established goals were not met, if appropriate.
(iii) Additional pertinent information including, when appropriate,
analysis and explanation of cost overruns or high unit costs.
Additionally, The Code of Federal Regulations (2 CFR 200.332 (d)) States that
the pass-through entity “Monitor the activities of the subrecipient as necessary to
ensure that the subaward is used for authorized purposes, in compliance with
Federal statutes, regulations, and the terms and conditions of the subaward; and
that subaward performance goals are achieved…”
Furthermore, the Code of Federal Regulations (45 cfr 200.62), states that “a non-
Federal entity must have internal control over compliance designed to provide
reasonable assurance that; …
(b) Transactions are executed in compliance with:
(1) Federal statutes, regulations, and the terms and conditions of the Federal award
that could have a direct and material effect on a Federal program; and
(2) Any other Federal statutes and regulations that are identified in the Compliance
Supplement…”
The Internal Control - Integrated Framework published by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO) specifies that a
satisfactory control environment is only effective when timely and appropriate
monitoring is performed by management.
Condition
The Mississippi Department of Finance and Administration did not perform a pre-
award risk assessment for the subrecipient of the Emergency Rental Payments
(ERP).  Additionally, no grant agreement exists between the subrecipient and
DFA; therefore, none of the required grant elements were properly communicated
to the subrecipient.  Lastly, DFA did not perform any monitoring procedures of the
ERP monies, at either the subrecipient level or the beneficiary level.  Based on
recommendations from those charged with governance, DFA elected to allow
Mississippi Home Corporation (MHC) the authority to administer the program for
the State of Mississippi.  MHC is a quasi-governmental agency and is not part of
the State’s financial reporting structure; therefore, DFA created a subrecipient
relationship when the ERP monies were distributed to MHC for the administration
of the Rental Assistance for Mississippians Program (RAMP).
197

STATE OF MISSISSIPPI
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
PART 3 – Federal Award Findings and Questioned Costs – US Dept of Treasury (continued)
Cause
Effect
Recommendation
Repeat Finding
Statistically Valid
View of Responsible
Officials
The Mississippi Department of Finance and Administration distributed the entirety
of the ERP grant to a third party administrator, MHC, and did not consider this to
be a subrecipient relationship.
Lack of proper controls and monitoring procedures could result in the misuse
and/or improper spending of federal funds.
We recommend the Department of Finance and Administration implement
monitoring procedures over subrecipients in order to ensure federal compliance
requirements are being met.  Additionally, we recommend that the agency follow
all pre-award and post-award requirements of grant programs.
No.
N/A
Management at the Mississippi Department of Finance and Administration
concurs with this finding.  See additional comments in the Corrective Action
Plan on page 296 of this audit report.
198

Auditor’s note to the Corrective Action Plan from Mississippi Department of Education
(MDE) Management
Department of Education – Activities Allowed/Allowable Costs - Material Weakness/Material
Noncompliance
2021-044
Strengthen Controls to Ensure Compliance with Allowable Costs Requirements of
the Coronavirus (COVID) Relief Funds (CRF) and Elementary and Secondary
School Emergency Relief Fund (ESSER).
MDE states in their response to the finding that “the crux of this finding hinges on the erroneous assertion
that only one vendor was allowed to offer input on the specifications.”  The finding acknowledges that
MDE provided evidence that three of the four vendors received the specifications in advance, but the
winning bidder received them 20 days in advance, while the remaining two vendors received them 7-8 days
in advance.  Additionally, the specifications sent to the winning bidder were marked “draft” and redline
comments were added to the specifications by the winning bidder when they were returned to MDE.  While
MDE did not adopt all of the winning bidder’s suggested modifications to the specifications, modifications
like the size of the needed laptop screens were adopted by MDE.  MDE could provide no support that the
fourth bidder was given advance notice of the specifications.
Secondly, MDE asserts that the points assigned to the winning bidder for the “Devices” category hinged on
the guarantee that the devices would be delivered by the November 20, 2022 delivery timeline; however,
two other bidders with lower price points overall on devices also committed to having devices delivered no
later than November 20, 2022.  In fact, bidders were told that that delivery by November 20, 2022 was a
requirement to bid on the RFQ.  MDE did not describe why the bidders received the points that they did (as
stated in the finding), and their statement that it depended on delivery dates is not supported by the RFQs.
This type of discrepancy is the reason that the evaluations of RFQ’s should contain sufficient detailed
justification of points awarded.
Department of Education – Reporting – Material Weakness - Material Noncompliance
2021-035
Strengthen Controls to Ensure Compliance with Federal Funding Accountability and
Transparency Act (FFATA) Requirements.
MDE states that they do not concur that FFATA information was entered timely or that no documentation
was maintained that could verify the information was entered; however, their response verifies that “MDE
is unable to demonstrate when the file was initially submitted…” Additionally, MDE has provided a
STATE OF MISSISSIPPI
OFFICE OF THE STATE AUDITOR
SHAD WHITE
STATE AUDITOR
POST OFFICE BOX 956 • JACKSON, MISSISSIPPI 39205 • (601) 576-2800 • FAX(601)576-2650
199

corrective action plan to address the elements of the finding. OSA will review this corrective action in later
audits to determine if MDE has complied.”
Department of Education – Special Tests and Provisions – Significant Deficiency/Immaterial
Noncompliance
2021-038
Strengthen Controls to Ensure Compliance with Equitable Participation of Private
School Children Requirements.
MDE states that they do not believe this is a systemic problem with the program, but states that they do not
require supporting documentation in the application phase, and review those documents in the monitoring
phase of the grant process. There is a significant lag time between the application phase on the grant cycle
and MDE’s subrecipient monitoring. Due to this lag, errors in the Local Educational Agency (LEA’s)
documentation would not be identified timely, resulting in improper Title-I allocation. In addition, every
LEA is not selected for on-site monitoring each year. Not reviewing the LEA’s documentation prior to
approval could result in errors in the Title-I allocation that may not be identified timely or at all. MDE
should consider strengthening these controls to ensure the proper allocation of funds timely.
POST OFFICE BOX 956 • JACKSON, MISSISSIPPI 39205 • (601) 576-2800 • FAX(601)576-2650
200

Auditor’s note to the Corrective Action Plan from Mississippi Department of Employment
Security (MDES) Management
Department of Employment Security – Activities Allowed/Allowable Costs - Material
Weakness/Material Noncompliance
2021-043
Strengthen Controls to Ensure Compliance with Allowable Costs and Activities
Allowed for Coronavirus Relief Funds
STATE OF MISSISSIPPI
OFFICE OF THE STATE AUDITOR
SHAD WHITE
STATE AUDITOR
Much of MDES’ argument that the questioned costs should be removed relies on Mississippi State Law
and disregards the requirements of the federal CRF grant. MDES asserts in their response that, because the
MS Legislature appropriated money to specific types of workforce development, that those expenditure
automatically became eligible for CRF funding.  While the MS Legislature has the authority to appropriate
CRF money to certain types of workforce development, those items still must have met the three allowable
cost requirements of the CRF funds.  State law authorizing equipment purchases cannot overrule the federal
program guidelines.  MDES failed to document or perform adequate due diligence to ensure that the fixed
asset purchases made by their subrecipients met the grant requirements.  These expenditures were not
properly justified with any cost comparison to ensure that the purchase was the most cost-effective solution.
Additionally, MDES could not provide any compelling evidence that these expenditures were necessary
due to the pandemic.
As stated in the finding, MDES could not provide documentation that the “student vouchers” paid for with
CRF monies were necessary due to the pandemic.  MDES could not provide compelling evidence that these
students were new students, that they completed the courses, that the courses were able to benefit the
students in the workforce, or that they were even necessary due to the pandemic.
MDES’ assertion that extensive documentation has been provided to OSA to validate these purchases is
erroneous.  MDES provided documentation to OSA, but that documentation did not support that the charges
were necessary or justified.  The justifications for necessity in some instances was nonsensical, and did not
support that the purchases were necessary due to the pandemic.  In the example noted by MDES in their
response, two lathes costing a total of $313,800 were purchased to assist with displaced internships.  Those
two lathes served 22 students, for a per student price of $14,263.  By fall of 2021, the internships had
resumed – meaning that the lathes were used for one semester.  The college in question provided no
evidence that any other method of fulfilling the internships was considered, and no other options for a more
cost-effective solution rather than buying over $300,000 in fixed assets was contemplated.  In a second
example given by MDES, the college purchased drones to assist in training drone pilots.  MDES response
notes that drones are an emerging technology and that additional drone pilots will be needed by 2025;
POST OFFICE BOX 956 • JACKSON, MISSISSIPPI 39205 • (601) 576-2800 • FAX (601) 576-2650
201

POST OFFICE BOX 956 • JACKSON, MISSISSIPPI 39205 • (601) 576-2800 • FAX (601) 576-2650
however, MDES does not provide any compelling justification as to why these drones and trained drone
pilots were necessary due to the pandemic.
Department
of Employment Security
–
Eligibility
-
Material Weakness/Material
Noncompliance
2021-015
Strengthen Controls to Ensure Compliance with Eligibility Requirements for
Unemployment Insurance
The Office of the State Auditor (OSA) acknowledges that the Mississippi Department of Employment
Security (MDES) was faced with an unexpected and staggering task to ensure unemployment benefits were
paid to individuals during the pandemic.  OSA also acknowledges that certain federal guidelines were
provided that MDES had to comply with in order to receive additional federal unemployment funds.  While
MDES’ response to the finding focuses on the federal requirements and state guidance to waive or ignore
existing controls, MDES fails to identify any way that the agency mitigated any of the fraud risks or
potential for overpayments created by waiving or overriding these controls.  This failure on the part of
MDES resulted in a 301% increase in known overpayments from fiscal year 2020 to 2021.  This failure to
safeguard the state’s assets is the basis for the material weakness finding.  Additionally, MDES fails to
acknowledge that the agency was required by the same type federal guidance referenced in their response
to the finding (UIPL Letters and Change Notices) to ensure adequate and proper fraud detection and
prevention techniques were being utilized by the agency.
Moreover, while MDES did receive federal guidance on making unemployment payments more accessible
to those directly impacted by the pandemic, the options provided by the federal government were to either
modify or suspend the work search requirements for individuals or employers directly impacted by COVID-
19 due to an illness in the workplace or direction from a public health official to isolate or quarantine
workers.  States were also given the flexibility to respond to the COVID-19 emergency in a broader way,
if they chose to do so (emphasis added by auditor). (Unemployment Insurance Program Letter Number
13-20, Change 1, Attachment 1, Question 2).  MDES chose to suspend the requirement for all
unemployment claims, and not only those that arose from an illness in the workplace or from an order to
isolate or quarantine workers.  The decision to implement broader flexibility and completely waive work
search requirements were made by MDES.  By MDES’ own admission in other auditee responses to OSA,
MDES stated that they requested the Governor’s Office waive the specific requirements.  Additionally, in
each Executive Order (1462, 1481, 1502, and 1510), MDES was given flexibility to reassess and modify
these measures prior to their expiration date in the orders.
Additionally, The Department of Labor (DOL) included program integrity language in all of the major
pieces of guidance associated with the state implementation of the CARES Act programs and provisions
(Unemployment Insurance Program Letter Number 28-20).  Program Integrity requirements for the regular
unemployment program and unemployment programs authorized by the CARES Act were to operate in
tandem, and CARES Act program requires that states must ensure that only eligible individuals receive
benefits (Unemployment Insurance Program Letter Number 23-20).    Both UIPL letters 23-20 and 28-20
specify that the states must make efforts to rapidly and proactively prevent, detect, and investigate
fraudulent activity; establish and recover fraud overpayments; and pursue criminal and civil prosecution to
deter fraud.  Specifically, states were strongly encouraged to implement the following measures to minimize
fraud in the unemployment system:
1) Social Security Administration Cross Match
2) Systematic Alien Verification for Entitlement
3) Incarceration cross matches
4) Internet Protocol Address checks
5) Data Analytics to cross reference claims for indicators of fraud.
202

POST OFFICE BOX 956 • JACKSON, MISSISSIPPI 39205 • (601) 576-2800 • FAX (601) 576-2650
Furthermore, many of the most effective tools to deter and detect fraud were available to MDES in the
Integrity Data Hub (IDH), and were available to states for well over a year.  These included:
1) Interstate Suspicious Actor Repository to match claims across states
2) Foreign IP Address verification to receive flags on claims filed from IP addresses outside of
the United States
3) Data Analytic tools
4) Fraud Alert Systems
5) Identify Verification for fraud scoring information, including flagging synthetic identities.
MDES has stated that they utilize the IDH; however, auditors cannot determine how effectively these
programs were utilized considering the high amount of overpayments that were made during fiscal year
2021.
Additionally, one of the specific fraud risks the UIPL, incarceration cross matches, were not
performed by MDES, and resulted in overpayments to incarcerated individuals.  These incarcerated
individuals were able to apply for benefits when MDES overrode or turned off the automated controls and
did not implement any compensating controls to ensure payments were proper.
In summary, regardless of the federal requirements or Executive Orders issued, MDES is still responsible
for ensuring the accuracy of unemployment claims.  In order to assure the accuracy of those claims, MDES
should have implemented compensating controls to safeguard the unemployment trust fund when other
controls were waived or overrode.  The ultimate responsibility to ensure that unemployment payments were
accurately paid out and that overpayments were kept to a minimum is the responsibility of MDES personnel.
Department
of
Employment
Security
–
Subrecipient
Monitoring
-
Material
Weakness/Material Noncompliance
2021-045
Strengthen Controls to Ensure Compliance with Subrecipient Monitoring
Requirements
When documentation of pre-award risk assessments was requested during the audit process, MDES did not
provide any auditable documentation to the auditors.  While MDES stated that they relied upon the same
pre-award risk assessment for the CRF grants as the Workforce Innovation and Opportunity Act (WIOA)
grants, none of the WIOA pre-award risk assessments were provided.  Personnel at MDES stated, when
this documentation was requested, that “there was no risk assessment of the four local areas performed prior
to the awarding of the CRF funds…We work closely with the local areas on a daily basis, perform yearly
subrecipient monitoring, and regularly conduct technical assistance all of which are closely monitored by
MDES management for any indication that we should reassess the locals as anything but low risk. We
understand that this is not documented and therefore does not meet the risk assessment requirement but
wanted to give the context of our actions.”
MDES appears to concur that they did not provide documented evidence to auditors that all required grant
elements were presented to grantees.  It should be noted that this evidence has still not been provided to
auditors as of the date of this report.
Lastly, the questioned costs as outlined in finding 2021-043 verify that MDES did not have proper
monitoring procedures in place to monitor subrecipients of the CRF grant program.  MDES disagrees that
these costs should be questioned (as noted in their response to finding 2021-043); therefore, they do not
concur that their monitoring procedures and controls failed.  OSA has explained, in detail, both in finding
203
2021-043 and in the rebuttal to MDES’ response above why the auditor questioned these expenses.  Please
refer to finding 2021-043 for further information.

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Auditor’s note to the Corrective Action Plan from Mississippi Emergency Management
Agency (MEMA)
MEMA – Activities Allowed/Allowable Costs - Material Weakness/Material Noncompliance
2021-046
Strengthen Controls to Ensure Compliance with Allowable Costs and Activities Allowed
Requirements for Coronavirus Relief Funds.
STATE OF MISSISSIPPI
OFFICE OF THE STATE AUDITOR
SHAD WHITE
STATE AUDITOR
MEMA’s provided analysis of the rent vs. purchase option was only provided after the initial finding was
presented to Management.  When the analysis was examined, auditors determined that it relied on
inaccurate underlying data.  The analysis provided that it would cost $2,059,200 to lease storage facilities
in one year.  However, this number was calculated by taking the current price of one warehouse that housed
25% of the materials and extrapolating it to encompass a price for 100% of the materials.  The storage cost
of this facility was $42,900.  MEMA also presented emails illustrating that there was a warehouse available
to rent that supplied half of the needed space for $30,000 a month for rent, and another facility for a fourth
of the needed space for $5,000 a month.  If extrapolations were made with this data, even if using the more
expensive building as the base data, the cost of leasing the building for two years would come to $1,440,000,
which is almost a million less than the initial cost of the building.
Moreover, the analysis provided by MEMA does not consider the additional costs that were associated with
the State Emergency Logistical Operations Center (SELOC) building to prepare the building for initial use.
These costs amounted to at least $518,042 in additional costs.  Lastly, the analysis does not factor in that
the building MEMA used for extrapolation is not a storage facility, but a nationwide distribution center that
also charged for pallet rental, the cost of moving pallets in and out, etc.  Additionally, the rental cost of the
Gulf Relay facility varied from month to month based on these expenditures and the amount of storage
utilized.  The prices varied from approximately $27,000 monthly to $50,000 monthly.
It appears to the auditor that MEMA used data in their analysis that would lead to the conclusion to purchase
the building, rather than to let the analysis dictate the most cost effective option. While MEMA may argue
that the building purchase was a better long term business decision for the agency, the purpose of the
Coronavirus Relief Funds (CRF) was to provide immediate relief for the pandemic and not provide long
term business solutions.
MEMA’s supporting documentation mainly relied on Mississippi State Law to validate the purchase of the
building, stating that the Legislature allowed them to purchase the building via legislation that was passed
during the fiscal year 2020 legislative session; however, state law cannot supplant federal law in regards to
a federal grant.
POST OFFICE BOX 956 • JACKSON, MISSISSIPPI 39205 • (601) 576-2800 • FAX (601) 576-2650
205

It should be reiterated that MEMA publicly stated that this facility was for future pandemics, and a
permanent office space for the procurement staff of MEMA, thereby verifying its intended use and purpose
extended past the period of performance.
MEMA – Subrecipient Monitoring - Material Weakness/Material Noncompliance
2021-047
Strengthen Controls to Ensure Terms and Conditions are stated in Subrecipient Subaward
Documents.
MEMA’s argument in their response relies on the fact that the MS Legislature appropriated CRF funds for
state program called “MERP”.  The program was designed to provide CRF monies to the counties and
municipalities in Mississippi.  Regardless of the appropriation of the Legislature, MEMA is still required
to follow subrecipient monitoring regulations as outlined in Uniform Grant Guidance, as required by the
Department of the Treasury.
POST OFFICE BOX 956 • JACKSON, MISSISSIPPI 39205 • (601) 576-2800 • FAX(601)576-2650
206

STATE OF MISSISSIPPI
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
FOR THE YEAR ENDED JUNE 30, 2021
PART 3 – FEDERAL AWARD FINDINGS AND QUESTIONED COSTS
U.S. DEPARTMENT OF VETERAN AFFAIRS
Finding Number
Finding and Recommendation__________________________________
MISSISSIPPI VETERANS AFFAIRS
Reporting
Material Weakness
Material Noncompliance
2021-051
Strengthen Controls Over the Preparation, Recording, and Review of the
Schedule of Expenditures of Federal Awards.
ALN Number
64.015 Veterans State Nursing Home Care
Federal Award No.
N/A
Pass-through Entity
N/A
Questioned Costs
Unable to determine due to disclaimer audit opinion.
Criteria
The Code of Federal Regulations (2 cfr §200.510(b)) states, in part “the auditee
must prepare a schedule of expenditures of federal awards for the period covered
by the auditee's financial statements which must include the total Federal awards
expended as determined in accordance with §200.502.”
Code of Federal Regulations (2 cfr §200.502(a)) states, in part, “the determination
of when a federal award is expended must be based on when the activity related to
the Federal award occurs.”
The Internal Control – Integrated Framework, published by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO) and the U.S.
Government Accountability Office Standards for Internal Control in the Federal
Government (Green Book) specify that a satisfactory control environment is only
effective when there are adequate control activities in place. Effective control
activities dictate that a review is performed to verify the accuracy and
completeness of financial information reported. The Federal Grant Activity
Schedule captures amounts that must be accurate and complete in order to ensure
the accuracy of financial and federal information reported on such schedule to
verify the accuracy and completeness of financial information reported.
The Mississippi Agency Accounting Policies and Procedures (MAAPP) manual
Section 27.30.60 states, “The Federal Grant Activity schedule supports amounts
207

STATE OF MISSISSIPPI
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
PART 3 – Federal Award Findings and Questioned Costs – US Dept of VA (continued)
reported on the GAAP packet for federal grant revenues, receivables, deferred
revenues and expenditures. The schedule is also used for preparing the Single
Audit Report required by the Single Audit Act, Office of Management and Budget
Uniform Grant Guidance and the State’s audit requirements. The amounts on this
schedule should be reconciled by the agency with amounts reported on federal
financial reports.”
Condition
During the audit of Mississippi Veterans Affairs (MVA) for fiscal year ended June
30, 2021, auditors noted that MVA recorded expenditures provided did not agree
to the amounts in the statewide accounting system, the Mississippi Accountability
System for Government Information and Collaboration (MAGIC).
The statewide SEFA is prepared using agency prepared grant schedule activity
reports, and a system of internal controls exists to ensure all federal monies are
included in the SEFA and that all agencies that have federal monies prepare grant
schedules. By making adjustments to the MVA accounting records without making
adjustments to MAGIC or notifying the DFA, MVA inadvertently circumvented
the control system and DFA was not alerted to the need for adjustment to the
amount of the funds in the SEFA.
Due to the designation as a Major Program under Uniform Grant Guidance Subpart
F, MVA required an audit for fiscal year 2021. MVA prepared and submitted grant
information to the auditors that did not agree to the DFA SEFA.
MVA could not reasonably justify the expenditures reported on the grant schedule,
nor could they produce supporting documentation of such expenditures.  Due to
this inability to support which expenditures were paid with grant funds, and an
inability to separate allowable costs in the from unallowable costs, auditors could
not determine, with any reasonable accuracy, what the questioned costs are from
the grant; therefore, auditors were overall unable to audit the 64.015 grant funds.
Cause
Management at MVA is relatively new and made adjustments to internal
expenditures without communication to SFA and the need to adjust the SEFA.
Effect
Failure to properly communicate corrections to expenditures be included correctly
in MAGIC and that the SEFA so that it with the underlying financial records could
result inaccurate reporting to both the state and federal oversight organizations.
Recommendation
We recommend Mississippi Veterans Affairs strengthen controls over the
preparation and review of the Schedule of Expenditures of Federal Awards to
ensure all grant award information and amounts reported are accurate and
correct, and that the information agrees with the underlying financial records.
Repeat Finding
Yes.
Statistically Valid
N/A
208

STATE OF MISSISSIPPI
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
PART 3 – Federal Award Findings and Questioned Costs – US Dept of VA (continued)
View of Responsible
Officials
Management at the Mississippi Veterans Affairs concurs with this finding.
See additional comments in the Corrective Action Plan on page 4 of this
audit report.
209

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II. SUMMARY SCHEDULE OF PRIOR
FEDERAL AUDIT FINDINGS

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STATE OF MISSISSIPPI
SUMMARY SCHEDULE OF PRIOR FEDERAL AUDIT FINDINGS
FOR THE YEAR ENDED JUNE 30, 2021
Instructions to Management
Each state grantee agency included in the prior year Single Audit Report for the State of Mississippi prepared a
summary schedule of prior federal audit findings as required by OMB Uniform Administrative Requirements,
Cost Principles, and Audit Requirements for Federal Awards 2 CFR 200, Section 5.11.  In order to provide a
systematic approach for reporting, agencies were asked to follow the format listed below.
For each prior year federal audit finding, the agency should include the following: (1) finding identification
including finding number, finding heading, Assistance Listing Number (ALN) and program name, (2) current
status, and (3) planned corrective action, if required.  These items are discussed below:
(1)
Each finding number, finding heading, ALN and program name should be listed in the same
sequence as presented in the prior year Single Audit Report.
(2)
The current status should be identified with one of the following terms:
a.
“Fully Corrected” - All corrective action has been taken.
b.
“Partially Corrected” - Some, but not all, corrective action has been taken.
c.
“Not Corrected” - Corrective action has not been taken.
d.
“Not Valid” - Finding is no longer valid and does not warrant further action.
(3)
Corrective action should be noted for findings that are not identified as “Fully Corrected.”
a.
When audit findings are “Partially Corrected” or “Not Corrected,” describe the planned
corrective action as well as any partial corrective action taken.
b.
When audit findings are “Not Valid,” describe the reasons the findings are no longer
considered valid or do not warrant further action.
211

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STATE OF MISSISSIPPI
SUMMARY SCHEDULE OF PRIOR FEDERAL AUDIT FINDINGS
FOR THE YEAR ENDED JUNE 30, 2021
INDEX LISTED BY FINDING NUMBER
FINDING
NUMBER
STATE GRANTEE AGENCY NAME
PAGE
NUMBER
2020-012
Department of Education
2020-032*a
Department of Education
2020-033*b
Department of Education
2020-005
Department of Employment Security
2020-006
Department of Employment Security
2020-007
Department of Employment Security
2020-036*c
Department of Employment Security
2020-037
Department of Health
2020-038
Department of Health
2020-039
Department of Health
2020-024
Department of Human Services
2020-025
Department of Human Services
2020-026
Department of Human Services
2020-027
Department of Human Services
*a The agency indicates the finding is partially corrected; finding 2021-036 was written to report current year
problems noted.
*b  The agency indicates the finding is partially corrected;  finding 2021-037 was written to report current year
problems noted.
*c  The agency indicates the finding is fully corrected;  finding 2021-015 was written to report current year
problems noted.
213
15
15
15
7
7
7
7
9
9
9
21
22
23
23

Summary of Prior Year Status
Continued
2020-028
Department of Human Services
2020-029
Department of Human Services
2020-030*d
Department of Human Services
2020-031*e
Department of Human Services
2020-034*f
Department of Transportation
2020-035
Department of Transportation
2020-011
Division of Medicaid
2020-041*g
Division of Medicaid
2020-042*h
Division of Medicaid
2020-043*i
Division of Medicaid
2020-044
Division of Medicaid
2020-045
Division of Medicaid
2020-046
Division of Medicaid
2020-023
MS Emergency Management Agency
2020-040*j
MS Veterans Affairs
*d  The agency indicates the finding is fully corrected;  finding 2021-013 was written to report current year
problems noted.
*e  The agency indicates the finding is fully corrected;  finding 2021-014 was written to report current year
problems noted.
*f  The agency indicates the finding is fully corrected;  finding 2021-020 was written to report current year
problems noted.
*g The agency indicates the finding is partially corrected; finding 2021-039 was written to report current year
problems noted.
*h The agency indicates the finding is partially corrected; finding 2021-041 was written to report current year
problems noted.
*i  The agency indicates the finding is partially corrected; finding 2021-042 was written to report current year -
problems noted.
*j  The agency indicates the finding is fully corrected; finding 2021-051 was written to report current year
problems noted.
214
23
24
24
25
7
7
9
9
9
30
31
31
31
33
7

215
2020-012
Strengthen Controls Over the Preparation of the Federal Grant Activity Schedule
PARTIALLY CORRECTED
Processes have been put in place to strengthen the controls over the preparation and review of
the Schedule of Federal Awards and Subgrant Schedule.
2020-032
Strengthen Controls to Ensure Compliance with On-Site Subrecipient Monitoring Requirements.
CFDA #84.010  Title I-Grants to Local Education Agencies
CFDA #84.367 Title II-Supporting Effective Instruction State Grants
PARTIALLY CORRECTED
The MDE has revised its Consolidated Federal Programs Monitoring Process and Protocol that
will be implemented for FY2022 Monitoring (SY2020-2021).  As noted in the Corrective Action
Plan, the full corrective action will be completed by June 30, 2022.  Because the FY20 Single
Audit finding is related to the FY2019 Monitoring (SY2017-2018), evidence of implementation of
the corrective action will be a part of the FY23 Single Audit.
2020-033
Strengthen Controls to Ensure Compliance with On-Site Subrecipient Monitoring Requirements
for Special Education Cluster Programs
CFDA #84.027  Special Education-Grants to States (IDEA, Part B)
CFDA #84.173 Special Education-Preschool Grants (IDEA, Preschool)
PARTIALLY CORRECTED
The MDE has strengthened and revised the IDEA Monitoring Process and Protocol that will be
piloted for FY2022 Monitoring (SY2020-2021).  As noted in the Corrective Action Plan, the full
corrective action will be completed by June 30, 2022.  Because the FY20 Single Audit finding is
related to the FY2019 Monitoring (SY2017-2018), evidence of implementation of the corrective
action will be a part of the FY23 Single Audit.

216

0LVVLVVLSSL'HSDUWPHQWRI(PSOR\PHQW6HFXULW\
7DWH5HHYHV
Governor
5RELQ6WHZDUW
,QWHULP([HFXWLYH'LUHFWRU
Helping Mississippians Get Jobs
+HQU\-.LUNVH\%XLOGLQJz(FKHORQ3DUNZD\z-DFNVRQ0LVVLVVLSSL
3RVW2IILFH%R[z-DFNVRQ0LVVLVVLSSLz
MDES is an Equal Employment Opportunity Employer
SUMMARY SCHEDULE OF PRIOR FEDERAL AUDIT FINDINGS
For the Year Ended June 30, 2021
2020-005
Controls Should Be Strengthened over MAGIC segregation of Duties and
Quarterly Access Review
CFDA # 17.225 Unemployment Insurance
Fully Corrected
2020-006
Controls Should Be Strengthened over the Reconciliation of MAGIC to
ReEmployMS
CFDA # 17.225
Unemployment Insurance
Fully Corrected
2020-007
Controls Should Be Strengthened over Unemployment Insurance Benefits
Paid
CFDA # 17.225
Unemployment Insurance
Fully Corrected
2020-036
Controls to Ensure Compliance with Eligibility Requirements
CFDA # 17.225
Unemployment Insurance
Fully Corrected
Signature: ____________________________________________ (Agency Head)
Title: Interim Executive Director___________________________
Date: ________________

217

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238

III. MANAGEMENT RESPONSES AND
CORRECTIVE ACTION PLANS

(This page left blank intentionally.)

STATE OF MISSISSIPPI
MANAGEMENT RESPONSES AND CORRECTIVE ACTION PLANS
FOR THE YEAR ENDED JUNE 30, 2021
Instructions to Management
In order to provide a systematic approach for agencies to respond to audit findings, the management of each
agency was requested to follow the instructions listed below in preparation of the formal response to single audit
findings and the corrective action plan.
For each AUDIT FINDING, the agency should include the following:  (1) Assistance Listing Number (ALN)
and program name, (2) type of compliance requirement, (3) audit finding number and finding heading, (4)
response, and (5) corrective action plan.  These items are discussed below:
1.
Each ALN and program name should be listed in the same sequence presented in the
management letter.  The entire finding is not required to be repeated.
2.
Each type of compliance requirement should be listed in the same sequence as presented in the
management letter.
3.
Each audit finding number and finding heading should be listed separately in the same sequence
as presented in the management letter.  The entire finding is not required to be repeated.
4.
Responses of the agency to audit findings should be included directly below each audit finding
heading.  For each response, the agency should state whether they concur or do not concur with
the individual finding and recommendation and the reasons why.
5.
After an audit finding heading has been listed along with the corresponding agency response,
the plan for corrective action should be listed using the following format:
a.
Specific steps to be taken to correct situation.
b.
Name(s) of the contact person(s) responsible for corrective action.
c.
Anticipated completion date for corrective action.
d.
Specific reasons why corrective action is not necessary, if applicable.
OMB Uniform Guidance, Section 200.521 requires audit findings to be resolved between federal agencies and
audited agencies within six months after the receipt of the single audit report by the federal government.  Audited
agencies should maintain permanent files on all correspondence with the federal government during the audit
resolution process.  Federal agencies may ask for additional information pertaining to audit findings.
On the following pages, we have compiled the formal response to the findings and recommendations and the
corrective action plan of each agency’s management.
239

(This page left blank intentionally.)

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258

Auditor’s note to the Corrective Action Plan from Mississippi Department of Education
(MDE) Management
Department of Education – Activities Allowed/Allowable Costs - Material Weakness/Material
Noncompliance
2021-034
Strengthen Controls to Ensure Compliance with Allowable Costs Requirements of
the Child and Adult Care Food Program (CACFP).
STATE OF MISSISSIPPI
OFFICE OF THE STATE AUDITOR
SHAD WHITE
STATE AUDITOR
Mississippi Department of Education (MDE) asserts in their disagreement with the finding that they have
a “robust system of monitoring” and that they could not verify the accuracy of the finding due to “not being
included in the reviews of the recipients.
OSA reviewed a significantly lower percentage of CACFP subrecipients than MDE alleges they reviewed
in their response (42%) and OSA found enough noncompliance to warrant a material noncompliance
finding with $126,191 in questioned costs, which should be noted is more than triple ($37,408) the amount
MDE stated they recovered from similar organizations.
Additionally, the assertion that the accuracy could not be verified due to not being “included in the reviews
of subrecipients” is misleading, and implies that MDE was not made aware of the particulars of the
questioned costs.  MDE was provided with a list of all the CACFP subrecipients that are noted in the finding
and a list of the specific questioned costs.  MDE stated it would take months to review those expenditures
at the same level of detail that OSA personnel were able to complete in less than six weeks.
In conclusion, the sheer number of errors in the subreicipient monitoring process that led to the questioned
allowable costs does not support MDE’s statement that their internal controls and subrecipient monitoring
system is either robust or adequate.
POST OFFICE BOX 956 • JACKSON, MISSISSIPPI 39205 • (601) 576-2800 • FAX (601) 576-2650
259

(This page left blank intentionally.)

Auditor’s note to the Corrective Action Plan from Mississippi Department of Education
(MDE) Management
Department of Education – Activities Allowed/Allowable Costs - Material Weakness/Material
Noncompliance
2021-044
Strengthen Controls to Ensure Compliance with Allowable Costs Requirements of
the Coronavirus (COVID) Relief Funds (CRF) and Elementary and Secondary
School Emergency Relief Fund (ESSER).
MDE states in their response to the finding that “the crux of this finding hinges on the erroneous assertion
that only one vendor was allowed to offer input on the specifications.”  The finding acknowledges that
MDE provided evidence that three of the four vendors received the specifications in advance, but the
winning bidder received them 20 days in advance, while the remaining two vendors received them 7-8 days
in advance.  Additionally, the specifications sent to the winning bidder were marked “draft” and redline
comments were added to the specifications by the winning bidder when they were returned to MDE.  While
MDE did not adopt all of the winning bidder’s suggested modifications to the specifications, modifications
like the size of the needed laptop screens were adopted by MDE.  MDE could provide no support that the
fourth bidder was given advance notice of the specifications.
Secondly, MDE asserts that the points assigned to the winning bidder for the “Devices” category hinged on
the guarantee that the devices would be delivered by the November 20, 2022 delivery timeline; however,
two other bidders with lower price points overall on devices also committed to having devices delivered no
later than November 20, 2022.  In fact, bidders were told that that delivery by November 20, 2022 was a
requirement to bid on the RFQ.  MDE did not describe why the bidders received the points that they did (as
stated in the finding), and their statement that it depended on delivery dates is not supported by the RFQs.
This type of discrepancy is the reason that the evaluations of RFQ’s should contain sufficient detailed
justification of points awarded.
Department of Education – Reporting – Material Weakness - Material Noncompliance
2021-035
Strengthen Controls to Ensure Compliance with Federal Funding Accountability and
Transparency Act (FFATA) Requirements.
MDE states that they do not concur that FFATA information was entered timely or that no documentation
was maintained that could verify the information was entered; however, their response verifies that “MDE
is unable to demonstrate when the file was initially submitted…” Additionally, MDE has provided a
STATE OF MISSISSIPPI
OFFICE OF THE STATE AUDITOR
SHAD WHITE
STATE AUDITOR
POST OFFICE BOX 956 • JACKSON, MISSISSIPPI 39205 • (601) 576-2800 • FAX(601)576-2650
261

corrective action plan to address the elements of the finding. OSA will review this corrective action in later
audits to determine if MDE has complied.”
Department of Education – Special Tests and Provisions – Significant Deficiency/Immaterial
Noncompliance
2021-038
Strengthen Controls to Ensure Compliance with Equitable Participation of Private
School Children Requirements.
MDE states that they do not believe this is a systemic problem with the program, but states that they do not
require supporting documentation in the application phase, and review those documents in the monitoring
phase of the grant process. There is a significant lag time between the application phase on the grant cycle
and MDE’s subrecipient monitoring. Due to this lag, errors in the Local Educational Agency (LEA’s)
documentation would not be identified timely, resulting in improper Title-I allocation. In addition, every
LEA is not selected for on-site monitoring each year. Not reviewing the LEA’s documentation prior to
approval could result in errors in the Title-I allocation that may not be identified timely or at all. MDE
should consider strengthening these controls to ensure the proper allocation of funds timely.
POST OFFICE BOX 956 • JACKSON, MISSISSIPPI 39205 • (601) 576-2800 • FAX(601)576-2650
262

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270

Auditor’s note to the Corrective Action Plan from Mississippi Department of Employment Security
(MDES) Management
Material Weakness
2021-008
Controls Should be Strengthened over Unemployment Insurance Benefits Paid.
STATE OF MISSISSIPPI
OFFICE OF THE STATE AUDITOR
SHAD WHITE
STATE AUDITOR
The Office of the State Auditor (OSA) acknowledges that the Mississippi Department of Employment Security
(MDES) was faced with an unexpected and staggering task to ensure unemployment benefits were paid to
individuals during the pandemic.  OSA also acknowledges that certain federal guidelines were provided that MDES
had to comply with in order to receive additional federal unemployment funds.  While MDES’ response to the
finding focuses on the federal requirements and state guidance to waive or ignore existing controls, MDES fails to
identify any way that the agency mitigated any of the fraud risks or potential for overpayments created by waiving
or overriding these controls.  This failure on the part of MDES resulted in a 301% increase in known overpayments
from fiscal year 2020 to 2021.  This failure to safeguard the state’s assets is the basis for the material weakness
finding.  Additionally, MDES fails to acknowledge that the agency was required by the same type federal guidance
referenced in their response to the finding (UIPL Letters and Change Notices) to ensure adequate and proper fraud
detection and prevention techniques were being utilized by the agency.
Moreover, while MDES did receive federal guidance on making unemployment payments more accessible to those
directly impacted by the pandemic, the options provided by the federal government were to either modify or suspend
the work search requirements for individuals or employers directly impacted by COVID-19 due to an illness in the
workplace or direction from a public health official to isolate or quarantine workers.  States were also given the
flexibility to respond to the COVID-19 emergency in a broader way, if they chose to do so (emphasis added by
auditor). (Unemployment Insurance Program Letter Number 13-20, Change 1, Attachment 1, Question 2).  MDES
chose to suspend the requirement for all unemployment claims, and not only those that arose from an illness in the
workplace or from an order to isolate or quarantine workers.  The decision to implement broader flexibility and
completely waive work search requirements were made by MDES.  By MDES’ own admission in other auditee
responses to OSA, MDES stated that they requested the Governor’s Office waive the specific requirements.
Additionally, in each Executive Order (1462, 1481, 1502, and 1510), MDES was given flexibility to reassess and
modify these measures prior to their expiration date in the orders.
Additionally, The Department of Labor (DOL) included program integrity language in all of the major pieces of
guidance associated with the state implementation of the CARES Act programs and provisions (Unemployment
Insurance Program Letter Number 28-20).  Program Integrity requirements for the regular unemployment program
and unemployment programs authorized by the CARES Act were to operate in tandem, and CARES Act program
requires that states must ensure that only eligible individuals receive benefits (Unemployment Insurance Program
Letter Number 23-20).    Both UIPL letters 23-20 and 28-20 specify that the states must make efforts to rapidly and
proactively prevent, detect, and investigate fraudulent activity; establish and recover fraud overpayments; and
pursue criminal and civil prosecution to deter fraud.  Specifically, states were strongly encouraged to implement
the following measures to minimize fraud in the unemployment system:
POST OFFICE BOX 956 • JACKSON, MISSISSIPPI 39205 • (601) 576-2800 • FAX (601) 576-2650
271

POST OFFICE BOX 956 • JACKSON, MISSISSIPPI 39205 • (601) 576-2800 • FAX (601) 576-2650
1) Social Security Administration Cross Match
2) Systematic Alien Verification for Entitlement
3) Incarceration cross matches
4) Internet Protocol Address checks
5) Data Analytics to cross reference claims for indicators of fraud.
Furthermore, many of the most effective tools to deter and detect fraud were available to MDES in the Integrity
Data Hub (IDH), and were available to states for well over a year.  These included:
1) Interstate Suspicious Actor Repository to match claims across states
2) Foreign IP Address verification to receive flags on claims filed from IP addresses outside of the United
States
3) Data Analytic tools
4) Fraud Alert Systems
5) Identify Verification for fraud scoring information, including flagging synthetic identities.
MDES has stated that they utilize the IDH; however, auditors cannot determine how effectively these programs
were utilized considering the high amount of overpayments that were made during fiscal year 2021.  Additionally,
one of the specific fraud risks the UIPL, incarceration cross matches, were not performed by MDES, and resulted
in overpayments to incarcerated individuals.  These incarcerated individuals were able to apply for benefits when
MDES overrode or turned off the automated controls and did not implement any compensating controls to ensure
payments were proper.
In summary, regardless of the federal requirements or Executive Orders issued, MDES is still responsible for
ensuring the accuracy of unemployment claims.  In order to assure the accuracy of those claims, MDES should have
implemented compensating controls to safeguard the unemployment trust fund when other controls were waived or
overrode.  The ultimate responsibility to ensure that unemployment payments were accurately paid out and that
overpayments were kept to a minimum is the responsibility of MDES personnel.
Material Weakness
2021-018
Strengthen Controls over the Overpayments of Employer Contributions.
According to multiple conversations with MDES personnel during the audit, MDES immediately recognized
employer overpayments as “Revenue” and moved the amounts to their Trust Fund from their clearing account,
which is a violation of generally accepted accounting principles as the money has not actually been “earned” until
the passage of the required three years.
Moreover, the MDES response states that they provide three forms of responses to employers regarding their
overpayments; however, this was not the practice in fiscal year 2021 until this matter was brought to Management’s
attention by the auditors.  Auditors informed Management of this issue prior to December 2021, so any action taken
by the MDES Chief of Tax as outlined in the response was in reaction to the lack of controls over employer
contributions, and therefore cannot be used as a validation of the existence of controls.  MDES states that these
overpayments can be refunded to the employer if the employer requests such a refund in writing; or the request
could be given at MDES discretion without a corresponding request.  MDES needs to ensure employers are aware
of overpayments so that they can request these refunds, if so desired.
In conclusion, MDES needs to strengthen controls over employer overpayments so that the State’s employers are
not penalized by an error in MDES’ system and can be refunded overpayments timely.
272

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Auditor’s note to the Corrective Action Plan from Mississippi Department of Employment
Security (MDES) Management
Department of Employment Security – Activities Allowed/Allowable Costs - Material
Weakness/Material Noncompliance
2021-043
Strengthen Controls to Ensure Compliance with Allowable Costs and Activities
Allowed for Coronavirus Relief Funds
STATE OF MISSISSIPPI
OFFICE OF THE STATE AUDITOR
SHAD WHITE
STATE AUDITOR
Much of MDES’ argument that the questioned costs should be removed relies on Mississippi State Law
and disregards the requirements of the federal CRF grant. MDES asserts in their response that, because the
MS Legislature appropriated money to specific types of workforce development, that those expenditure
automatically became eligible for CRF funding.  While the MS Legislature has the authority to appropriate
CRF money to certain types of workforce development, those items still must have met the three allowable
cost requirements of the CRF funds.  State law authorizing equipment purchases cannot overrule the federal
program guidelines.  MDES failed to document or perform adequate due diligence to ensure that the fixed
asset purchases made by their subrecipients met the grant requirements.  These expenditures were not
properly justified with any cost comparison to ensure that the purchase was the most cost-effective solution.
Additionally, MDES could not provide any compelling evidence that these expenditures were necessary
due to the pandemic.
As stated in the finding, MDES could not provide documentation that the “student vouchers” paid for with
CRF monies were necessary due to the pandemic.  MDES could not provide compelling evidence that these
students were new students, that they completed the courses, that the courses were able to benefit the
students in the workforce, or that they were even necessary due to the pandemic.
MDES’ assertion that extensive documentation has been provided to OSA to validate these purchases is
erroneous.  MDES provided documentation to OSA, but that documentation did not support that the charges
were necessary or justified.  The justifications for necessity in some instances was nonsensical, and did not
support that the purchases were necessary due to the pandemic.  In the example noted by MDES in their
response, two lathes costing a total of $313,800 were purchased to assist with displaced internships.  Those
two lathes served 22 students, for a per student price of $14,263.  By fall of 2021, the internships had
resumed – meaning that the lathes were used for one semester.  The college in question provided no
evidence that any other method of fulfilling the internships was considered, and no other options for a more
cost-effective solution rather than buying over $300,000 in fixed assets was contemplated.  In a second
example given by MDES, the college purchased drones to assist in training drone pilots.  MDES response
notes that drones are an emerging technology and that additional drone pilots will be needed by 2025;
POST OFFICE BOX 956 • JACKSON, MISSISSIPPI 39205 • (601) 576-2800 • FAX (601) 576-2650
287

POST OFFICE BOX 956 • JACKSON, MISSISSIPPI 39205 • (601) 576-2800 • FAX (601) 576-2650
however, MDES does not provide any compelling justification as to why these drones and trained drone
pilots were necessary due to the pandemic.
Department
of Employment Security
–
Eligibility
-
Material Weakness/Material
Noncompliance
2021-015
Strengthen Controls to Ensure Compliance with Eligibility Requirements for
Unemployment Insurance
The Office of the State Auditor (OSA) acknowledges that the Mississippi Department of Employment
Security (MDES) was faced with an unexpected and staggering task to ensure unemployment benefits were
paid to individuals during the pandemic.  OSA also acknowledges that certain federal guidelines were
provided that MDES had to comply with in order to receive additional federal unemployment funds.  While
MDES’ response to the finding focuses on the federal requirements and state guidance to waive or ignore
existing controls, MDES fails to identify any way that the agency mitigated any of the fraud risks or
potential for overpayments created by waiving or overriding these controls.  This failure on the part of
MDES resulted in a 301% increase in known overpayments from fiscal year 2020 to 2021.  This failure to
safeguard the state’s assets is the basis for the material weakness finding.  Additionally, MDES fails to
acknowledge that the agency was required by the same type federal guidance referenced in their response
to the finding (UIPL Letters and Change Notices) to ensure adequate and proper fraud detection and
prevention techniques were being utilized by the agency.
Moreover, while MDES did receive federal guidance on making unemployment payments more accessible
to those directly impacted by the pandemic, the options provided by the federal government were to either
modify or suspend the work search requirements for individuals or employers directly impacted by COVID-
19 due to an illness in the workplace or direction from a public health official to isolate or quarantine
workers.  States were also given the flexibility to respond to the COVID-19 emergency in a broader way,
if they chose to do so (emphasis added by auditor). (Unemployment Insurance Program Letter Number
13-20, Change 1, Attachment 1, Question 2).  MDES chose to suspend the requirement for all
unemployment claims, and not only those that arose from an illness in the workplace or from an order to
isolate or quarantine workers.  The decision to implement broader flexibility and completely waive work
search requirements were made by MDES.  By MDES’ own admission in other auditee responses to OSA,
MDES stated that they requested the Governor’s Office waive the specific requirements.  Additionally, in
each Executive Order (1462, 1481, 1502, and 1510), MDES was given flexibility to reassess and modify
these measures prior to their expiration date in the orders.
Additionally, The Department of Labor (DOL) included program integrity language in all of the major
pieces of guidance associated with the state implementation of the CARES Act programs and provisions
(Unemployment Insurance Program Letter Number 28-20).  Program Integrity requirements for the regular
unemployment program and unemployment programs authorized by the CARES Act were to operate in
tandem, and CARES Act program requires that states must ensure that only eligible individuals receive
benefits (Unemployment Insurance Program Letter Number 23-20).    Both UIPL letters 23-20 and 28-20
specify that the states must make efforts to rapidly and proactively prevent, detect, and investigate
fraudulent activity; establish and recover fraud overpayments; and pursue criminal and civil prosecution to
deter fraud.  Specifically, states were strongly encouraged to implement the following measures to minimize
fraud in the unemployment system:
1) Social Security Administration Cross Match
2) Systematic Alien Verification for Entitlement
3) Incarceration cross matches
4) Internet Protocol Address checks
5) Data Analytics to cross reference claims for indicators of fraud.
288

POST OFFICE BOX 956 • JACKSON, MISSISSIPPI 39205 • (601) 576-2800 • FAX (601) 576-2650
Furthermore, many of the most effective tools to deter and detect fraud were available to MDES in the
Integrity Data Hub (IDH), and were available to states for well over a year.  These included:
1) Interstate Suspicious Actor Repository to match claims across states
2) Foreign IP Address verification to receive flags on claims filed from IP addresses outside of
the United States
3) Data Analytic tools
4) Fraud Alert Systems
5) Identify Verification for fraud scoring information, including flagging synthetic identities.
MDES has stated that they utilize the IDH; however, auditors cannot determine how effectively these
programs were utilized considering the high amount of overpayments that were made during fiscal year
2021.
Additionally, one of the specific fraud risks the UIPL, incarceration cross matches, were not
performed by MDES, and resulted in overpayments to incarcerated individuals.  These incarcerated
individuals were able to apply for benefits when MDES overrode or turned off the automated controls and
did not implement any compensating controls to ensure payments were proper.
In summary, regardless of the federal requirements or Executive Orders issued, MDES is still responsible
for ensuring the accuracy of unemployment claims.  In order to assure the accuracy of those claims, MDES
should have implemented compensating controls to safeguard the unemployment trust fund when other
controls were waived or overrode.  The ultimate responsibility to ensure that unemployment payments were
accurately paid out and that overpayments were kept to a minimum is the responsibility of MDES personnel.
Department
of
Employment
Security
–
Subrecipient
Monitoring
-
Material
Weakness/Material Noncompliance
2021-045
Strengthen Controls to Ensure Compliance with Subrecipient Monitoring
Requirements
When documentation of pre-award risk assessments was requested during the audit process, MDES did not
provide any auditable documentation to the auditors.  While MDES stated that they relied upon the same
pre-award risk assessment for the CRF grants as the Workforce Innovation and Opportunity Act (WIOA)
grants, none of the WIOA pre-award risk assessments were provided.  Personnel at MDES stated, when
this documentation was requested, that “there was no risk assessment of the four local areas performed prior
to the awarding of the CRF funds…We work closely with the local areas on a daily basis, perform yearly
subrecipient monitoring, and regularly conduct technical assistance all of which are closely monitored by
MDES management for any indication that we should reassess the locals as anything but low risk. We
understand that this is not documented and therefore does not meet the risk assessment requirement but
wanted to give the context of our actions.”
MDES appears to concur that they did not provide documented evidence to auditors that all required grant
elements were presented to grantees.  It should be noted that this evidence has still not been provided to
auditors as of the date of this report.
Lastly, the questioned costs as outlined in finding 2021-043 verify that MDES did not have proper
monitoring procedures in place to monitor subrecipients of the CRF grant program.  MDES disagrees that
these costs should be questioned (as noted in their response to finding 2021-043); therefore, they do not
concur that their monitoring procedures and controls failed.  OSA has explained, in detail, both in finding
289
2021-043 and in the rebuttal to MDES’ response above why the auditor questioned these expenses.  Please
refer to finding 2021-043 for further information.

(This page left blank intentionally.)

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Auditor’s note to the Corrective Action Plan from Mississippi Department of Transportation
(MDOT) Management
Department of Transportation – Special Test & Provisions – Wage Rate - Material
Weakness/Material Noncompliance
2021-020
Strengthen Controls to Ensure Compliance with Wage Rate Requirements
MDOT states that their Contract Administration Department (CAD) does not have control over when the
contractors or subcontractors submit their weekly statements or when the warrants are issued to contractors.
However, the Code of Federal regulations (as quoted in the finding) requires that MDOT retain control over
those very things.  Even though MDOT did not concur with the finding, they provided some type of
corrective action to help mitigate the issue and OSA will verify that these actions were taken by MDOT in
a future audit.
Department of Transportation – Special Test & Provisions – Quality Assurance Program -
Significant Deficiency/Immaterial Noncompliance
2021-021
Strengthen Controls to Ensure Compliance with Special Test Requirements Related
to the Quality Assurance Program
STATE OF MISSISSIPPI
OFFICE OF THE STATE AUDITOR
SHAD WHITE
STATE AUDITOR
Based on the Corrective Action Plan, MDOT provided pending corrective action for part of the finding and
appeared to concur, even though they stated they did not concur with the finding.  They did not provide
pending corrective action for the portion of the finding for the 20 instances in which the sample was
completed, reviewed, and authorized by the same employee.
MDOT states that the review and authorization of the sample items are not practicable to be segregated;
however, MDOT provided no compensating controls to help ensure that sampling records are accurate,
complete, authorized, or entered into the database correctly.  It should be noted that MDOT personnel
incorrectly coded sampling information four times out of 20.  Some type of additional control procedure to
ensure that the sampling information is correct could prevent further errors.
POST OFFICE BOX 956 • JACKSON, MISSISSIPPI 39205 • (601) 576-2800 • FAX (601) 576-2650
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Auditor’s note to the Corrective Action Plan from Mississippi Division of Medicaid (MDOM)
Management
Division of Medicaid – Eligibility - Material Weakness/Material Noncompliance
2021-041
Strengthen Controls to Ensure Compliance with Eligibility Requirements of the
Medical Assistance Program and the Children’s Health Insurance Program (CHIP)
STATE OF MISSISSIPPI
OFFICE OF THE STATE AUDITOR
SHAD WHITE
STATE AUDITOR
This finding is a repeat finding for MDOM since the Fiscal Year 2019 Single Audit.  MDOM’s State Plan
requires the verification of all income for MAGI-based eligibility determinations, and, as stated in the
finding, MDOM’s Eligibility Policy and Procedure Manual requires the use of an individual’s most recent
tax return to verify self-employment income.   In multiple instances, applicants either misreported self-
employment income or failed to report self-employment income.  MDOM’s failure to adequately capture
and verify self-employment income led to 9 instances were individuals who may not have been eligible to
receive benefits were awarded benefits.  In a similar case reported in last year’s audit, two individuals
fraudulently applied for and received Medicaid benefits, namely by concealing self-employment income
on their tax returns.  These instances resulted in over $70,000 in unentitled benefits being paid.  In order to
attempt to reduce ineligible individuals from receiving benefits, MDOM should strengthen their controls
and perform due diligence to ensure that self-employment income is properly verified.  MDOM repeatedly
states that they do not have access to state tax return information; however, their own policy states that they
will use tax return data to verify self-employment income.
As explained to MDOM by auditors, the questioned costs remained even though MDOM was unable to
remove individuals from the program due to COVID-19.  The auditor asserts that, if MDOM had performed
proper due diligence when initially evaluating these individuals, they may have never been accepted into
the program; therefore, the questioned costs remain.  The auditor concurs that OSA is not able to know the
recipients were actually ineligible; conversely, MDOM is not able to know the recipients are actually
eligible due to their own failed compliance with policies.  Eligibility for these individuals is, at best,
questionable, which is why the payments made are questioned costs.
Additionally, MDOM stated that they do not concur with the section of the finding regarding MDES
verifications.  To date MDOM has offered no documentation to support their assertion that these individuals
were verified through the MDES system.
Division of Medicaid – Special Tests & Provisions – Provider Eligibility - Material
Weakness/Material Noncompliance
POST OFFICE BOX 956 • JACKSON, MISSISSIPPI 39205 • (601) 576-2800 • FAX (601) 576-2650
329

2021-042
Strengthen Controls to Ensure Compliance with Provider Eligibility Requirements
of the Children’s Health Insurance Program (CHIP)
In the corrective action plan, MDOM states “MDOM requires the MCO to conduct screenings of all
providers; however, the MCO may delegate provider credentialing activities, which includes provider
screening.” As noted in the finding, Molina delegates credentialing and allows providers to “credential
themselves”. The Medicaid Provider Enrollment Compendium (MPEC) states that allowing managed care
organizations to delegate provider credentialing activities to allow providers to “credential themselves” is
not in compliance with 42 CFR 455. This arrangement creates a conflict of interest and does not allow the
MDOM to maintain appropriate oversite.
POST OFFICE BOX 956 • JACKSON, MISSISSIPPI 39205 • (601) 576-2800 • FAX(601)576-2650
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336

Auditor’s note to the Corrective Action Plan from Mississippi Emergency Management
Agency (MEMA)
MEMA – Activities Allowed/Allowable Costs - Material Weakness/Material Noncompliance
2021-046
Strengthen Controls to Ensure Compliance with Allowable Costs and Activities Allowed
Requirements for Coronavirus Relief Funds.
STATE OF MISSISSIPPI
OFFICE OF THE STATE AUDITOR
SHAD WHITE
STATE AUDITOR
MEMA’s provided analysis of the rent vs. purchase option was only provided after the initial finding was
presented to Management.  When the analysis was examined, auditors determined that it relied on
inaccurate underlying data.  The analysis provided that it would cost $2,059,200 to lease storage facilities
in one year.  However, this number was calculated by taking the current price of one warehouse that housed
25% of the materials and extrapolating it to encompass a price for 100% of the materials.  The storage cost
of this facility was $42,900.  MEMA also presented emails illustrating that there was a warehouse available
to rent that supplied half of the needed space for $30,000 a month for rent, and another facility for a fourth
of the needed space for $5,000 a month.  If extrapolations were made with this data, even if using the more
expensive building as the base data, the cost of leasing the building for two years would come to $1,440,000,
which is almost a million less than the initial cost of the building.
Moreover, the analysis provided by MEMA does not consider the additional costs that were associated with
the State Emergency Logistical Operations Center (SELOC) building to prepare the building for initial use.
These costs amounted to at least $518,042 in additional costs.  Lastly, the analysis does not factor in that
the building MEMA used for extrapolation is not a storage facility, but a nationwide distribution center that
also charged for pallet rental, the cost of moving pallets in and out, etc.  Additionally, the rental cost of the
Gulf Relay facility varied from month to month based on these expenditures and the amount of storage
utilized.  The prices varied from approximately $27,000 monthly to $50,000 monthly.
It appears to the auditor that MEMA used data in their analysis that would lead to the conclusion to purchase
the building, rather than to let the analysis dictate the most cost effective option. While MEMA may argue
that the building purchase was a better long term business decision for the agency, the purpose of the
Coronavirus Relief Funds (CRF) was to provide immediate relief for the pandemic and not provide long
term business solutions.
MEMA’s supporting documentation mainly relied on Mississippi State Law to validate the purchase of the
building, stating that the Legislature allowed them to purchase the building via legislation that was passed
during the fiscal year 2020 legislative session; however, state law cannot supplant federal law in regards to
a federal grant.
POST OFFICE BOX 956 • JACKSON, MISSISSIPPI 39205 • (601) 576-2800 • FAX (601) 576-2650
337

It should be reiterated that MEMA publicly stated that this facility was for future pandemics, and a
permanent office space for the procurement staff of MEMA, thereby verifying its intended use and purpose
extended past the period of performance.
MEMA – Subrecipient Monitoring - Material Weakness/Material Noncompliance
2021-047
Strengthen Controls to Ensure Terms and Conditions are stated in Subrecipient Subaward
Documents.
MEMA’s argument in their response relies on the fact that the MS Legislature appropriated CRF funds for
state program called “MERP”.  The program was designed to provide CRF monies to the counties and
municipalities in Mississippi.  Regardless of the appropriation of the Legislature, MEMA is still required
to follow subrecipient monitoring regulations as outlined in Uniform Grant Guidance, as required by the
Department of the Treasury.
POST OFFICE BOX 956 • JACKSON, MISSISSIPPI 39205 • (601) 576-2800 • FAX(601)576-2650
338

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342

IV. INDICES

(This page left blank intentionally.)

STATE OF MISSISSIPPI
INDEX OF FINANCIAL STATEMENT FINDINGS AND RESPONSES
FOR THE YEAR ENDED JUNE 30, 2021
FINANCIAL STATEMENT FINDINGS AND RECOMMENDATIONS (by finding number)
FINDING
NUMBER
PAGE
NUMBER
STATE GRANTEE AGENCY NAME
2021-001
69
Department of Human Services
2021-002
6
Department of Finance and Administration
2021-003

Department of Finance and Administration
2021-004
71
Department of Marine Resources
2021-005

Department of Corrections
2021-006

Department of Education
2021-007
75
Division of Medicaid
2021-008
57
Department of Employment Security
2021-009

Department of Public Safety
2021-016
5
Department of Employment Security
2021-017
6
Department of Employment Security
2021-018

Department of Employment Security
MANAGEMENT RESPONSES AND CORRECTIVE ACTION PLANS (by State Agency)
Department of Corrections: Page 245
Department of Education: Page 247
Department of Employment Security: Page 263
Auditors Response to Employment Security Corrective Action Plan: 271
Department of Finance and Administration: Page 291
Department of Human Services: Page 301
Department of Marine Resources: Page 9
Department of Public Safety: Page 11
Division of Medicaid: Page 21
343

(This page left blank intentionally.)

STATE OF MISSISSIPPI
INDEX OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTS
LISTED BY FEDERAL DEPARTMENT
FOR THE YEAR ENDED JUNE 30, 2021
 U.S. Department of Agriculture: Page
 U.S. Department of Commerce: None
 U.S. Department of Defense: None
 U.S. Department of Housing and Urban Development:  None
 U.S. Department of the Interior:   None
 U.S. Department of Justice: None
 U.S. Department of Labor: Page41
 U.S. Department of Transportation: Page3
 U.S. Department of Treasury: Page71
 Appalachian Regional Commission: None
 National Foundation on the Arts and Humanities:  None
 Small Business Administration:  None
 U.S. Department of Veterans Affairs: Page7
 Environmental Protection Agency:  None
 U.S. Department of Energy: None
 U.S. Department of Education: Page5
 Gulf Coast Ecosystem Restoration Council: None
 Election Assistance Commission: None
 U.S. Department of Health and Human Services: Page9
 Corporation for National and Community Service: None
 Executive Office of the President: None
 Social Security Administration:  None
 U.S. Department of Homeland Security: Page7
Note:  Federal Departments are listed in order of their respective numerical Assistance Listing Number.
345

(This page left blank intentionally.)

STATE OF MISSISSIPPI
INDEX OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTS
LISTED BY STATE GRANTEE AGENCY
FOR THE YEAR ENDED JUNE 30, 2021
 Agriculture and Commerce: PageV71-173
 Animal Health: None
 Archives and History: None
 Arts Commission: None
 Attorney General: None
 Board for Community and Junior Colleges: None
 Corrections: None
 East MS State Hospital: None
 Education: Pages5-106736
 Emergency Management: Pages83-189
 Employment Security: Pages7863
 Environmental Quality: None
 Finance and Administration: PageV71-198
14 Forestry Commission: None
 Governor’s Office: None
 Health: Pages9-110
 Human Services: Pages531121
 Insurance: None
 Library Commission: None
 Marine Resources: None
 Medicaid: PageV3-134
 Mental Health: None
 Military Department: None
 MS Development Authority: None
 MS State Hospital: None
 Oil and Gas Board: None
 Board of Pharmacy: None
 Public Safety: None
 Public Service Commission: None
 Public Utilities Staff: Pages89-191
 Rehabilitation Services: None
 Secretary of State: None
 Soil and Water Conservation Commission: None
 Supreme Court: None
 Transportation: Pages3-167
 Treasury: None
 Veterans Affairs: Pages91-1937-209
 Wildlife, Fisheries and Parks: None
Note:  If findings and recommendations related to and agency appear on more than one page in a
sequence,only the first page is indicated in the above reference.
347

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STATE OF MISSISSIPPI
INDEX OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTS
LISTED BY FINDING NUMBER
FOR THE YEAR ENDED JUNE 30, 2021
FINDING
PAGE
NUMBER
NUMBER
STATE GRANTEE AGENCY NAME
2021-010
Department of Human Services
2021-011
5
Department of Human Services
2021-012
12
Department of Human Services
2021-013
64
Department of Human Services
2021-014
98
Department of Human Services
2021-015
41
Department of Employment Security
2021-019
13
Department of Transportation
2021-020
5
Department of Transportation
2021-021
16
Department of Transportation
2021-022
17
Department of Employment Security
2021-023
19
Department of Employment Security
2021-024
14
Department of Employment Security
2021-025
15
Department of Employment Security
2021-026
152
Department of Employment Security
2021-027
17
Department of Employment Security
2021-028
17
Department of Employment Security
2021-029
1950
Department of Employment Security
2021-030
93
Department of Finance and Administration
2021-031
194
            Department of Finance and Administration
2021-032
16
            Department of Finance and Administration
2021-033
19
Department of Health
2021-034

Department of Education
2021-035
8
Department of Education
2021-036
100
Department of Education
2021-037
12
Department of Education
2021-038
14
Department of Education
2021-039
13
Division of Medicaid
2021-040
14
Division of Medicaid
2021-041
16
Division of Medicaid
2021-042
131
Division of Medicaid
2021-043
176
DFA/Department of Employment Securities
2021-044
573
DFA/Department of Education
2021-045
180
DFA/Department of Employment Securities
2021-046
183
DFA/Emergency Management Agency
2021-047
15
DFA/Emergency Management Agency
2021-048
17
DFA/Emergency Management Agency
2021-049
19
DFA/Public Utilities Staff
2021-050
171
Department of Agriculture and Commerce
349
111

STATE OF MISSISSIPPI
INDEX OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTS
LISTED BY FINDING NUMBER
FOR THE YEAR ENDED JUNE 30, 2021
FINDING
PAGE
NUMBER
NUMBER
STATE GRANTEE AGENCY NAME
2021-051
7
Veterans Affairs Board
2021-052
191
Veterans Affairs Board
350

STATE OF MISSISSIPPI
INDEX OF MANAGEMENT RESPONSES TO FEDERAL AWARD FINDINGS
AND CORRECTIVE ACTION PLANS
LISTED BY STATE GRANTEE AGENCY
FOR THE YEAR ENDED JUNE 30, 2021
 Agriculture and Commerce: Page41
 Animal Health: None
 Archives and History: None
 Arts Commission: None
 Attorney General: None
 Board for Community and Junior Colleges: None
 Corrections: None
 East MS State Hospital: None
 Education: Page9
 Emergency Management: Page31
 Employment Security: Page73
 Environmental Quality: None
 Finance and Administration: Page95
 Forestry Commission: None
 Governor’s Office: None
 Health: Page9
 Human Services: Page303
 Insurance: None
 Library Commission: None
 Marine Resources: None
 Medicaid: Page23
 Mental Health: None
 Military Department: None
 Mississippi Development Authority: None
 MS State Hospital: None
 Oil and Gas Board: None
 Board of Pharmacy: None
 Public Safety: None
 Public Service Commission: None
 Public Utilities Staff: Page39
 Rehabilitation Services: None
 Secretary of State: None
 Soil and Water Conservation Commission: None
 Supreme Court: None
 Transportation: Page13
 Treasury: None
 Veterans Affairs: Page41
 Wildlife, Fisheries and Parks: None
351

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V. ACKNOWLEDGMENTS

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ACKNOWLEDGMENTS
REPORT PREPARED BY:
Shad White, State Auditor
Stephanie C. Palmertree, CPA, CGMA, Deputy State Auditor
Jason K. Ashley, Deputy Director, Financial and Compliance Audit Division
Angela Mire, CPA, Director, Agency Audit Section
Many thanks to the following managers, supervisors and field staff of the Office of the State Auditor for their
efforts in gathering information contained in this Single Audit Report:
Managers
Jeremy Ashley, CFE
Ashley Jolly, CPA
Alan Jarrett
John T. Newell, CPA
Supervisors
Virginia Anderson

Emily Mathis
Richard Aultman, CPA
Lisa Meade, CPA
Allen Case, CPA
Jeremy Miller, CPA
Brianna Dang
Clayton Southerland, CPA
Kari Horn

Vincent Steiner
Field Staff
Chad Allgood
John Simpson
LaSabre Charleston, CPA
Brittany Stanford
Levi Hill
Elevia Tate
Joshua Kastner
Na Venator, CPA
Shavonda Lott
Michael Walker, CPA, CFE
Dana McMorris
Interdivisional Audit Staff
Michael Torres, CPA - Director
LaDonna Johnson, CISA
Quality Assurance Staff
Leigh Taylor, CPA – Director
Kylie Joiner, CPA
We would also like to thank staff members of the Office of Financial Reporting, Department of Finance and
Administration for their assistance through compilation of the Schedule of Expenditures of Federal Awards.
Special thanks to Melody Crews, Caralee Ferrell, and Jacqueline Thomas - the Administrative Staff of the Financial
and Compliance Division - who tirelessly support us during our audits.  Lastly, thank you to Jimmie Moore, who
keeps our computers and copiers running year round.
353

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Office of the State Auditor
Post Office Box 956
Jackson, Mississippi  39205-0956
www.osa.state.ms.us
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