State of Florida Coronavirus Relief Fund Desk Review (OIG-CA-23-029) — Treasury OIG, July 20, 2023

Summary

Treasury Office of Inspector General desk review memorandum OIG-CA-23-029, dated July 20, 2023, on the State of Florida's use of Coronavirus Relief Fund proceeds from Assistant Inspector General for Audit Deborah L. Harker, performed under contract by Castro & Company, LLC. Treasury paid Florida $5,855,807,379.80 from the fund. Castro reviewed a selection of 64 transactions and identified total questioned costs of $893,154,357.89 in unsupported expenditures, finding that payments to individuals complied but contracts, grants, transfers and aggregate reporting did not comply with the CARES Act and Treasury's Guidance. It rates the risk of unallowable use of funds as high and recommends that Treasury OIG pursue missing documentation or recoupment. Florida management stated it can support the costs but needs more time because the documentation lies with the counties.

Summary drafted by a model from the document's text below and checked by script against that text before publication. It is a navigation aid, not a reading of what the document proves. Where AI is used

Full text

OFFICE OF
INSPECTOR GENERAL
DEPARTM ENT OF THE TREASURY
WASHINGTON, D.C.  20220

July 20, 2023

MEMORANDUM FOR JESSICA MILANO, ACTING CHIEF RECOVERY OFFICER,
DEPARTMENT OF THE TREASURY

FROM:

Deborah L. Harker /s/
Assistant Inspector General for Audit

SUBJECT:
Desk Review of State of Florida’s Use of Coronavirus
Relief Fund Proceeds (OIG-CA-23-029)

Please find the attached desk review memorandum1 on the State of Florida’s use
of Coronavirus Relief Fund (CRF) proceeds. The CRF is authorized under Title VI of
the Social Security Act, as amended by Title V, Division A of the Coronavirus Aid,
Relief, and Economic Security Act (CARES Act). Under a contract monitored by
our office, Castro & Company, LLC (Castro), a certified independent public
accounting firm, performed the desk review. Castro performed the desk review in
accordance with the Council of the Inspectors General on Integrity and Efficiency
Quality Standards for Federal Offices of Inspector General standards of
independence, due professional care, and quality assurance.

In its desk review, Castro found that the State of Florida personnel timely
completed the required quarterly Financial Progress Reports (FPR) for Cycles 12
through 5.3 Castro personnel reviewed documentation for a selection of 64
transactions reported in the quarterly reports and found that the State of Florida
personnel could not provide the necessary documentation to support certain
transactions resulting in total unsupported expenditures of $893,154,357.89 (see
attached schedule of monetary benefits).

Castro recommends the Department of the Treasury Office of Inspector General
(OIG) pursue obtaining missing documentation from Florida management and
ensure reporting corrections are made, or whether recoupment of funds is
necessary. Further, based on Florida’s responsiveness to Treasury OIG’s requests
and its ability to provide sufficient documentation, Castro recommends Treasury
OIG determine if a full-scope audit over Florida’s use of its CRF proceeds is

1 The Coronavirus Aid, Relief, and Economic Security Act (CARES Act) assigned the Department of
the Treasury Office of Inspector General with responsibility for compliance monitoring and
oversight of the receipt, disbursement, and use of Coronavirus Relief Fund (CRF) payments. The
purpose of the desk review is to perform monitoring procedures of the prime recipient’s receipt,
disbursement, and use of CRF proceeds as reported in the grants portal on a quarterly basis.
2 Calendar quarter ending June 30, 2020.
3 Calendar quarter ending June 30, 2021.

Page 2

feasible. Castro and Treasury OIG personnel met with Florida management to
discuss the questioned costs and reporting issues. Florida Management stated
they are able to support the questioned costs, but would need significantly more
time to collect the support since they utilize a decentralized management
approach and the documentation currently lies with the counties and not the state.
In addition, Florida stated that they have made some corrections to their reporting
in subsequent cycles and would work with Treasury OIG to ensure all corrections
have been made.

In connection with our contract with Castro, we reviewed Castro’s desk review
memorandum and related documentation and inquired of its representatives. Our
review, as differentiated from an audit performed in accordance with generally
accepted government auditing standards, was not intended to enable us to
express an opinion on the State of Florida’s use of the CRF proceeds. Castro is
responsible for the attached desk review memorandum and the conclusions
expressed therein. Our review found no instances in which Castro did not comply,
in all material respects, with the Council of the Inspectors General on Integrity and
Efficiency’s Quality Standards for Federal Offices of Inspectors General.

We appreciate the courtesies and cooperation provided to Castro and our staff
during the desk review. If you have any questions or require further information,
please contact me at (202) 486-1420, or a member of your staff may contact Lisa
DeAngelis, Deputy Assistant Inspector General for Audit, at (202) 487-8371.

cc:     Michelle A. Dickerman, Deputy Assistant General Counsel, Department of
the Treasury
Victoria Collin, Chief Compliance & Finance Officer, Office of Recovery
Programs, Department of the Treasury

Chris Spencer, Director of Policy and Budget, State of Florida
Christopher Sun, Director of Data and Reporting, Office of Recovery
Programs, Department of the Treasury

Wayne Ference, Partner, Castro & Company, LLC

Page 3

Attachment

Schedule of Monetary Benefits

According to the Code of Federal Regulations,4 a questioned cost is a cost that is
questioned due to a finding:

(a) which resulted from a violation or possible violation of a statute,
regulation, or the terms and conditions of a Federal award, including for
funds used to match Federal funds;

(b) where the costs, at the time of the review, are not supported by
adequate documentation; or

(c) where the costs incurred appear unreasonable and do not reflect the
actions a prudent person would take in the circumstances.

Questioned costs are to be recorded in the Department of the Treasury’s
(Treasury) Joint Audit Management Enterprise System (JAMES).5 The amount will
also be included in the Office of Inspector General (OIG) Semiannual Report to
Congress. It is Treasury management's responsibility to report to Congress on the
status of the agreed to recommendations with monetary benefits in accordance
with 5 USC Section 405(b) of the Inspector General Act of 1978.

Recommendation

Questioned Costs
Recommendation No. 1

$893,154,357.89

The questioned cost represents amounts provided by Treasury under the
Coronavirus Relief Fund. As discussed in the attached desk review,
$893,154,357.89 is the State of Florida’s expenditures reported in the grant-
reporting portal that lacked supporting documentation.

4 2 CFR § 200.84 – Questioned Cost
5 JAMES is Treasury’s audit recommendation tracking system.

Desk Review of the State of Florida
1

1635 King Street
Alexandria, VA 22314
Phone: 703.229.4440
Fax: 703.859.7603
www.castroco.com

July 20, 2023

OIG-CA-23-029

MEMORANDUM FOR DEBORAH L. HARKER,
ASSISTANT INSPECTOR GENERAL FOR AUDIT

FROM:
Wayne Ference

Partner, Castro & Company, LLC

SUBJECT:
Desk Review of the State of Florida

On September 2, 2021, we initiated a desk review of the State of Florida’s (Florida)
use of the Coronavirus Relief Fund (CRF) authorized under Title VI of the Social
Security Act, as amended by Title V, Division A of the Coronavirus Aid, Relief, and
Economic Security Act (CARES Act).1 The objective of our desk review was to
evaluate Florida’s documentation supporting its uses of CRF proceeds as reported
in the GrantSolutions2 portal and to assess the risk of unallowable use of funds.
The scope of our desk review was limited to obligation and expenditure data for
the period of March 1, 2020 through June 30, 2021 as reported in Cycles 13
through 54 in the GrantSolutions portal.

As part of our desk review, we performed the following:
1) reviewed Florida’s quarterly Financial Progress Reports (FPR) submitted in
the GrantSolutions portal through June 30, 2021;
2) reviewed the Department of the Treasury’s (Treasury) Coronavirus Relief
Fund Guidance as published in the Federal Register on January 15, 2021;5

1 P.L. 116-136 (March 27, 2020).
2 GrantSolutions, a grant and program management Federal shared service provider under the
U.S. Department of Health and Human Services, developed a customized and user-friendly
reporting solution to capture the use of CRF payments from recipients.
3 Calendar quarter ending June 30, 2020.
4 Calendar quarter ending June 30, 2021.
5 Coronavirus Relief Fund Guidance as published in the Federal Register (January 15, 2021)
https://home.treasury.gov/system/files/136/CRF-Guidance-Federal-Register_2021-00827.pdf

Desk Review of the State of Florida
2

3) reviewed Treasury Office of Inspector General’s (OIG) Coronavirus Relief
Fund Frequently Asked Questions Related to Reporting and
Recordkeeping;6
4) reviewed Treasury OIG’s monitoring checklists7 of Florida’s quarterly FPR
submissions for reporting deficiencies;
5) reviewed other audit reports issued, such as Single Audit reports, and
those issued by the Government Accountability Office and other applicable
Federal agency OIGs for internal control or other deficiencies that may
pose risk or impact Florida’s uses of CRF proceeds;
6) reviewed Treasury OIG Office of Investigations (OI), the Council of the
Inspectors General on Integrity and Efficiency Pandemic Response
Accountability Committee (PRAC),8 and Treasury OIG Office of Counsel
input on issues that may pose risk or impact Florida’s use of CRF proceeds;
7) interviewed key personnel responsible for preparing and certifying
Florida’s GrantSolutions portal quarterly FPR submissions, as well as
officials responsible for obligating and expending CRF proceeds;
8) made a non-statistical selection of Contracts, Grants, Transfers,9 Direct
Payments, Aggregate Reporting,10 and Aggregate Payments to Individuals11
data identified through GrantSolutions reporting; and
9) evaluated documentation and records used to support Florida’s quarterly
FPRs.

6 Department of the Treasury Office of Inspector General Coronavirus Relief Fund Frequently Asked
Questions Related to Reporting and Recordkeeping OIG-20-028R; March 2, 2021.
7 The checklists are used by Treasury OIG to monitor the progress of prime recipient reporting in
the GrantSolutions portal. GrantSolutions quarterly submission reviews are designed to identify
material omissions and significant errors, and where necessary, include procedures for notifying
prime recipients of misreported data for timely correction. Treasury OIG follows the CRF Prime
Recipient Quarterly GrantSolutions Submissions Monitoring and Review Procedures Guide, OIG-
CA-20-029R to monitor the prime recipients quarterly.
8 Section 15010 of P.L. 116-136 established the Pandemic Response Accountability Committee
within the Council of the Inspectors General on Integrity and Efficiency to promote transparency
and conduct and support oversight of covered funds (see Footnote 18 for a definition of covered
funds) and the coronavirus response to (1) prevent and detect fraud, waste, abuse, and
mismanagement; and (2) mitigate major risks that cut across program and agency boundaries.
9 A transfer to another government entity is a disbursement or payment to a government entity
that is legally distinct from the prime recipient.
10 Recipients are required to report CRF transactions greater than or equal to $50,000 in detail in
the GrantSolutions portal. Transactions less than $50,000 can be reported as an aggregate lump-
sum amount by type (contracts, grants, loans, direct payments, and transfers to other government
entities).
11 Obligations and expenditures for payments made to individuals, regardless of amount, are
required to be reported in the aggregate in the GrantSolutions portal to prevent inappropriate
disclosure of personally identifiable information.

Desk Review of the State of Florida
3

Based on our review of Florida’s documentation supporting the uses of its CRF
proceeds as reported in the GrantSolutions portal, we found that uses of CRF
proceeds for Aggregate Payments to Individuals complied with the CARES Act
and Treasury’s Guidance. However, we determined that the expenditures related
to Contracts greater than or equal to $50,000, Grants greater than or equal to
$50,000, Transfers greater than or equal to $50,000, and Aggregate Reporting less
than $50,000 did not comply with the CARES Act and Treasury’s Guidance. We
also found that Direct Payments greater than or equal to $50,000 complied with
the CARES Act but did not comply with Treasury’s Guidance.

Based on the totality of the work performed, we identified total questioned costs
of $893,154,357.89 consisting of $892,966,838.65 determined through our detailed
transaction testing and $187,519.24, which we did not test in detail but determined
through review of general ledger records compared to amounts reported in
GrantSolutions. We determined that Florida’s risk of unallowable use of funds is
high. Castro recommends Treasury OIG pursue obtaining missing documentation
from Florida management and ensure reporting corrections are made, or whether
recoupment of funds is necessary. Further, based on Florida’s responsiveness to
Treasury OIG’s requests and its ability to provide sufficient documentation, we
recommend Treasury OIG determine if a full-scope audit over Florida’s use of its
CRF proceeds is feasible.

Non-Statistical Transaction Selection Methodology

Treasury issued a CRF payment to Florida of $5,855,807,379.80. As of Cycle 5,12
Florida’s cumulative obligations and expenditures were $5,855,807,379.80 and
$5,813,435,660.79, respectively. Florida’s cumulative obligations and
expenditures, by payment type, as reported in GrantSolutions through Cycle 5 are
summarized below:

Payment Type
Cumulative
Obligations
Cumulative
Expenditures
Contracts >= $50,000
$    135,879,824.91
$    134,514,542.52
Grants >= $50,000
$ 1,397,653,855.34
$ 1,356,647,418.72
Loans >= $50,000
$                            -
$                            -
Transfers >= $50,000
$ 2,368,625,461.00
$ 2,368,625,461.00
Direct Payments >= $50,000
$      65,983,407.72
$      65,983,407.72
Aggregate Reporting < $50,000
$      46,905,800.08
$      46,905,800.08
Aggregate Payments to Individuals
(In Any Amount)
$ 1,840,759,030.75
$ 1,840,759,030.75
Totals
$ 5,855,807,379.80
$ 5,813,435,660.79

12 Calendar quarter ending June 30, 2021.

Desk Review of the State of Florida
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Castro made a non-statistical selection of Contracts greater than or equal to
$50,000, Grants greater than or equal to $50,000, Transfers greater than or equal
to $50,000, Direct Payments greater than or equal to $50,000, Aggregate Reporting
less than $50,000, and Aggregate Payments to Individuals. Selections were made
using auditor judgment based on information and risks identified in reviewing
audit reports, the GrantSolutions portal reporting anomalies13 identified by the
Treasury OIG CRF monitoring team, and review of Florida’s FPR submissions.
Castro noted Florida did not obligate or expend CRF proceeds to Loans greater
than or equal to $50,000; therefore, we did not make a selection of transactions
from this category.

The number of transactions (61) we selected to test were based on Florida’s total
CRF award amount and our overall risk assessment of Florida. To allocate the
number of transactions (61) by payment type (Contracts greater than or equal to
$50,000, Grants greater than or equal to $50,000, Transfers greater than or equal
to $50,000, Direct Payments greater than or equal to $50,000, Aggregate Reporting
less than $50,000, and Aggregate Payments to Individuals), we compared the
payment type dollar amounts as a percentage of cumulative obligations for
Cycle 5.14 Additionally, Treasury OIG identified four anomalies that consisted of
two outliers15 and two transactions representing a potential duplicate payment.
Castro determined that out of the two outliers, one outlier was already included
within Castro’s selection for the payment type Grants greater than or equal to
$50,000. The anomalies identified by Treasury OIG resulted in three additional
selections for Castro’s desk review, for a total of 64 transaction selections.

Background

The CARES Act appropriated $150 billion to establish the CRF. Under the CRF,
Treasury made payments for specified uses to States and certain local
governments; the District of Columbia and U.S. Territories, including the
Commonwealth of Puerto Rico, the United States Virgin Islands, Guam, American
Samoa, and the Commonwealth of the Northern Mariana Islands; and Tribal
governments. Treasury issued a CRF payment to Florida for $5,855,807,379.80.

13 Treasury OIG has a pre-defined list of risk indicators that are triggered based on data submitted
by recipients in the FPR submissions that meet certain criteria. Castro reviewed these results
provided by Treasury OIG for Florida.
14 Calendar quarter ending June 30, 2021.
15 Outliers were identified by Treasury OIG personnel.  Based on statistical modeling, these
transactions were identified as having a high dollar amount relative to transactions at similar
points in time, with similar award descriptions, and that the same prime recipient disbursed.

Desk Review of the State of Florida
5

The CARES Act stipulates that a recipient may only use the funds to cover costs
that—
(1) are necessary expenditures incurred due to the public health emergency
with respect to the coronavirus disease 2019 (COVID-19);
(2) were not accounted for in the budget most recently approved as of
March 27, 2020; and
(3) were incurred between March 1, 2020 and December 31, 2021.16

Section 15011 of the CARES Act, requires each covered recipient17 to submit to
Treasury and the PRAC, no later than 10 days after the end of each calendar
quarter, a report that contains (1) the total amount of large covered funds18,19
received from Treasury; (2) the amount of large covered funds received that were
expended or obligated for each project or activity; (3) a detailed list of all projects
or activities for which large covered funds were expended or obligated; and (4)
detailed information on any level of sub-contracts or sub-grants awarded by the
covered recipient or its sub-recipients.

The CARES Act assigned Treasury OIG the responsibility for compliance
monitoring and oversight of the receipt, disbursement, and use of CRF proceeds.
Treasury OIG also has authority to recoup funds in the event that it is determined
a recipient failed to comply with requirements of subsection 601(d) of the Social
Security Act, as amended, (42 U.S.C. 801(d)).

Desk Review Results

We reviewed Florida’s quarterly FPR submissions through June 30, 2021, and
determined that Florida submitted all its reports on a timely basis. Based on our
review of Florida’s documentation supporting the uses of its CRF proceeds as
reported in the GrantSolutions portal, we determined that Aggregate Payments to
Individuals transactions selected for detailed review were supported by

16 P.L. 116-260 (December 27, 2020). The period of performance end date of the CRF was extended
through December 31, 2021 by the Consolidated Appropriations Act, 2021. The period of
performance end date for tribal entities was further extended to December 31, 2022 by the State,
Local, Tribal, and Territorial Fiscal Recovery, Infrastructure, and Disaster Relief Flexibility Act,
Division LL of the Consolidated Appropriations Act, 2023, P.L. 117-328, December 29, 2022, 136
Stat. 4459.
17 Section 15011 of P.L. 116-136 defines a covered recipient as any entity that receives large
covered funds and includes any State, the District of Columbia, and any territory or possession of
the United States.
18 Section 15010 of P.L. 116-136 defines covered funds as any funds, including loans, that are made
available in any form to any non-Federal entity, not including an individual, under Public Laws 116-
123, 127, and 136, as well as any other law which primarily makes appropriations for Coronavirus
response and related activities.
19 Section 15011 of P.L. 116-136 defines large covered funds as covered funds that amount to more
than $150,000.

Desk Review of the State of Florida
6

documentation and were allowable expenditures in accordance with the CARES
Act and Treasury’s guidance. We also found that Aggregate Payments to
Individuals and Direct Payments greater than or equal to $50,000 were necessary
expenditures due to the COVID-19 public health emergency, were not accounted
for in the budget most recently approved as of March 27, 2020, and were incurred
during the covered period.

However, we determined that the expenditures related to Contracts greater than
or equal to $50,000, Grants greater than or equal to $50,000, Transfers greater
than or equal to $50,000, and Aggregate Reporting less than $50,000 did not
comply with the CARES Act and Treasury’s Guidance. We also found that Direct
Payments greater than or equal to $50,000 complied with the CARES Act but did
not comply with Treasury’s Guidance. The transactions selected for testing were
not selected statistically, and therefore results cannot be extrapolated to the total
universe of transactions.

The following table includes the total cumulative expenditure population amount
and the cumulative expenditure amount tested. Additionally, this table includes a
summary of Castro’s testing results over expenditure transaction balances. Within
the table below, we have included a summary of unsupported and ineligible
expenditures identified as questioned costs. These expenditures do not comply
with the CARES Act and Treasury’s Guidance. Additionally, in the far-right
column, we have identified the expenditures that Castro tested without exceptions
noted. See Desk Review Results section below this table for a detailed discussion
of questioned costs and other issues identified throughout the course of our desk
review.

Desk Review of the State of Florida
7

Summary of Expenditure Testing and Recommended Results – As of Cycle 520
Payment Type
Cumulative
Expenditure
Population Amount
Cumulative
Expenditure Tested
Amount
Unsupported
Reconciling
Items21
Unsupported
Exception
Ineligible
Exception
Castro Reviewed
Value Without
Exception
(per Support)
Contracts >= $50,000
 $     134,514,542.52
 $       72,604,525.96
 $                  -     $   72,604,525.96
 $                 -    $                             -
Grants >= $50,000
 $  1,356,647,418.72
 $     502,722,649.55
 $                  -     $ 337,242,323.50
 $                 -    $     165,480,326.05
Loans >= $50,000
 $                         -
 $                        -
 $                  -     $                         -
 $                 -    $                             -
Transfers >= $50,000
 $  2,368,625,461.00
 $  1,465,595,089.00
 $                  -     $ 481,977,654.00
 $                 -    $     983,617,435.00
Direct Payments >=
$50,000
 $       65,983,407.72
 $            981,141.50
 $                  -     $                        -
 $                 -    $            981,141.50
Aggregate
Reporting < $50,000
 $       46,905,800.08
 $         3,604,632.50
 $  187,519.24
 $     1,142,335.19
 $                 -    $         2,462,297.31
Aggregate
Payments to
Individuals (in any
amount)
 $  1,840,759,030.75
 $  1,096,287,986.91
 $                  -     $                        -
 $                 -    $  1,096,287,986.91
Totals
 $  5,813,435,660.79
 $  3,141,796,025.42
 $  187,519.24
 $ 892,966,838.65
 $                 -    $  2,248,829,186.77

Contracts Greater Than or Equal to $50,000

Based on the documentation reviewed and entries in GrantSolutions, we
determined Florida’s Contracts greater than or equal to $50,000 did not comply
with the CARES Act and Treasury’s Guidance. We question $72,604,525.96 of
expenditures related to one transaction over which we performed testwork
because of a lack of supporting documentation. For that contract, Castro obtained
and reviewed general ledger (GL) detail files and high-level summaries, which
agreed to the cumulative expenditure amounts reported in GrantSolutions.
However, Florida did not provide any invoice documentation to support the
expenditure amounts. Without detailed invoices, we were unable to assess the
accuracy and eligibility of cumulative expenditures incurred using CRF funding.
Additionally, without invoice expenditure support, we were unable to confirm the
expenditure category and associated project for those related balances.

Florida personnel told us that this contract agreement was for call center support
for Florida’s re-employment assistance program and the claim amount was for
monthly costs that exceeded the Florida Department of Economic Opportunity’s
(DEO) normal operations. Florida stated that the DEO did not keep adequate
records to support the monthly claim amounts that exceeded normal operational
costs, and the DEO was conducting a detailed historical operational cost analysis
and comparison to support their claim amounts. Florida personnel told us that
they intended to work with the DEO to obtain supporting documentation and

20 Calendar quarter ending June 30, 2021.
21 As a result of our reconciliation procedures, we determined that the cumulative expenditures
recorded in GrantSolutions for original transaction amounts prior to sub-selections were
$12,777,942.62 while the expenditures per the general ledger detail were $12,590,423.38, resulting
in a variance of $187,519.24. However, we did not test detailed support for these amounts. As
such, we excluded this balance from the “Cumulative Expenditure Tested Amount” column.

Desk Review of the State of Florida
8

make adjustments at the conclusion of DEO’s analysis. Florida personnel
anticipate reporting these adjustments as a correction in future GrantSolutions
reporting cycles.

Grants Greater Than or Equal to $50,000

Based on the documentation reviewed and entries made in GrantSolutions, we
determined Florida’s Grants greater than or equal to $50,000 did not comply with
the CARES Act and Treasury’s Guidance. We question $337,242,323.50 of
expenditures related to Grants greater than or equal to $50,000 because of a lack
of supporting documentation. We selected 13 transactions over which to perform
testwork, which included 33 sub-selections22 and we identified $337,242,323.50 in
questioned costs, which we have further disaggregated below.

 For 9 out of 33 sub-selections, we identified unsupported expenditure
amounts of $82,592,898.13. Florida provided GL details to support the
transactions, which we were able to agree to our selections without
exception. However, Florida did not provide support for the additional sub-
selections prior to the end of our fieldwork.
 For 14 out of 33 sub-selections, we identified unsupported expenditure
amounts of $152,664,054.01. Florida either did not provide a payroll
distribution report or GL, or provided information which did not agree to
our sub-selection. Additionally, Florida did not provide detailed expenditure
support such as vendor invoices.
 For 1 out of 33 sub-selections, we identified unsupported expenditure
amounts of $2,804,201. We received the payroll distribution report, but
noted an unsupported expenditure amount labeled “Sheriff and EMS
Payroll Previously submitted” of $2,804,201. We reached out to Florida for a
breakout of this amount; however, Florida did not respond prior to the end
of our fieldwork.
 For 2 out of 33 sub-selections, we identified unsupported expenditure
amounts of $6,611,911.37. Castro received partial payroll distribution
reports, but $6,611,911.37 in payroll costs related to another document that
was not provided to Castro.
 For 4 out of 33 sub-selections, Florida claimed $92,569,258.99 in
expenditures but provided payroll distribution files totaling $119,245,810.85,
which exceeded claimed expenditures by $26,676,551.86. We reviewed the
payroll distribution report provided by Florida and requested that Florida
provide us with the specific payroll transactions that agreed to amounts
claimed. However, Florida did not respond to our request prior to the end of

22 Due to the voluminous nature of transactions at the original transaction selection level, we
obtained and utilized a GL detail listing to select a sub-selection of transactions needed to test
obligations and expenditures at the detailed transaction level.

Desk Review of the State of Florida
9

our fieldwork. Therefore, we were unable to identify the transactions that
related to this CRF claim and as such, we question $92,569,258.99 in
claimed expenditures.

We do not consider GL detail support provided to be acceptable, as Florida did not
provide us with detailed underlying grant program documentation (e.g., sub-
recipient grant agreements, invoices for goods and supplies purchased, etc.)
needed to verify the expenditures incurred were necessary due to the public
health emergency with respect to COVID-19. Without details of grant program
costs incurred by Florida’s sub-recipients, we were unable to perform a full
assessment to verify the accuracy and eligibility of cumulative expenditures
incurred using CRF funding. Florida did not respond with sufficient supporting
documentation prior to the end of our fieldwork and did not respond to our
requests for both the root cause of missing support and a corrective action plan.

Transfers Greater Than or Equal to $50,000

We determined Florida’s Transfers greater than or equal to $50,000 did not
comply with the CARES Act and Treasury’s Guidance. We question $481,977,654
of expenditures related to Transfers greater than or equal to $50,000 because of a
lack of supporting documentation.

Florida identified a total of $929 million in cumulative obligations of Florida
Education Finance Program (FEFP) funding as necessary to respond to the
pandemic’s impact on K-12 schools. This amount represented three months of
funding granted by Florida, via Executive Order, to 74 different Florida County
Public School Systems, County School Boards, and County School Districts. These
entities were sub-recipients flagged as Special District Governments/ Independent
School Districts by Florida within GrantSolutions. This funding allowed for the
transfer of allocations to school districts to cover the last 3 months of the school
year (April, May, and June of 2020) that were most immediately affected by the
COVID-19 pandemic. We noted that Florida did not calculate these obligation
estimates and allocate these transferred funds based on Treasury’s $500 per full-
time employee (FTE) guidance, as detailed in FAQ #53 of the Federal Register,
Volume 86. Additionally, we determined that Florida made duplicate transfer
payments to each school district, and that the total transfer expenditure claims for
each school exceeded $500 per full time equivalent student. As such, we
determined these expenditures were not subject to Treasury’s administrative
accommodation exempting required documentation, but instead required
underlying expenditure support to evidence compliance with the CARES Act.

As part of our procedures, we selected 21 transactions for testing. We identified
the following exceptions within 7 out of 21 transactions selected for testing, which

Desk Review of the State of Florida
10

consisted of $481,977,654 out of the April, May, and June of 2020 $929 million
transfer allocation amount.

For these samples tested, Florida leveraged its existing FEFP state funding
program as a vehicle to transfer funds to 74 different sub-recipients within the
state on a predetermined allocation basis. Although Florida did provide Castro
with an eligibility justification document with a list of incremental COVID-19 costs
that it intended sub-recipients to use the FEFP transferred CRF claimed funds to
pay for, we reviewed Florida’s FEFP guidance and determined that this statute and
funding guidance was not modified to include CARES Act specific COVID-19
requirements. Additionally, Florida personnel told us that they did not provide any
additional transfer documents to its school districts other than the existing FEFP
statutes and program guidance, which included pre-COVID-19 requirements for
use of funds under the FEFP program. Therefore, we determined that Florida did
not communicate specific COVID-19 eligibility requirements to the school districts
along with these transferred funds.

Further, we requested detailed expenditure documentation from Florida to
support the school district’s actual expenditures incurred using the CRF funds.
Florida personnel told us that they did not require these school districts to retain
detailed expenditure documentation to support costs incurred under this program.
Specifically, school districts were instructed to record CRF funds transferred
through FEFP funds to its general revenue funds, and as such, were not instructed
to create a CRF appropriation code against which to track expenditures incurred
using these transferred CRF funds. Florida personnel told us that it would be
impossible to provide detailed invoices or GL detail files supporting school
districts’ incurred expenditures at the transaction level. Without this GL detail, we
could not make a sub-selection of underlying expenditure transactions incurred by
Florida’s sub-recipients. Additionally, since the sub-recipients did not track actual
expenditures incurred, Castro determined that it would have been difficult, if not
impossible for Florida to perform sufficient sub-recipient monitoring procedures
over these CRF reported expenditure balances.

Florida did provide us with a spreadsheet of its FEFP obligation allocation
calculations, internally generated payment vouchers, and a memo summarizing
Florida’s internal voucher payments to the school districts under the FEFP
program. However, we did not consider this acceptable documentation, as Florida
did not provide detailed underlying expenditure support such as GL detail listings
of school district incurred expenditure amounts, invoices, payroll distribution
reports, and/or timesheets to corroborate the estimated cumulative expenditure
figures reported by Florida in GrantSolutions. As these expenditures were not
subject to Treasury’s administrative accommodation exemption for
documentation, without detailed invoices we were unable to perform a full

Desk Review of the State of Florida
11

assessment needed to verify the accuracy and eligibility of cumulative
expenditures incurred using CRF funding. Therefore, we question expenditures of
$481,977,654 as unsupported.

We determined Florida did not comply with Treasury’s Federal Register Notice
Volume 86, Number 10 FAQ #53. This requirement allowed an administrative
convenience of up to $500 per full time equivalent student but Florida did not
calculate its obligations and distribute transferred funds using this methodology.

In addition to questioned costs of $481,977,654 identified within our testing above,
we determined the full amount of $929 million that Florida transferred to sub-
recipients may be similarly unsupported. If the Treasury OIG determines that a full
scope audit is feasible, we recommend Treasury OIG determine if the full
$929 million claim is similarly unsupported.

Direct Payments Greater Than or Equal to $50,000

We determined Florida’s Direct Payments greater than or equal to $50,000
complied with the CARES Act but did not comply with Treasury’s Guidance. We
selected two transactions to test. For one of these transactions, we selected three
expenditure transactions as sub-selections.

We obtained and reviewed the underlying expenditure support for our sub-
selections and noted that the GrantSolutions balance of $1,871,731.46 consisted of
GL detail of 37 individual transactions (three of which included our sub-
selections), each with their own document number, invoice number, and payment
date. Instead of aggregating these 37 different transactions into one Direct
Payment entry within GrantSolutions, we determined that Florida personnel
should have reported each of these transactions as separate Direct Payment
entries within GrantSolutions with their own cumulative obligation and
expenditure balance and payment date. Therefore, this did not comply with
Treasury OIG’s reporting requirements to individually report direct payment
transactions (for both cumulative expenditure and obligation reported balances).
We determined Florida did not comply with Treasury OIG Guidance OIG-CA-20-
028R, Department of the Treasury Office of Inspector General Coronavirus Relief
Fund Frequently Asked Questions Related to Reporting and Recordkeeping
(Revised), FAQ # 40 because Florida personnel reported transactions in the
aggregate instead of individually in the proper greater than $50,000 payment type
section. We are not questioning these costs as the support for these transactions
was adequate; however, we determined the amount tested was a reporting
misclassification.

Desk Review of the State of Florida
12

Aggregate Reporting Less Than $50,000

We determined Florida’s Aggregate Reporting less than $50,000 payment type did
not comply with the CARES Act and Treasury’s Guidance. We questioned
$1,142,335.19 in expenditures due to a lack of supporting documentation, to
include lack of sufficient eligibility determination responses. Additionally, we
identified misclassification exceptions related to Aggregate Reporting less than
$50,000 that should have been reported as Contracts greater than or equal to
50,000, Direct Payments greater than or equal to 50,000, and/or Transfers greater
than or equal to $50,000. We were unable to determine the correction entry
required due to insufficient obligation support.

We selected one transaction to test; however, due to the volume of expenditures
contained within the transaction, we selected eight sub-selections to obtain
coverage at the transaction level.

We identified unsupported questioned expenditure amounts totaling
$1,142,335.19. We have further disaggregated and detailed these exceptions
below:

 For 2 out of 8 sub-selections, we identified unsupported expenditure
amounts of $1,136,250.93. Florida provided us with GL detail files, internally
generated payment vouchers approving amounts for payment, and a high-
level summary of expenditures incurred. We did not consider this to be
sufficient expenditure support, as Florida did not provide us with detailed
expenditure support (such as invoices, payroll distribution reports, and/or
timesheets) needed to corroborate expenditure amounts reported in
GrantSolutions. Without detailed invoices, we were unable to perform a full
assessment needed to verify the accuracy and eligibility of expenditure
amounts incurred using CRF funding.
 For 1 out of 8 sub-selections, we identified unsupported expenditure
amounts of $6,084.26. We reviewed expenditure invoice support that we
were able to agree to the amounts reported in GrantSolutions without
exception, but these invoices contained only high-level descriptions of
services incurred which we did not consider sufficient to corroborate that
these expenditure transactions were necessary due to the public health
emergency with respect to COVID-19. Additionally, we requested Florida’s
previous budget to ensure that these expenditures were not previously
budgeted, but Florida did not respond to our request for this supporting
documentation.

We requested missing supporting documentation from Florida personnel on
multiple occasions and granted multiple extensions to our desk review timeline.

Desk Review of the State of Florida
13

Florida personnel told us that the root cause for not providing requested support
for the exceptions was that the review timelines were difficult to meet due to the
voluminous nature of expenditure support, competing financial reporting
requirements, and because Florida did not have the needed documentation
readily available.

For 5 out of 8 sub-selections, we reviewed underlying expenditure support and
determined that each of these transactions exceeded $50,000; therefore, Florida
personnel misclassified these cumulative obligations and expenditures within
GrantSolutions. The result was an overstatement to Aggregate Reporting less
than $50,000. Due to lack of sufficient obligating documentation, we were unable
to determine whether these transactions should have been reported as Contracts
greater than or equal to $50,000, Direct Payments greater than or equal to $50,000,
and/or Transfers greater than or equal to $50,000. Although we do not consider
misclassifications to be questioned costs, we do not consider these misclassified
transaction balances to comply with Treasury’s Guidance as they should have
been reported under a different payment type.

Florida stated that at the transactional level, these orders and subsequent charges
were below $50,000 and therefore reported as Direct Payments in aggregate less
than $50,000. However, it was unable to respond to our requests for detailed
expenditure support. Florida noted that it would review the detailed charges to
verify each charge was below $50,000, and if any of the charges were in excess of
$50,000, then Florida would make an adjustment in future GrantSolutions
submissions.

In addition to our detailed review of transactions in the sub-selections, we
performed data analytic procedures over the expenditures within the GL detail file
provided and found $2,132,953 in additional misclassifications. Florida confirmed
that it would review its transactions to determine if any of the charges were in
excess of $50,000, and if so, Florida told us that it intended to make an adjustment
in future GrantSolutions cycle submissions.

Desk Review of the State of Florida
14

Conclusion

We found that uses of CRF proceeds for Aggregate Payments to Individuals
complied with the CARES Act and Treasury’s Guidance. However, we determined
that the expenditures related to Contracts greater than or equal to $50,000, Grants
greater than or equal to $50,000, Transfers greater than or equal to $50,000, and
Aggregate Reporting less than $50,000 did not comply with the CARES Act and
Treasury’s Guidance. We also found that Direct Payments greater than or equal to
$50,000 complied with the CARES Act but did not comply with Treasury’s
Guidance.

Based on the totality of the work performed, we identified total questioned costs
of $893,154,357.89 consisting of $892,966,838.65 determined through our detailed
transaction testing and $187,519.24, which we did not test in detail but determined
through review of general ledger records compared to amounts reported in
GrantSolutions. We determined that Florida’s risk of unallowable use of funds is
high. Castro recommends Treasury OIG pursue obtaining missing documentation
from Florida management and ensure reporting corrections are made, or whether
recoupment of funds is necessary. Further, based on Florida’s responsiveness to
Treasury OIG’s requests and its ability to provide sufficient documentation, we
recommend Treasury OIG determine if a full-scope audit over Florida’s use of its
CRF proceeds is feasible.

*****

All work completed with this letter complies with the Council of the Inspectors
General on Integrity and Efficiency’s Quality Standards for Federal Offices of
Inspectors General, which require that the work adheres to the professional
standards of independence, due professional care, and quality assurance to
ensure the accuracy of the information presented.23 We appreciate the courtesies
and cooperation provided to our staff during the desk review.

Sincerely,

Wayne Ference
Partner, Castro & Company, LLC

23 https://www.ignet.gov/sites/default/files/files/Silver%20Book%20Revision%20-%208-20-12r.pdf

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