New York City Department of Health and Mental Hygiene Charged Some Unallowable Costs to Its CDC COVID-19 Award, A-04-22-02035
- Issuer
- Office of Inspector General
- Document type
- Report
Summary
An audit report by the Department of Health and Human Services Office of Inspector General, Report No. A-04-22-02035, dated October 2023, on the New York City Department of Health and Mental Hygiene's use of its CDC Epidemiology and Laboratory Capacity COVID-19 award. The audit covered $579 million in expenditures claimed between March 2020 and September 2021 and reviewed a stratified random sample of 124 line items totaling $22.7 million. It finds that 96 items met award requirements, while 28 lacked adequate documentation or were charged to the wrong award because subrecipient costs were not reviewed. OIG recommends a refund of $15,671,958 and stronger subrecipient oversight. The department's comments agree that $8,430 should be refunded, dispute the remaining sampled transactions, and agree with the oversight recommendation.
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
Department of Health and Human Services
OFFICE OF
INSPECTOR GENERAL
NEW YORK CITY DEPARTMENT OF
HEALTH AND MENTAL HYGIENE
CHARGED SOME UNALLOWABLE COSTS
TO ITS CDC COVID-19 AWARD
Inquiries about this report may be addressed to the Office of Public Affairs at
Public.Affairs@oig.hhs.gov.
Amy J. Frontz
Deputy Inspector General
for Audit Services
October 2023
A-04-22-02035
Office of Inspector General
https://oig.hhs.gov
The mission of the Office of Inspector General (OIG) is to provide objective oversight to promote the
economy, efficiency, effectiveness, and integrity of the Department of Health and Human Services (HHS)
programs, as well as the health and welfare of the people they serve. Established by Public Law
No. 95-452, as amended, OIG carries out its mission through audits, investigations, and evaluations
conducted by the following operating components:
Office of Audit Services. OAS provides auditing services for HHS, either by conducting audits
with its own audit resources or by overseeing audit work done by others. The audits examine the
performance of HHS programs, funding recipients, and contractors in carrying out their respective
responsibilities and provide independent assessments of HHS programs and operations to reduce waste,
abuse, and mismanagement.
Office of Evaluation and Inspections. OEI’s national evaluations provide HHS, Congress,
and the public with timely, useful, and reliable information on significant issues. To promote impact,
OEI reports also provide practical recommendations for improving program operations.
Office of Investigations. OI’s criminal, civil, and administrative investigations of fraud and
misconduct related to HHS programs and operations often lead to criminal convictions, administrative
sanctions, and civil monetary penalties. OI’s nationwide network of investigators collaborates with the
Department of Justice and other Federal, State, and local law enforcement authorities. OI works with
public health entities to minimize adverse patient impacts following enforcement operations. OI also
provides security and protection for the Secretary and other senior HHS officials.
Office of Counsel to the Inspector General. OCIG provides legal advice to OIG on HHS
programs and OIG’s internal operations. The law office also imposes exclusions and civil monetary
penalties, monitors Corporate Integrity Agreements, and represents HHS’s interests in False Claims Act
cases. In addition, OCIG publishes advisory opinions, compliance program guidance documents, fraud
alerts, and other resources regarding compliance considerations, the anti-kickback statute, and other
OIG enforcement authorities.
Notices
THIS REPORT IS AVAILABLE TO THE PUBLIC
at https://oig.hhs.gov
Section 8M of the Inspector General Act, 5 U.S.C. App., requires
that OIG post its publicly available reports on the OIG website.
OFFICE OF AUDIT SERVICES FINDINGS AND OPINIONS
The designation of financial or management practices as
questionable, a recommendation for the disallowance of costs
incurred or claimed, and any other conclusions and
recommendations in this report represent the findings and
opinions of OAS. Authorized officials of the HHS operating
divisions will make final determination on these matters.
Report in Brief U.S. DEPARTMENT OF HEALTH & HUMAN SERVICES
Date: October 2023
OFFICE OF INSPECTOR GENERAL
Report No. A-04-22-02035
Why OIG Did This Audit New York City Department of Health and Mental
Congress approved COVID-19 funding for
HHS’s pandemic response efforts, Hygiene Charged Some Unallowable Costs to Its
including funding to the Centers for CDC COVID-19 Award
Disease Control and Prevention (CDC) for
its Epidemiology and Laboratory Capacity
(ELC) program to provide support for What OIG Found
public health response activities. CDC NYC DOHMH used its COVID-19 funding in accordance with award
used its ELC Cooperative Agreement requirements for 96 of the 124 sample items we reviewed. However, for 28
(award) to distribute significant amounts sample items, NYC DOHMH did not maintain adequate documentation to
of its COVID-19 funding to existing support costs and charged some costs to the wrong award. These errors
recipients, including the New York City occurred because NYC DOHMH did not provide oversight of its subrecipients
Department of Health and Mental in accordance with Federal requirements. Specifically, NYC DOHMH did not
Hygiene (NYC DOHMH). NYC DOHMH review subrecipient costs charged to the award but instead relied on
received $1.6 billion, nearly double its subrecipients’ self-certification of costs charged to the Federal award. Based
fiscal year 2021 base ELC award amount, on the results of our sample, we found that NYC DOHMH claimed
in ELC COVID-19 funding between March $15,671,958 in unallowable costs.
2020 and May 2021.
What OIG Recommends and NYC DOHMH Comments
COVID-19 has created extraordinary We recommend that NYC DOHMH: (1) refund $15,671,958 to the Federal
challenges for the delivery of health care government and (2) strengthen its oversight of subrecipients to prevent
and human services to Americans. As the future unallowable payments by reviewing subrecipient invoices and
oversight agency for HHS, the Office of supporting documentation to ensure costs claimed are allowable and
Inspector General (OIG) oversees HHS’s allocable.
COVID-19 response and recovery
efforts. This audit is part of our COVID-19 In response to our draft report, NYC DOHMH partially agreed with our first
response strategic plan. recommendation and agreed with our second recommendation. Regarding
our first recommendation, NYC DOHMH agreed that of the $15,671,958 we
Our objective was to determine whether identified in error, $8,430 (or 3 of the 28 sample items the OIG determined
the NYC DOHMH used its CDC COVID-19 to be in error) should be refunded to CDC. However, NYC DOHMH disagreed
funding in accordance with award with the assessment of the remaining 25 sampled transactions totaling
requirements. $15,663,528 and provided additional documentation which we reviewed.
Based on our analysis of the additional information provided by NYC
How OIG Did This Audit DOHMH, we adjusted the dollar amount for our first recommendation to
Our audit covered $579 million in CDC reflect the additional support NYC DOHMH provided.
ELC COVID-19 expenditures NYC DOHMH
claimed between March 2020 and NYC DOHMH agreed with our second recommendation as it pertains to ELC
September 2021. We selected a stratified subawards given to NYC agencies through NYC DOHMH. NYC DOHMH stated
random sample of 124 line items totaling that going forward, intergovernmental subawards will detail expectations for
$22.7 million. We sent questionnaires to substantiating that costs claimed are allowable and allocable. We commend
NYC DOHMH, interviewed officials from NYC DOHMH on the actions it is taking to address our recommendation and
CDC and NYC DOHMH, and reviewed and the actions it will take going forward. Having this type of source
analyzed documentation we received to documentation would enhance NYC DOHMH’s subrecipient monitoring to
support each sample item. ensure costs claimed are allowable, reasonable, and allocable.
The full report can be found at https://oig.hhs.gov/oas/reports/region4/42202035.asp.
TABLE OF CONTENTS
INTRODUCTION ............................................................................................................................... 1
Why We Did This Audit ....................................................................................................... 1
Objective ............................................................................................................................. 1
Background ......................................................................................................................... 2
COVID-19 Epidemiology and Laboratory Capacity Program................................... 2
New York City Department of Health and Mental Hygiene ................................... 2
How We Conducted This Audit ........................................................................................... 3
FINDINGS ......................................................................................................................................... 4
Federal Requirements and Department of Health and Mental Hygiene Policy ................. 4
Department of Health and Mental Hygiene Charged Some Unallowable Costs ................ 5
Subrecipient Costs Inadequately Documented ...................................................... 5
Costs Not Related to COVID-19 .............................................................................. 6
Department of Health and Mental Hygiene Received Unallowable
COVID-19 Funds ............................................................................................................... 6
RECOMMENDATIONS ..................................................................................................................... 6
NEW YORK CITY DEPARTMENT OF HEALTH AND MENTAL HYGIENE COMMENTS......................... 6
OIG RESPONSE ................................................................................................................................ 7
APPENDICES
A: Scope and Methodology ................................................................................................ 8
B: Statistical Sampling Methodology ................................................................................ 10
C: New York City Department of Health and Mental Hygiene Comments ....................... 12
NYC DOHMH Charged Some Unallowable Costs to Its CDC COVID-19 Award (A-04-22-02035)
INTRODUCTION
WHY WE DID THIS AUDIT
Congress approved five COVID-19 appropriation bills to fund HHS’s pandemic response efforts,
including funding to the Centers for Disease Control and Prevention (CDC) to provide support
for core public health response activities, such as epidemiology, surveillance, laboratory
capacity, infection control, mitigation, communications, and other preparedness and response
activities. 1 CDC used its Epidemiology and Laboratory Capacity (ELC) Cooperative Agreement
(award) to distribute significant amounts of its COVID-19 funding to existing recipients,
including New York City Department of Health and Mental Hygiene (NYC DOHMH). 2
New York City was one of the epicenters of the COVID-19 outbreak in the United States. As one
of the recipients of CDC’s ELC COVID-19 funding, NYC DOHMH received $1.6 billion, nearly
double its fiscal year 2021 base ELC award amount, in ELC COVID-19 funding between March
2020 and May 2021.
COVID-19 has created extraordinary challenges for the delivery of health care and human
services to Americans. As the oversight agency for HHS, the Office of Inspector General (OIG)
oversees HHS’s COVID-19 response and recovery efforts. This audit is part of OIG’s COVID-19
response strategic plan.3
OBJECTIVE
Our objective was to determine whether the NYC DOHMH used its CDC COVID-19 funding in
accordance with award requirements.
1
The appropriation bills included (1) the Coronavirus Preparedness and Response Supplemental Appropriations
Act, 2020 (P.L. 116-123); (2) Families First Coronavirus Response Act (P.L. 116-127); (3) CARES Act (Coronavirus Aid,
Relief, and Economic Security Act) (P.L. 116-136); (4) Paycheck Protection Program and Health Care Enhancement
Act (P.L. 116-139); and (5) the Coronavirus Response and Relief Supplemental Appropriations Act, 2021 (P.L. 116-
260).
2
A cooperative agreement is a financial assistance support mechanism used when there will be substantial Federal
programmatic involvement. Substantial involvement means that the awarding office program staff will collaborate
or participate in project or program activities as specified in the Notice of Award.
3
OIG’s COVID-19 response strategic plan and oversight activities can be accessed at HHS-OIG’s Oversight of COVID-
19 Response and Recovery | HHS-OIG.
NYC DOHMH Charged Some Unallowable Costs to Its CDC COVID-19 Award (A-04-22-02035) 1
BACKGROUND
COVID-19 Epidemiology and Laboratory Capacity Program
The goal of the ELC program is to reduce illness and related deaths caused by a wide range of
infectious disease threats, such as Zika, Ebola, and COVID-19. CDC awards funds to 64
recipients each year to strengthen public health program growth while providing the flexibility
needed to address emerging infectious disease issues. 4 In the event of a public health
emergency such as the COVID-19 pandemic, CDC makes supplemental funds available through
the ELC award.
The ELC COVID-19 funding was intended to:
• support jurisdictions in conducting surveillance to detect transmission;
• establish and monitor activities related to COVID-19 in the areas of epidemiology,
laboratory, and informatics;
• strengthen state and local public health laboratory preparedness and response
capabilities;
• provide resources to state, local, and territorial health departments in support of a
broad range of COVID-19 testing and epidemiologic surveillance-related activities; and
• support and oversee expanded testing capacity for COVID-19, including the ability to
process, manage, analyze, use, and report the increased data produced.
New York City Department of Health and Mental Hygiene
With an annual budget of $1.6 billion and more than 6,000 employees throughout the 5
boroughs, NYC DOHMH is one of the largest public health agencies in the world and one of the
nation's oldest public health agencies.5,6 NYC DOHMH’s mission is to protect and promote the
health of 8 million New Yorkers by studying the patterns, causes, and effects of health and
disease conditions in NYC neighborhoods. These studies shape policy decisions and NYC's
health agenda.
From March to May 2020, approximately 203,000 cases and 18,600 deaths among persons with
laboratory-confirmed COVID-19 were reported to NYC DOHMH. NYC DOHMH received
4
The 64 ELC recipients include all 50 states, several large metro areas, and U.S. territories and affiliates.
5
Available online at https://www.nyc.gov/site/doh/about/about-doh.page. Accessed on 05/15/2023.
6
The five boroughs of NYC are the Bronx, Brooklyn, Manhattan, Queens, and Staten Island.
NYC DOHMH Charged Some Unallowable Costs to Its CDC COVID-19 Award (A-04-22-02035) 2
supplemental ELC funding from CDC to combat the COVID-19 pandemic, beginning in March
2020.
To assist in its efforts in combatting the COVID-19 pandemic, NYC DOHMH used some of this
funding to issue two subawards—one to NYC Health and Hospitals for overseeing NYC’s Test
and Trace Program for citywide COVID-19 testing and contact tracing and another to the
Department of Social Services for mobile COVID-19 testing services at various facilities.7 NYC
DOHMH also used the funding to address the following strategies in combatting the COVID-19
pandemic: (1) using laboratory data to enhance investigation, response, and prevention; (2)
improving surveillance and reporting of electronic health data; (3) supporting the increase in
demand for distribution of hand sanitizers, thermometers, and tissues to support health
education campaigns with community partners; and (4) controlling COVID-19 in high-risk
settings to protect vulnerable populations.
HOW WE CONDUCTED THIS AUDIT
Our audit covered $579 million in CDC ELC COVID-19 expenditures NYC DOHMH claimed
between March 2020 and September 2021 (audit period). We selected a stratified random
sample of 124 line items totaling $22.7 million. 8 We sent questionnaires to NYC DOHMH
officials related to their processes, procedures, and controls; interviewed officials from CDC and
NYC DOHMH; and reviewed and analyzed documentation we received to support each sample
item.
We used CDC’s COVID-19 ELC award requirements as the basis of our review and 45 CFR Part 75
to assess compliance with monitoring activities, allowable costs, and internal controls.
For each of the 124 sample items, we obtained and reviewed documentation to support the
costs charged to the Federal award. For sample items that included multiple charges, we
judgmentally selected a variety of cost categories within each sample item to ensure we
reviewed all cost categories.
When determining the allowability of sample items, we considered the various flexibilities
brought on by the COVID-19 pandemic and the need for public health agencies to respond
swiftly. For example, we considered charges for supplies and portable refrigerators for mobile
testing sites allowable because they were necessary for the performance of the award.
7
The Test and Trace Program also provided Take Care Packages to any case or contact household who indicated a
need for personal protective equipment, such as masks.
8
Our sample selection consisted of sample items taken from four strata. Two strata contained expenditures
incurred directly by DOHMH, one stratum contained expenditures incurred under the NYC Health and Hospitals
subaward, and the final stratum contained expenditures incurred under the Department of Social Services
subaward. See Appendix B for information on our sample.
NYC DOHMH Charged Some Unallowable Costs to Its CDC COVID-19 Award (A-04-22-02035) 3
We conducted this performance audit in accordance with generally accepted government
auditing standards. Those standards require that we plan and perform the audit to obtain
sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions
based on our audit objective. We believe that the evidence obtained provides a reasonable
basis for our findings and conclusions based on our audit objective.
Appendix A contains the details of our audit scope and methodology and Appendix B contains
the details of our statistical sampling methodology.
FINDINGS
NYC DOHMH used its COVID-19 funding in accordance with award requirements for 96 of the
124 sample items we reviewed. However, for 28 sample items, NYC DOHMH did not maintain
adequate documentation to support costs and charged some costs to the wrong award. These
errors occurred because NYC DOHMH did not provide adequate oversight of its award in
accordance with Federal requirements. Based on the results of our sample, we found that NYC
DOHMH claimed $15,671,958 in unallowable costs.
FEDERAL REQUIREMENTS AND DEPARTMENT OF HEALTH AND MENTAL HYGIENE POLICY
The 2019 Epidemiology and Laboratory Capacity for Prevention and Control of Emerging
Infectious Diseases Notice of Award (NU50CK000517-01-00) incorporates Federal laws,
regulations, policies, and CDC’s General Terms and Conditions for Non-research Grant and
Cooperative Agreements and ascribes these requirements to the recipient of the award.
A recipient is defined as the organization that receives a grant or cooperative agreement and is
responsible and accountable for the use of the funds provided and for the performance of the
project or activity. A recipient can be a Federal or non-Federal entity.9 The award recipient
must establish and maintain effective internal control over the Federal award (45 CFR §
75.303). The award recipient is responsible for oversight of the operations of the award
activities and must monitor these activities to ensure compliance with applicable Federal
requirements (45 CFR § 75.342).
Recipients that subaward funds to other organizations, termed subrecipients, are required to
monitor the activities of the subrecipient to ensure that the subaward complies with Federal
statutes, regulations, and the terms and conditions of the subaward (45 CFR § 75.352).
For costs to be allowable, they must be adequately documented (45 CFR § 75.403). Costs must
also be allocable to a particular Federal award or other cost objective if the goods or services
involved are chargeable or assignable to that Federal award or cost objective in accordance
with relative benefits received (45 CFR § 75.405).
9
A non-Federal entity is defined as a State, local government, or nonprofit organization that carries out a Federal
award as a recipient or subrecipient (45 CFR § 75.2).
NYC DOHMH Charged Some Unallowable Costs to Its CDC COVID-19 Award (A-04-22-02035) 4
NYC DOHMH has the responsibility, as a pass-through entity, to adequately monitor its
subrecipients to ensure compliance with Federal statutes, regulations, and the terms and
conditions of the subaward. According to the DOHMH Subrecipient Monitoring Policy,
subrecipient monitoring procedures apply to all Federally funded subawards issued to local
governments and other non-Federal entities. The monitoring should be documented and
include reviewing invoices and supporting documentation to ensure costs claimed are
allowable, reasonable, and allocable. In addition, the policy states that NYC DOHMH’s
subrecipients are responsible and liable to identify and monitor their subcontractors in the
same way as NYC DOHMH monitors its subrecipients.
DEPARTMENT OF HEALTH AND MENTAL HYGIENE CHARGED SOME UNALLOWABLE COSTS
Of the 124 sample items that we reviewed, 28 sample items were in error. Specifically, for 25
sample items, NYC DOHMH did not maintain adequate documentation and 3 sample items
were for costs not related to COVID-19 response efforts.
Subrecipient Costs Inadequately Documented
NYC DOHMH claimed costs for 25 of the 28 sample items, totaling $15,663,528, that were
inadequately documented and associated with one of its subrecipients.10 For example, some
costs for personnel services, supplies, and insurance were not supported.
As the recipient of CDC ELC award funds, NYC DOHMH was responsible for ensuring that it and
its subrecipients complied with all award requirements, including maintaining supporting
documentation, such as invoices, receipts, and payroll registers, for all claimed costs. However,
NYC DOHMH could not provide documentation to support the 25 sample items, despite
multiple requests by us during a period of 6 months. Instead, for these sample items, NYC
DOHMH provided Excel spreadsheets that listed lump sum costs by category, such as personnel,
supplies, and testing incentives. NYC DOHMH officials stated that the subrecipient would need
to request the underlying supporting documentation from its providers and, in turn, the
subrecipient would send the documentation directly to us. While the subrecipient
subsequently provided some documentation to support our sample items, there was not
enough detail to determine the allowability of the charge. For example, some of the personnel
services documentation we received did not support the time charged to the award.
NYC DOHMH did not have adequate documentation to support costs claimed because it did not
follow Federal award requirements or its own policies and procedures for subrecipient
oversight. Specifically, NYC DOHMH did not review supporting documentation for claimed
costs, such as invoices, to ensure that either of its subrecipients’ costs were allowable and
allocable. Instead of reviewing subrecipient documentation, as required, NYC DOHMH relied on
its subrecipients to maintain adequate supporting documentation for claimed costs and to
10
For the other subrecipient, NYC DOHMH was able to provide us with documentation to support the
corresponding sample items.
NYC DOHMH Charged Some Unallowable Costs to Its CDC COVID-19 Award (A-04-22-02035) 5
provide the documentation when requested. NYC DOHMH officials stated that it relied on its
subrecipients to self-certify the validity of the costs incurred because all NYC agencies use the
same financial management system and are subject to the same financial processes and single
audit requirements.
Costs Not Related to COVID-19
NYC DOHMH claimed costs totaling $8,430 for three sample items that were not related to the
award. Specifically, one sample item was for chlamydia and gonorrhea tests, one was for
tuberculosis tests, and one was for professional services that were not included in the award.
These errors occurred because mistakes were not identified or corrected during NYC DOHMH’s
expenditure review process, which is designed to ensure that costs were allocable. NYC
DOHMH stated that its expenditures are typically reviewed by personnel with expertise in the
ELC program for approval before submission to CDC. The NYC DOHMH Office of Revenue also
compares its expenditures to the CDC-approved budget. Once program personnel approve the
expenditures, a report is submitted to CDC for costs incurred on the ELC award. However,
because of the influx of COVID-19 funds and the fast-paced environment under which staff
were working during the pandemic, human errors occurred and were not identified or
corrected during the expenditure review process.
DEPARTMENT OF HEALTH AND MENTAL HYGIENE RECEIVED UNALLOWABLE COVID-19 FUNDS
Based on the results of our sample, we found that NYC DOHMH claimed $15,671,958 in
unallowable costs. Without proper oversight of its subrecipients and adequate documentation
to support Federal expenditures, NYC DOHMH is at risk of improperly spending Federal funds.
RECOMMENDATIONS
We recommend that NYC DOHMH:
• refund $15,671,958 to the Federal government and
• strengthen its oversight of subrecipients to prevent future unallowable payments by
reviewing subrecipient invoices and supporting documentation to ensure costs claimed
are allowable and allocable.
NEW YORK CITY DEPARTMENT OF HEALTH AND MENTAL HYGIENE COMMENTS
In response to our draft report, NYC DOHMH partially agreed with our first recommendation
and agreed with our second recommendation. Regarding our first recommendation, NYC
DOHMH agreed that 3 of the 28 sample items the OIG determined to be in error were non-ELC
related and $8,430 should be refunded to CDC. However, it disagreed with the assessment of
the remaining 25 sampled transactions which totaled $15,663,528. NYC DOHMH noted that
NYC DOHMH Charged Some Unallowable Costs to Its CDC COVID-19 Award (A-04-22-02035) 6
that these 25 items were associated with one City-agency and it had made a concerted effort to
produce supporting documents prior, during, and after the draft report was issued by OIG.
NYC DOHMH agreed with our second recommendation as it pertains to ELC subawards given to
NYC agencies through NYC DOHMH. NYC DOHMH stated that going forward,
intergovernmental subawards will detail expectations for substantiating that costs claimed are
allowable and allocable. For instance, payment will be conditioned upon submission of
required reports and supporting documentation. In addition, claims to NYC DOHMH must also
be accompanied by supporting information such as an itemized breakdown of costs, and a
signed attestation that all costs claimed have been verified and are allowable.
OIG RESPONSE
Regarding NYC DOHMH’s response to our first recommendation, the OIG analyzed all
documentation provided by NYC DOHMH for the sample items in error. Based on our analysis
of the information provided by NYC DOHMH, we determined that NYC DOHMH provided
support for an additional $346,254 related to these 25 sample items that was charged to the
Federal award. However, for the remaining $15,663,528 associated with those 25 errors, we
found that the documentation provided either did not support actual costs incurred or could
not support the allocation methodology used to charge costs to the COVID-19 awards.
We adjusted the dollar amount for our first recommendation by $346,254 to reflect the
additional documentation NYC DOHMH provided.
In regard to our second recommendation, we commend NYC DOHMH on the actions it is taking
to address our recommendation and the actions it will take going forward including requiring
subrecipients to submit documentation to facilitate verification that services invoiced by
subcontracted vendors were delivered according to subcontract terms. This action is generally
the same as procedures in effect during our audit because NYC DOHMH already received from
its subrecipients the information required in the claim summary, but this information was not
accompanied by actual invoices and supporting documentation as required in its subrecipient
monitoring policy. Having this type of source documentation would enhance NYC DOHMH’s
subrecipient monitoring to ensure costs claimed are allowable, reasonable, and allocable.
NYC DOHMH’s written comments, excluding the additional supporting documentation, are
included as Appendix C.
NYC DOHMH Charged Some Unallowable Costs to Its CDC COVID-19 Award (A-04-22-02035) 7
APPENDIX A: SCOPE AND METHODOLOGY
SCOPE
Our audit covered $578,957,095 in total CDC ELC COVID-19 payments made to NYC DOHMH.
We selected a stratified random sample of 124 line items and reviewed payments totaling
$22,710, 872.
During our audit, we did not assess the overall internal control structure of NYC DOHMH.
Instead, we limited our review to NYC DOHMH’s internal controls for ensuring compliance with
CDC COVID-19 award requirements.
We conducted our audit from February 2022 to May 2023.
METHODOLOGY
To accomplish our objective, we:
• reviewed applicable COVID-19 appropriation bills, Federal requirements, CDC guidance,
and NYC DOHMH Policies and Procedures;
• interviewed CDC officials to obtain an understanding of the ELC program;
• reviewed Notices of Awards, budgets, work plans, and milestone reports;
• reconciled NYC DOHMH's COVID-19 expenditures;
• reviewed NYC DOHMH expenditures to ensure funds were being used timely;
• reviewed subaward memorandum of understanding agreements;
• provided questionnaires to NYC DOHMH officials;
• interviewed NCY DOHMH officials;
• selected a stratified random sample of 124 line items totaling $22,710,872 (see
Appendix B);
• determined the allowability for each of the 124 line items by:
o reviewing and analyzing documentation received;
o ensuring expenditures were incurred during the periods of performance;
NYC DOHMH Charged Some Unallowable Costs to Its CDC COVID-19 Award (A-04-22-02035) 8
o reviewing vendor contracts and agreements; and
o ensuring expenditures were related to COVID-19 program objectives;
• determined the total value of line items in error; and
• discussed the results of our audit with NYC DOHMH officials.
We conducted this performance audit in accordance with generally accepted government
auditing standards. Those standards require that we plan and perform the audit to obtain
sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions
based on our audit objective. We believe that the evidence obtained provides a reasonable
basis for our findings and conclusions based on our audit objective.
NYC DOHMH Charged Some Unallowable Costs to Its CDC COVID-19 Award (A-04-22-02035) 9
APPENDIX B: STATISTICAL SAMPLING METHODOLOGY
SAMPLING FRAME
Our sampling frame consisted of 4 Excel spreadsheets that contained 5,560 transaction line
items totaling $578,957,095 that NYC DOHMH expended from ELC COVID-19 award funds for
the period March 5, 2020, through September 30, 2021. 11
SAMPLE UNIT
The sample unit was a line item.
SAMPLE DESIGN AND SAMPLE SIZE
We used a stratified random sample. NYC DOHMH expenditures for the ELC COVID-19 awards
were comprised of four types of transactions—two types generated by NYC DOHMH (direct and
adjustment transactions) and two types generated through subawards to NYC Health and
Hospitals (H+H) and NYC Department of Social Services (DSS). The specific strata are shown in
Table 1.
Table 1: Sample Design Summary
Number
of Line Frame Dollar Sample Value of
Stratum Type of Transaction Items Value Size Sample
1 NYC DOHMH Direct Expenditures 1,055 $73,290,095 30 $1,833,687
2 NYC DOHMH Adjustments 101 $8,637,590 30 $1,373,636
3 H+H Expenditures 4,370 $478,302,157 30 $776,296
4 DSS Expenditures 34 $18,727,253 34 $18,727,253
Total 5,560 $578,957,095 124 $22,710,872
SOURCE OF RANDOM NUMBERS
We generated the random numbers using Office of Inspector General, Office of Audit Services,
statistical software.
METHOD FOR SELECTING SAMPLE UNITS
We sorted the line items in each stratum as follows:
• NYC DOHMH Direct Expenditures—The Excel spreadsheet was sorted by dollar amount
in ascending order and then by transaction ID.
11
These line items were not netting transactions and had a value greater than $500.
NYC DOHMH Charged Some Unallowable Costs to Its CDC COVID-19 Award (A-04-22-02035) 10
• NYC DOHMH Adjustments—The Excel spreadsheet was sorted by dollar amount in
ascending order and then by transaction ID.
• H+H Expenditures—The Excel spreadsheet contained two categories of expenditures,
personnel services and other than personnel services, which were appended once
sorted as follows:
o Personnel Services expenditures were sorted by dollar amount in ascending order
and then by employee ID number.
o Other than Personnel Services expenditures were sorted by dollar amount in
ascending order and then by invoice date.
• DSS Expenditures—The Excel spreadsheet was sorted by total expense in ascending
order and then by transaction ID.
We then consecutively numbered the line items within each stratum. After generating the
random numbers, we selected the corresponding frame items for review.
ESTIMATION METHODOLOGY
We have chosen not to report any estimates of unallowable costs in the sampling frame
because the lower limit of the two-sided 90-percent confidence interval was less than the
known unallowable costs in the sample. Therefore, we are recommending recovery of only the
unallowable costs for the items in our sample.
NYC DOHMH Charged Some Unallowable Costs to Its CDC COVID-19 Award (A-04-22-02035) 11
APPENDIX C: NEW YORK CITY DEPARTMENT OF HEALTH AND MENTAL HYGIENE COMMENTS
NEW YORK CITY DEPARTMENT OF
N¥C:
Health
HEALTH AND MENTAL HYGIENE
Ashwin Vasan, MD, PhD
Commissioner
August 31, 2023
Lori Pilcher
Regional Inspector General
Office of Audit Services, Region IV
61 Forsyth Street, SW, Suite 3T41
Atlanta, GA 30303
Dear Ms. Pilcher,
The NYC Department of Health and Mental Hygiene (Health Department, DOHMH) reviewed
HHS-OIG’s draft audit report on the Health Department’s use of the Epidemiology and Laboratory
Capacity (ELC) awards for COVID-19 response and recovery efforts. The OIG’s objective was to
determine whether the Health Department used its CDC COVID-19 funding in accordance with
award requirements. The audit covered $579 million in ELC COVID-19 expenditures that
DOHMH claimed between March 2020 and September 2021.
The auditors conclude that the Health Department did not provide oversight of its subrecipients in
accordance with federal requirements. Specifically, DOHMH did not review subrecipients’ costs
charged to the award and relied on their self-certification of costs.
COVID-19 pandemic created unprecedented challenges for delivering health care and human
services. It also provided a stark reminder of systemic health inequities that exited pre-pandemic.
The ELC funding assisted in the Health Department’s efforts to combat the pandemic and stop the
spread. These monumental efforts were in collaboration with New York City Administration, other
City agencies and partnership with communities.
The Health Department thanks the auditors for the opportunity to respond to the draft report and
appreciates the courtesy and professionalism of OIG’s audit team.
Attached is the Health Department’s response to the draft audit report. If you have any questions
or need further information, please contact Sara Packman, Assistant Commissioner, Audit
Services, at spackman@health.nyc.gov or at (347) 396-6679.
Sincerely,
Ashwin Vasan, MD, PhD
Commissioner
Enclosure
CC:
Emiko Otsubo, Chief Operating Officer/Executive Deputy Commissioner, DOHMH
Celia Quinn, M.D., MPH, Deputy Commissioner, Division of Disease Control, DOHMH
Aaron Anderson, Chief Financial Officer/Deputy Commissioner, Division of Finance, DOHMH
Sara Packman, Assistant Commissioner, Bureau of Audit Services, DOHMH
NYC DOHMH Charged Some Unallowable Costs to Its CDC COVID-19 Award (A-04-22-02035) 12
RESPONSE TO HHS-OIG’ DRAFT AUDIT REPORT ON DOHMH’S USE OF ELC
FUNDS FOR COVID-19 RESPONSE AND RECOVERY EFFORTS
Report No. A-04-22-02035
The NYC Department of Health and Mental Hygiene (Health Department, DOHMH) reviewed the
Office of Inspector General, U.S. Department of Health and Human Services’ (OIG) draft audit
report on DOHMH’s use of ELC (Epidemiology and Laboratory Capacity) award for COVID-19
response and recovery efforts. The OIG’s objective was to determine whether the Health
Department used its CDC (Centers for Disease Control & Prevention) COVID-19 funding in
accordance with award requirements. The audit covered $579 million in ELC COVID-19
expenditures that DOHMH claimed between March 2020 and September 2021.
The auditors concluded that DOHMH did not provide oversight of its subrecipients in accordance
with federal requirements. Specifically, DOHMH did not review subrecipients’ costs charged to
the award, but instead relied on subrecipients’ self-certification of costs charged to the federal
award. This conclusion is based on the auditors’ interviews, DOHMH’s responses to
questionnaires, and the auditors’ detailed testing of 124 sample transactions.
The Health Department thanks the auditors for the opportunity to respond to the draft report and
appreciates the courtesy and professionalism of OIG’s audit team. The following is the Health
Department’s position relevant to the findings and recommendations.
Issue: “NYC DOHMH did not provide adequate oversight of its award in accordance with
Federal requirements”
During the audit period of March 2020 to September 2021, New York City was at the center of
the COVID-19 epidemic, creating unprecedented challenges for delivering health care and human
services. As the auditors describe in their report, “From March to May 2020, approximately
203,000 cases and 18,600 deaths among persons with laboratory confirmed COVID-19 were
reported to NYC DOHMH”. To respond swiftly, NYC’s prior mayoral administration directed
DOHMH to issue subawards under ELC to NYC Health+Hospitals (H+H), NYC’s public hospital
system, to oversee NYC’s Test and Trace Program. DOHMH was also directed to issue a
subaward to the NYC Department of Social Services (DSS) to provide COVID-19 testing at its
homeless shelters and other congregate housing facilities. Thus, COVID-19 vaccination and
testing response was a collaborative effort involving DOHMH, H+H, other city agencies including
NYC DSS and the NYC Office of Management & Budget (OMB).
The auditors assessed that DOHMH claimed for subrecipients’ costs that were “inadequately
documented” and that “of the 124 sample items… 28 sample items were in error.” Specifically,
the auditors stated that “for 25 sample items, DOHMH did not maintain adequate documentation.”
It should be noted that these 25 items were associated with one City-agency (DSS), and that DSS
made up 82% of the total dollar value of the 124 sample items tested. Accordingly, DSS made a
concerted effort to and was able to produce supporting documents prior, during, and after the Draft
1
NYC DOHMH Charged Some Unallowable Costs to Its CDC COVID-19 Award (A-04-22-02035) 13
Report was issued by OIG. The remaining 3 transactions were non-COVID-19 related expenses
for DOHMH which were erroneously charged to the ELC award.
While DOHMH acknowledges that it did not oversee these subawards consistent with the
DOHMH Subrecipients Monitoring Policy, DOHMH also notes that it had been transparent about
this fact and disclosed it during the auditors’ interviews and DOHMH’s 4-29-2022 formal response
to the auditors’ questionnaire stating that “…DOHMH’s subrecipients for ELC grants are mostly
inter-governmental agencies (H+H, DSS). They are part of the NYC Single Audit, audited by the
same Single Auditor and are reported in the same audit report. The NYC Office of Management
and Budget (OMB) coordinates with the Single Auditor and monitors each NYC agencies’
corrective actions.”
In response to follow-up questions, DOHMH officials stated that the Health Department regularly
monitored its City agency partners to make sure that they complied with Award requirements for
reporting financial information, progress toward milestones, performance measures and
procedures for project and budget modifications. DOHMH’s principal investigator (PI) for the
Award reviewed sub-recipients’ quarterly milestones, and performance measure reports prior to
submitting them to CDC.
OIG Recommendations and DOHMH’s Response
DOHMH should
1. “Refund $16,018,212 to the Federal government.”
DOHMH reviewed DSS’ supporting documentation submitted before and after the issuance of
OIG’s Draft Report and determined that these documents supported most expenses claimed to
the ELC award.
Accordingly, DOHMH disagrees with the OIG auditors’ assessment relative to 25 sampled
transactions for DSS totaling $16,009,782 and agrees that 3 sampled transactions for DOHMH
totaling $8,430 were non-ELC and should be refunded to CDC. The appendix to this response
includes DOHMH’s position relative to each of the 28 transactions which total $16,018,212.
2. DOHMH should “..strengthen its oversight of subrecipients to prevent future unallowable
payments by reviewing subrecipient invoices and supporting documentation to ensure costs
claimed are allowable and allocable.”
DOHMH agrees with this recommendation as it pertains to ELC subawards given to NYC
agencies through DOHMH. Going forward, memoranda of understanding governing
intergovernmental subawards will detail expectations for substantiating that costs claimed are
allowable and allocable. Payment will be conditioned upon submission of required reports and
documentation to facilitate verification that services invoiced by subcontracted vendors were
delivered according to subcontract terms. Claims to DOHMH must also be accompanied by a
claim summary with claim date, claim number, period for which the claim is submitted (start and end
dates), itemized breakdown of costs with brief descriptions, total claim amount, signed attestation that
all costs claimed have been verified and are allowable, and name, telephone, and email address of
contact person to respond to inquiries about the claim.
2
NYC DOHMH Charged Some Unallowable Costs to Its CDC COVID-19 Award (A-04-22-02035) 14
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