OIG Ca 25 015 Desk Review Of The State Of Mississippi S Use Of Coronavirus Relief Fund Proceeds
Summary
A Department of the Treasury Office of Inspector General memorandum, OIG-CA-25-015, dated December 12, 2024, from Assistant Inspector General for Audit Deborah L. Harker, transmitting a desk review of the State of Mississippi's use of Coronavirus Relief Fund proceeds performed by Castro & Company, LLC. The review covered obligation and expenditure data for March 1, 2020 through September 30, 2022, and a non-statistical selection of 30 transactions. It reports unsupported questioned costs of $1,324,066 in the Direct Payments and Aggregate Payments to Individuals payment types and rates Mississippi's risk of unallowable use of funds as moderate. It also notes $5,910,417 in CRF questioned costs in the fiscal year 2021 Single Audit Act report and recommends follow-up on unemployment expenditures. A schedule of monetary benefits is attached.
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Page 1 DEPARTMENT OF THE TREASURY
W ASHINGTON, D. C. 20220
OFFICE OF
INSPECT OR GENERAL
December 12, 2024
MEMORANDUM FOR JESSICA MILANO, CHIEF PROGRAM OFFICER,
OFFICE OF CAPITAL ACCESS, DEPARTMENT OF THE TREASURY
FROM: Deborah L. Harker /s/
Assistant Inspector General for Audit
SUBJECT: Desk Review of the State of Mississippi’s Use of
Coronavirus Relief Fund Proceeds
(OIG-CA-25-015)
Please find the attached desk review memorandum 1 on the State of Mississippi’s
(Mississippi) 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 personnel reviewed documentation for a non-statistical
selection of 30 transactions reported in the quarterly Financial Progress Reports
(FPR) and identified total unsupported questioned costs for Direct Payments
greater than or equal to $50,000 and Aggregate Payments to Individuals 2 payment
types of $1,324,066 (see attached schedule of monetary benefits).
Castro determined that the expenditures related to Contracts greater than or equal
to $50,000 and Grants greater than or equal to $50,000 payment types complied
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 grant-reporting portal on a quarterly
basis.
2 Obligations and expenditures for payments made to individuals, regardless of amount, are
required to be reported in the aggregate in the grant-reporting portal to prevent inappropriate
disclosure of personally identifiable information.
Page 2
with the CARES Act and the Department of the Treasury’s (Treasury) Guidance.
Additionally, Castro found that the Aggregate Reporting less than $50,000 3
payment type complied with the CARES Act, but did not comply with Treasury
Guidance. Further, Castro determined that the expenditures related to the Direct
Payments greater than or equal to $50,000 and Aggregate Payments to
Individuals4 payment types did not comply with the CARES Act and Treasury’s
Guidance. Castro determined that Mississippi’s risk of unallowable use of funds is
moderate.
Castro recommends that Treasury Office of Inspector General (OIG) follow-up with
Mississippi’s management to confirm the $1,324,066 of transactions noted as
unsupported expenditures within Direct Payments greater than or equal to $50,000
and Aggregate Payments to Individuals can be supported. If support is not
provided, Treasury OIG should recoup the funds or request Mississippi
management to provide support for replacement expenses, not previously
charged, that were eligible during the CRF period of performance.
Further, based on Mississippi’s responsiveness to Treasury OIG’s requests and its
ability to provide sufficient documentation and/or replace unsupported
transactions charged to CRF with valid expenditures, Castro recommends
Treasury OIG determine the feasibility of conducting an audit for the Direct
Payments greater than or equal to $50,000 and Aggregate Payments to Individuals
payment types.
Castro also noted that Mississippi had findings in their Single Audit Act report for
fiscal year 2021. Castro recommends that Treasury OIG follow-up with Treasury’s
Office of Capital Access to ensure that management decision letters are issued on
the findings identified by the auditor in the Single Audit Act reports, which are
summarized below.
3 Prime recipients were required to report CRF transactions greater than or equal to $50,000 in
detail in the grant-reporting portal. Transactions less than $50,000 could be reported as an
aggregate lump-sum amount by type (contracts, grants, loans, direct payments, and transfers to
other government entities).
4 Obligations and expenditures for payments made to individuals, regardless of amount, were
required to be reported in the aggregate in the grant-reporting portal to prevent inappropriate
disclosure of personally identifiable information.
Page 3
1) Mississippi’s fiscal year 2020 Single Audit Act report was published on
July 28, 2021, and the auditor did not identify any CRF related questioned
costs.
2) Mississippi’s fiscal year 2021 Single Audit Act report was published on
November 11, 2022, and the auditor determined unsupported questioned
costs specific to the CRF in the amount of $5,910,417.
3) Mississippi’s fiscal year 2022 Single Audit Act report was published on
July 31, 2022, and the auditor did not identify any CRF related questioned
costs.
Castro recommends Treasury OIG follow-up on the CRF-specific questioned costs
reported in the fiscal year 2021 report.
Additionally, Castro identified other matters throughout the course of the desk
review that warrant Treasury OIG’s attention relating to Mississippi’s
Unemployment Insurance Trust Fund. Castro noted potential unemployment
overpayments were reported by Mississippi’s State Auditors. The Mississippi
Department of Employment Security asserted that the potential overpayments
were estimates that were extrapolated from Single Audit Act testing associated
with a prior year finding. In addition, they explained that the actual known
overpayment was related to the testing of the prior year finding. Given this
information, Castro was unable to determine whether the potential fraudulent
claims noted by the State Auditors were reimbursed with CRF proceeds. Castro
recommends Treasury OIG follow-up with Mississippi to determine the feasibility
of conducting a limited scope review of its unemployment expenditures.
Mississippi management opted to forgo meeting withTreasury OIG and Castro to
further discuss the report. Mississippi will collect the documentation needed to
support the questioned costs and provide the support to Treasury OIG during their
follow-up review in 2025.
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 Mississippi’s use of 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 Quality Standards for Federal Offices of Inspectors General .
Page 4
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, Audit Director, at (202) 487-8371.
cc: Michelle A. Dickerman, Deputy Assistant General Counsel, Department of
the Treasury
Danielle Christensen, Deputy Chief Program Officer, Office of Capital
Access, Department of the Treasury
Jason Quon, Division Deputy, Mississippi Department of Finance and
Administration
Liz Welch, Executive Director, Mississippi Department of Finance and
Administration
Reginald Welch, Fiscal Analyst, Mississippi Department of Finance and
Administration
Wayne Ference, Partner, Castro & Company, LLC
Page 5
Attachment
Schedule of Monetary Benefits
According to the Code of Federal Regulations, 5 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). 6 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.
Recommendation Questioned Costs
Recommendation No. 1 $1,324,066
The questioned cost represents amounts provided by Treasury under the
Coronavirus Relief Fund. As discussed in the attached desk review, $1,324,066 is
Mississippi’s expenditures reported in the grant-reporting portal that were
ineligible or lacked supporting documentation.
5
2 CFR § 200.84 – Questioned Cost
6
JAMES is Treasury’s audit recommendation tracking system.
1635 King Street
Alexandria, VA 22314
Phone: 703.229.4440
Fax: 703.859.7603
www.castroco.com
Desk Review of the State of Mississippi
December 12, 2024
OIG-CA-25-015
MEMORANDUM FOR DEBORAH L. HARKER,
ASSISTANT INSPECTOR GENERAL FOR AUDIT
FROM: Wayne Ference
Partner, Castro & Company, LLC
SUBJECT: Desk Review of the State of Mississippi
On April 9, 2024, we initiated a desk review of the State of Mississippi’s
(Mississippi) 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 Mississippi’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 September 30, 2022,3 as reported in
the GrantSolutions portal.
As part of our desk review, we performed the following:
1) reviewed Mississippi’s quarterly Financial Progress Reports (FPRs)
submitted in the GrantSolutions portal through September 30, 2022;
2) reviewed the Department of the Treasury’s (Treasury) Coronavirus Relief
Fund Guidance as published in the Federal Register on January 15, 2021; 4
1
P.L. 116-136 (March 27, 2020).
2
GrantSolutions, a grant and program management Federal shared service provider under the
United States (U.S.) Department of Health and Human Services, developed a customized and user-
friendly reporting solution to capture the use of CRF payments from prime recipients.
3
Mississippi fully expended their total CRF proceeds as of September 30, 2022. Castro set the
scope end date to September 30, 2022, which was the date of Mississippi’s last reporting
submission within the GrantSolutions portal.
4
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
1
Desk Review of the State of Mississippi
3) reviewed Treasury Office of Inspector General’s (OIG) Coronavirus Relief
Fund Frequently Asked Questions Related to Reporting and
Recordkeeping;5
4) reviewed Treasury OIG’s monitoring checklists6 of Mississippi’s quarterly
FPR submissions for reporting deficiencies;
5) reviewed other audit reports issued, such as Single Audit Act reports, 7 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 Mississippi’s uses of CRF proceeds;
6) reviewed Treasury OIG Office of Investigations, the Council of the
Inspectors General on Integrity and Efficiency Pandemic Response
Accountability Committee,8 and Treasury OIG Office of Counsel input on
issues that may pose risk or impact Mississippi’s use of CRF proceeds;
7) interviewed key personnel responsible for preparing and certifying
Mississippi’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, Direct Payments,
Aggregate Reporting, 9 and Aggregate Payments to Individuals10 data
F
identified through GrantSolutions portal reporting; and
5
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.
6
The checklists were used by Treasury OIG personnel to monitor the progress of prime recipient
reporting in the GrantSolutions portal. GrantSolutions quarterly submission reviews were
designed to identify material omissions and significant errors, and where necessary, included
procedures for notifying prime recipients of misreported data for timely correction. Treasury OIG
followed the CRF Prime Recipient Quarterly GrantSolutions Submissions Monitoring and Review
Procedures Guide, OIG-CA-20-029R to monitor the prime recipients on a quarterly basis.
7
P. L. 104-156 (July 5, 1996). The Single Audit Act of 1984, as amended in 1996, requires entities
who receive federal funds in excess of $750,000 to undergo an annual audit of those Federal funds.
The act was enacted for the purpose of promoting sound financial management, including
effective internal controls, with respect to Federal awards administered by non-Federal entities and
to establish uniform requirements for audits. This prime recipient was subject to those audit
requirements, and Castro reviewed applicable prior year single audit reports as part of our desk
review risk assessment procedures.
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 15 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
Prime recipients were required to report CRF transactions greater than or equal to $50,000 in
detail in the GrantSolutions portal. Transactions less than $50,000 could be reported as an
aggregate lump-sum amount by type (contracts, grants, loans, direct payments, and transfers to
other government entities).
10
Obligations and expenditures for payments made to individuals, regardless of amount, were
required to be reported in the aggregate in the GrantSolutions portal to prevent inappropriate
disclosure of personally identifiable information.
2
Desk Review of the State of Mississippi
9) evaluated documentation and records used to support Mississippi’s
quarterly FPRs.
Based on our review of Mississippi’s documentation supporting the uses of its
CRF proceeds as reported in the GrantSolutions portal, we determined that the
expenditures related to the Contracts greater than or equal to $50,000 and Grants
greater than or equal to $50,000 payment types complied with the CARES Act and
Treasury’s Guidance. Additionally, we found that the Aggregate Reporting less
than $50,000 payment type complied with the CARES Act, but did not comply with
Treasury Guidance. Further, we determined that the expenditures related to the
Direct Payments greater than or equal to $50,000 and Aggregate Payments to
Individuals payment types did not comply with the CARES Act and Treasury’s
Guidance.
We identified total unsupported questioned costs of $1,324,066. Further, we
determined that Mississippi’s risk of unallowable use of funds is moderate.
Castro recommends that Treasury OIG follow-up with Mississippi’s management
to confirm if the $1,324,066 noted as unsupported expenditures within the Direct
Payments greater than or equal to $50,000 and Aggregate Payments to Individuals
payment types can be supported. If support is not provided, Treasury OIG should
recoup the funds or request Mississippi management to provide support for
replacement expenses, not previously charged, that were eligible during the CRF
period of performance.
Further, based on Mississippi’s responsiveness to Treasury OIG’s requests and its
ability to provide sufficient documentation and/or replace unsupported
transactions charged to CRF with valid expenditures, Castro recommends
Treasury OIG determine the feasibility of conducting an audit for the Direct
Payments greater than or equal to $50,000 and Aggregate Payments to Individuals
payment types.
At the time of our fieldwork, Castro noted that Mississippi had findings in their
Single Audit report for fiscal year 2021. Castro recommends that Treasury OIG
follow-up with Treasury’s Office of Capital Access to ensure that management
decision letters are issued on the findings identified by the auditor in the Single
Audit reports, which we have summarized below.
Mississippi’s fiscal year 2020 Single Audit report was published on
July 28, 2021, and the auditor did not identify any CRF related questioned
costs.
Mississippi’s fiscal year 2021 Single Audit report was published on
3
Desk Review of the State of Mississippi
November 11, 2022, and the auditor found unsupported questioned costs
specific to the CRF in the amount of $5,910,417.
Mississippi’s fiscal year 2022 Single Audit report was published on
July 31, 2023, and the auditor did not identify any CRF related questioned
costs.
We recommend Treasury OIG follow-up on any CRF specific questioned costs
reported in the fiscal year 2021 report.
Non-Statistical Transaction Selection Methodology
Treasury issued a $1,250,000,000 CRF payment to Mississippi. As of
September 30, 2022, Mississippi expended all its CRF funds. Mississippi’s
cumulative obligations and expenditures by payment type are summarized below.
Cumulative Cumulative
Payment Type Obligations Expenditures
Contracts >= $50,000 $ 16,290,119 $ 16,290,119
Grants >= $50,000 $ 485,560,392 $ 485,560,392
Loans >= $50,000 $ - $ -
Transfers >= $50,000 $ - $ -
Direct Payments >= $50,000 $ 138,359,475 $ 138,359,475
Aggregate Reporting < $50,000 $ 168,436,790 $ 168,436,790
Aggregate Payments to
Individuals (in any amount) $ 441,353,224 $ 441,353,224
Totals $ 1,250,000,000 $ 1,250,000,000
Castro made a non-statistical selection of payments in the Contracts greater than
or equal to $50,000, Grants 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 payment types. Selections were made using
auditor judgment based on information and risks identified in reviewing audit
reports, the GrantSolutions portal reporting anomalies11 identified by the Treasury
OIG CRF monitoring team, and review of Mississippi’s FPR submissions.
Mississippi did not obligate or expend CRF proceeds to the Loans greater than or
equal to $50,000 and Transfers12 greater than or equal to $50,000 payment types;
therefore, we did not select transactions from these payment types.
11
Treasury OIG had a pre-defined list of risk indicators that were triggered based on data
submitted by prime recipients in the FPR submissions that met certain criteria. Castro reviewed
these results provided by Treasury OIG for the prime recipient.
12
A transfer to another government entity is a disbursement or payment to a government entity
that is legally distinct from the prime recipient.
4
Desk Review of the State of Mississippi
The number of transactions (30) we selected to test was based on Mississippi’s
total CRF award amount and Castro’s overall risk assessment of Mississippi. To
allocate the number transactions (30) by payment type (Contracts greater than or
equal to $50,000, Grants 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 total payment type dollar amounts as
a percentage of cumulative expenditures as of September 30, 2022. The
transactions tested were not selected statistically, and therefore results could not
be extrapolated to the total universe of transactions.
Additionally, Treasury OIG provided information on anomalies identified for
Mississippi. We selected 17 anomalies within our original transaction selections.
Treasury OIG also identified additional anomalies in the form of potential
duplicate transactions which had not already been included within our transaction
selections, from which we selected three potential duplicates. We performed
limited testing on these three potential duplicate payments. We identified
exceptions within our testing of potential duplicate transactions. See Direct
Payments – Mississippi Emergency Management Agency’s Duplicated Costs in
the GrantSolutions Portal section below for further discussion.
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 U.S. Virgin Islands, Guam, American Samoa,
and the Commonwealth of the Northern Mariana Islands; and Tribal governments
(collectively referred to as “prime recipients”). Treasury issued a $1,250,000,000
CRF payment to Mississippi. The CARES Act stipulates that a prime recipient may
only use the funds to cover costs that —
(1) were 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
5
Desk Review of the State of Mississippi
(3) were incurred during the covered period between March 1, 2020 and
December 31, 2021.13
Section 15011 of the CARES Act required each covered recipient 14 to submit to
Treasury and the Pandemic Response Accountability Committee, no later than 10
days after the end of each calendar quarter, a report that contained (1) the total
amount of large, covered funds15,16 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 the authority to recoup funds in the event it is determined a
prime recipient failed to comply with requirements of subsection 601(d) of the
Social Security Act, as amended, (42 U.S.C. 801(d)).
13
P.L. 116-260 (December 27, 2020). The covered period end date of the CRF was extended through
December 31, 2021 by the Consolidated Appropriations Act, 2021. The covered period 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.
14
Section 15011 of P.L. 116-136 defined a covered recipient as any entity that received large,
covered funds and included any State, the District of Columbia, and any territory or possession of
the United States.
15
Section 15010 of P.L. 116-136 defined covered funds as any funds, including loans, that were
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 made appropriations for
Coronavirus response and related activities.
16
Section 15011 of P.L. 116-136 defined large, covered funds as covered funds that amounted to
more than $150,000.
6
Desk Review of the State of Mississippi
Desk Review Results
Financial Progress Reports
We reviewed Mississippi’s quarterly FPRs through September 30, 2022, and found
that Mississippi timely filed quarterly FPRs in the GrantSolutions portal in
compliance with Treasury OIG’s reporting requirements for the periods ending
June 30, 2020 through September 30, 2022.
Population Reconciling and Financial Reporting Control Issues
Castro’s review of Mississippi’s GrantSolutions portal reported expenditures as of
September 30, 2022 as compared to the underlying general ledger (GL) details,
resulted in the identification of reconciling reporting errors. Castro determined
that Mississippi did not have effective controls over its procedures to reconcile its
GrantSolutions reported amounts to its GL population. Mississippi’s management
confirmed they did not make current quarter adjustments to reconcile payment
types. In addition, Mississippi obtained financial data from multiple departments
and agencies and due to time constraints, they were unable to complete the
reconciliation. We identified the following reconciliation errors:
Cumulative
Cumulative Expenditures Per
Expenditures GL Detail
Payment Type per FPR Population Difference
Contracts >= $50,000 $ 16,290,119 $ 23,739,785 $ 7,449,666
Grants >= $50,000 $ 485,560,392 $ 491,869,889 $ 6,309,497
Loans >= $50,000 $ - $ - $ -
Transfers >= $50,000 $ - $ - $ -
Direct Payments >= $50,000 $ 138,359,475 $ 137,352,662 $ (1,006,813)
Aggregate Reporting < $50,000 $ 168,436,790 $ 171,665,040 $ 3,228,250
Aggregate Payments to Individuals
(in any amounts) $ 441,353,224 $ 425,372,624 $ (15,980,600)
Totals $ 1,250,000,000 $ 1,250,000,000 $ -
Castro noted that these classification errors between the GrantSolutions portal
reported expenditures by payment types in comparison to the GL detail
populations did not result in a change to the total expenditures claimed. However,
we considered these reporting errors to be non-compliant with Treasury’s
Guidance. Castro made transaction selections for testing using a combination of
FPR and GL detail.
7
Desk Review of the State of Mississippi
Summary of Testing Results
We found that the Contracts greater than or equal to $50,000 and Grants greater
than or equal to $50,000 payment types complied with the CARES Act and
Treasury’s Guidance. Additionally, we found that Aggregate Reporting less than
$50,000 complied with the CARES Act, but did not comply with Treasury
Guidance. Further, we found that the Direct Payments greater than or equal to
$50,000 and Aggregate Payments to Individuals payment types did not comply
with the CARES Act and Treasury’s Guidance because we were unable to
determine if all tested expenditures were necessary 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. The
transactions selected for testing were not selected statistically, and therefore
results could not be extrapolated to the total universe of transactions.
Within Table 1 below, we have included a summary of $4,066 in unsupported
expenditures identified as questioned costs through our testing of detailed
transactions, which did not comply with the CARES Act and Treasury’s Guidance.
Castro also identified other matters throughout the course of our desk review
procedures which we considered to be questioned costs that were not part of our
testing of detailed transactions. Table 2 below combines the questioned costs
identified in Table 1 with the other questioned costs of $1,320,000 identified
separately from our detailed transaction testing to account for total questioned
costs of $1,324,066. See the Desk Review Results section below Table 2 for a
detailed discussion of questioned costs and other issues identified throughout the
course of our desk review.
8
Desk Review of the State of Mississippi
Table 1 - Summary of Expenditures Testing and Recommended Results
As of September 30, 202217
Cumulative Unsupported Ineligible
Expenditure GL Cumulative Tested Tested Total Tested
Population Expenditure Questioned Questioned Questioned
Payment Type
Amount Tested Amount Costs Costs Costs
Contracts >= $50,000 $ 23,739,785 $ 1,700,734 $ - $ - $ -
Grants >= $50,000 $ 491,869,889 $ 32,699,175 $ - $ - $ -
Loans >= $50,000 $ - $ - $ - $ - $ -
Transfers >= $50,000 $ - $ - $ - $ - $ -
Direct Payments >=
$50,000 $ 137,352,662 $ 12,624,382 $ - $ - $ -
Aggregate Reporting <
$50,000 $ 171,665,040 $ 122,874 $ - $ - $ -
Aggregate Payments to
Individuals (in any
amount) $ 425,372,624 $ 207,537,373 $ 4,066 $ - $ 4,066
Totals $ 1,250,000,000 $ 254,684,538 $ 4,066 $ - $ 4,066
17
Castro identified reporting misclassifications between all payment types when comparing
Mississippi’s GrantSolutions portal data to the GL details as of September 30, 2022. We considered
this a reporting error that did not comply with Treasury’s Guidance. We presented the corrected
GL population amount above to demonstrate the costs charged to Mississippi’s GL per payment
type. Our transaction selections were made as of September 30, 2022, using a combination of FPR
and GL details. See Desk Review Results Section - Population Reconciling and Financial Reporting
Control Issues above for more information.
9
Desk Review of the State of Mississippi
Table 2 – Summary of Expenditures Testing and Other Matters and Recommended Results
As of September 30, 2022
(E)
(B) (C=A+B) Ineligible (F=D+E)
(A) Unsupported Total (D) Questioned Total (G=C+F)
Unsupported Questioned Unsupported Ineligible Costs Ineligible Total
Questioned Costs (Other Questioned Questioned (Other Questioned Questioned
Payment Type Costs (Tested) Matters) Costs Costs (Tested) Matters) Costs Costs
Contracts >= $50,000 $ - $ - $ - $ - $ - $ - $ -
Grants >= $50,000 $ - $ - $ - $ - $ - $ - $ -
Loans >= $50,000 $ - $ - $ - $ - $ - $ - $ -
Transfers >= $50,000 $ - $ - $ - $ - $ - $ - $ -
Direct Payments >= $50,000 $ - $ 1,320,000 $ 1,320,000 $ - $ - $ - $ 1,320,000
Aggregate Reporting <
$50,000 $ - $ - $ - $ - $ - $ - $ -
Aggregate Payments to
Individuals (in any amount) $ 4,066 $ - $ 4,066 $ - $ - $ - $ 4,066
Totals $ 4,066 $ 1,320,000 $ 1,324,066 $ - $ - $ - $ 1,324,066
10
Desk Review of the State of Mississippi
Contracts Greater Than or Equal to $50,000
We determined Mississippi’s Contracts greater than or equal to $50,000 complied
with the CARES Act and Treasury’s Guidance. We tested three contracts totaling
$1,700,734 and identified no exceptions. The contracts tested included
expenditures for the implementation of an Artificial Intelligence Camera
Surveillance System to track social contact and reduce in-person contact to limit
the spread of COVID-19 within a prison facility; contract consulting services to
administer the Back to Business Mississippi Grant Program (a program designed
to provide grants to eligible small businesses that suffered an interruption to their
regular business operations due to COVID-19); and construction costs for the
expansion of a parking lot for the Mississippi Emergency Management Agency
State Emergency Logistical Operations Center to facilitate distribution of personal
protective equipment.
Grants Greater Than or Equal to $50,000
We determined Mississippi’s Grants greater than or equal to $50,000 complied
with the CARES Act and Treasury’s Guidance. We tested transaction expenditures
totaling $32,699,175 for 12 grants and identified no exceptions. The grants tested
included expenditures related to reimbursements for the public-school education
system and students; training programs for displaced employees due to the
pandemic; broadband expansion for increased telework capabilities;
reimbursement to medical facilities for payroll and non-payroll expenses; and
public health expenses for city facilities.
Direct Payments Greater Than or Equal to $50,000
We determined Mississippi’s Direct Payments greater than or equal to $50,000 did
not comply with the CARES Act and Treasury’s Guidance. We tested transaction
expenditures totaling $12,624,382 for four direct payments and identified no
testing exceptions. The direct payments tested included expenditures related to
upgrades for the Mississippi Wireless Information Network related to
communication needs due to the COVID-19 pandemic; purchase of masks; COVID-
19 project related payroll costs for a County; and enhancements to strengthen
facility capabilities for medical centers to receive COVID-19 patients.
We identified one transaction that was considered misclassified under Direct
Payments greater than or equal to $50,000 instead of Aggregate Payments to
Individuals in the GrantSolutions portal, resulting in non-compliance with
Treasury’s Guidance. We reviewed the supporting documentation and determined
the payroll related costs were eligible and did not result in any questioned costs.
11
Desk Review of the State of Mississippi
We also reviewed three additional direct payment transactions identified as
potential duplicate payments by Treasury OIG totaling $3,960,000. We identified
other matter unsupported questioned costs of $1,320,000 related to one of these
transactions, as detailed below.
Mississippi Emergency Management Agency’s Duplicated Costs in the
GrantSolutions Portal
The Mississippi Emergency Management Agency purchased 400,000 units of
masks from a third-party vendor totaling $1,320,000. We determined Mississippi
erroneously duplicated a previous expenditure claimed in the GrantSolutions
portal as of September 30, 2022, resulting in other matter unsupported questioned
costs of $1,320,000. Based on the supporting documentation provided, Mississippi
reversed out the initial purchase of the masks for the amount of $1,320,000 in the
GL but failed to adjust the expenditures to decrease the amount claimed in the
GrantSolutions portal by $1,320,000, resulting in an overstatement of Direct
Payments greater than or equal to $50,000.
Aggregate Reporting Less Than $50,000
We determined Mississippi’s Aggregate Reporting less than $50,000 complied
with the CARES Act, but not Treasury’s Guidance. We tested three transactions
totaling $122,874 and identified no exceptions. The transactions tested included
professional services for emergency management technical assistance to
Mississippi Emergency Management Agency personnel with the COVID-19
response efforts; financial assistance provided to commodity producers for losses
incurred during the COVID-19 pandemic; and one-time, individual hazard duty
payments to agency-identified sworn law enforcement officers that performed
hazardous duty work in December 2021 during the COVID-19 pandemic covered
period.
We identified one transaction that was considered misclassified under Aggregate
Direct Payments less than $50,000 instead of Aggregate Payments to Individuals
in the GrantSolutions portal, resulting in non-compliance with Treasury’s
Guidance. We reviewed the supporting documentation and determined the
payroll related costs were eligible and did not result in any questioned costs.
12
Desk Review of the State of Mississippi
Aggregate Payments to Individuals
CRF payments made to individuals, regardless of amount, were required to be
reported in the aggregate in the GrantSolutions portal to prevent inappropriate
disclosure of personally identifiable information. Castro notes that the Aggregate
Payments to Individuals payment type consisted of the below broad types of
potential costs, which we have defined from Treasury’s guidance as published in
the Federal Register.18 Prime recipients may or may not have claimed all these
types of expenditures.
Public Health and Safety Payroll19 – consisted of payroll costs for public
health and safety department personnel.
Substantially Dedicated Payroll20 – consisted of payroll costs for non-
public health and safety personnel who were substantially dedicated to
mitigating or responding to the COVID-19 public health emergency.
Non-Substantially Dedicated Payroll21 – consisted of payroll costs for
personnel who performed COVID-19 related tasks on a part-time basis.
Non-Payroll Expenditures – consisted of financial assistance payments to
citizens due to hardship or loss of income, unemployment claims, and
other non-payroll related expenditures made to individuals.
18
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
19
Treasury’s Federal Register guidance provided the following examples of public health and
safety employees: “police officers (including state police officers), sheriffs and deputy sheriffs,
firefighters, emergency medical responders, correctional and detention officers, and those who
directly support such employees such as dispatchers and supervisory personnel…employees
involved in providing medical and other health services to patients and supervisory personnel,
including medical staff assigned to schools, prisons, and other such institutions, and other support
services essential for patient care (e.g., laboratory technicians) as well as employees of public
health departments directly engaged in matters related to public health and related supervisory
personnel.”
20
Substantially dedicated payroll costs meant that personnel must have dedicated over 50 percent
of their time to responding or mitigating COVID-19. Treasury’s Federal Register guidance stated:
“The full amount of payroll and benefits expenses of substantially dedicated employees may be
covered using payments from the Fund. Treasury has not developed a precise definition of what
"substantially dedicated" means given that there is not a precise way to define this term across
different employment types. The relevant unit of government should maintain documentation of
the "substantially dedicated" conclusion with respect to its employees.”
21
Payroll costs that were not substantially dedicated were payroll costs that were not for public
health and safety, and which were not substantially dedicated to performing COVID-19 related
tasks. Treasury’s Federal Register guidance defined more stringent tracking requirements for these
types of payroll costs. Specifically, Treasury’s Federal Register stated: “track time spent by
employees related to COVID-19 and apply Fund payments on that basis but would need to do so
consistently within the relevant agency or department. This means, for example, that a
government could cover payroll expenses allocated on an hourly basis to employees' time
dedicated to mitigating or responding to the COVID-19 public health emergency.”
13
Desk Review of the State of Mississippi
The Mississippi Aggregate Payments to Individuals balance consisted of payroll
and other transactions from the following types of claimed costs.
Aggregate Payments to Individuals Total Expenses
Category Types22 Claimed
Public Health and Safety Payroll $ 9,562,310
Substantially Dedicated Payroll $ 123,393
Non-Substantially Dedicated Payroll $ 1,132,446
Non-Payroll Expenditures23 $ 414,554,475
Totals $ 425,372,624
Castro noted that public health and safety payroll transactions were subject to
Treasury’s administrative accommodation,24 and therefore, were subject to less
detailed documentation requirements. Castro tested public health and safety
payroll transactions by reviewing itemized payroll distribution reports to support
these balances. Substantially dedicated payroll balances were not subject to this
administrative accommodation, and therefore, Castro tested these transactions by
reviewing payroll distribution files and by performing tests over specific employee
timesheet submissions or other documentation provided by the prime recipient to
confirm the “substantially dedicated” conclusion with respect to its employees.
Non-Payroll expenditure balances were also not subject to this administrative
accommodation, and therefore, Castro tested these transactions by reviewing the
program requirements, and requested specific supporting documentation to
determine eligibility and allowable use.
22
We obtained and reviewed Mississippi’s prepared Aggregate Payments to Individuals Analysis
that totaled $425,372,624. We confirmed the total amount reconciled to the GL level details. See
Population Reconciling and Financial Reporting Control Issues above.
23
As demonstrated in the table above, Mississippi expended approximately 97 percent of their
Aggregate Payments to Individuals CRF proceeds within Non-Payroll Expenditures. Of the $414.6
million reported, $392.4 million was used for unemployment-related expenditures. Refer to the
Unemployment Replenishment Analysis section below.
24
Treasury’s Federal Register guidance stated the following regarding an administrative
accommodation: “In recognition of the particular importance of public health and public safety
workers to State, local, and tribal government responses to the public health emergency, Treasury
has provided, as an administrative accommodation, that a State, local, or tribal government may
presume that public health and public safety employees meet the substantially dedicated
test…This means that, if this presumption applies, work performed by such employees is
considered to be a substantially different use than accounted for in the most recently approved
budget as of March 27, 2020. All costs of such employees may be covered using payments from
the Fund for services provided during the period that begins on March 1, 2020, and ends on
December 31, 2021.”
14
Desk Review of the State of Mississippi
We determined Mississippi’s Aggregate Payments to Individuals did not comply
with the CARES Act and Treasury’s Guidance. We tested expenditures totaling
$207,537,373 for eight Aggregate Payments to Individuals transactions. We tested
transactions related to unemployment insurance expenditures, public health and
safety payroll, substantially dedicated and non-substantially dedicated payroll,
and reimbursement costs to a corrections facility for social distancing and
sanitation measures. We identified exceptions related to one transaction, resulting
in unsupported questioned costs of $4,066, as detailed below.
Additionally, we identified a reporting misclassification that was non-compliant
with Treasury’s Guidance under the payment type Aggregate Payments to
Individuals, where we determined that Mississippi should have correctly reported
these costs under the Aggregate Reporting less than $50,000 payment type.
Aggregate Payments to Individuals Exception – Alcorn County Corrections
Facility Non-Payroll Costs
The Mississippi Department of Corrections (MDOC) claimed, and we tested
$48,523 in CRF proceeds for Regional Correctional Facilities as part of their
mitigation efforts in response to the COVID-19 pandemic. For this specific
transaction, Alcorn County Regional Correctional Facility was reimbursed for
social distancing and sanitation measures expenditures.
We inspected Alcorn County's reimbursement request, which consisted of
invoices, purchase orders, and payment vouchers, and determined they were
necessary in response to the COVID-19 pandemic. However, one transaction
purchase for a medical cart for $4,066 was submitted with the reimbursement
request, but Mississippi confirmed the medical cart was not received and no
remittance was made by Alcorn. Mississippi personnel stated, "…MDOC does not
have payment support for the medical cart. Per Alcorn County, the medical cart
order was cancelled and was never received."
Based on this response, we determined the claimed expenditures did not comply
with the CARES Act and Treasury’s Guidance resulting in unsupported questioned
costs of $4,066. Additionally, we identified a reporting misclassification that was
non-compliant with Treasury’s Guidance under payment type Aggregate
Payments to Individuals, where we determined that Mississippi should have
correctly reported these costs under the Aggregate Reporting less than $50,000
payment type.
15
Desk Review of the State of Mississippi
Non-Payroll Expenditures: Unemployment Replenishment Analysis
The Unemployment Insurance (UI) Trust Fund25 is a reserve funded by state taxes,
primarily on employers, and used only to pay state unemployment benefits. The
balance in the reserve fund can decline during a prolonged period of high
unemployment, such as the COVID-19 pandemic. The fund’s activity is
demonstrated by inflows and outflows of the account based on contributions from
state taxes or employers and reduced by issuance of unemployment benefit
claims. Due to the COVID-19 pandemic, Mississippi experienced significant
increases in unemployment claims, which decreased the reserve fund balance and
increased the risk of insolvency.
Mississippi experienced a significant decline in the UI Trust Fund balance from
February 29, 2020 through July 31, 2020, of $362,006,348. Upon inspection of
Mississippi’s unemployment claims analysis, which summarized the inflows and
outflows of the UI Trust Fund balance during the covered period, Castro noted
Mississippi management was able to track paid unemployment claims that were
specific to COVID-19, which totaled $526,363,300. Mississippi used CRF proceeds
in the amount of $392,351,450 to replenish the UI Trust Fund balance. The
increase in unemployment benefits claimed directly impacted Mississippi’s UI
Trust Fund balance, which increased the risk of potential insolvency. Castro also
obtained a written confirmation from the Mississippi personnel responsible for
managing the UI Trust Fund, which stated that Mississippi utilized other federal
funding sources to reimburse unemployment related expenditures; however,
Castro accounted for those in our analysis and noted that Mississippi’s UI Trust
Fund balance decreased by more than the amount of other federal funding
sources used.
Castro concluded Mississippi’s CRF payment to the Mississippi UI Trust Fund was
a replenishment payment and not an augmentation to the UI Trust Fund.
Additionally, Castro determined these payments were necessary due to the
COVID-19 pandemic and did not represent unemployment claims that would have
been paid regardless of the pandemic.
Mississippi claimed $392,351,450 in expenditures for unemployment claims and
benefits payments managed by the Mississippi Department of Employment
Security issued to residents who were unemployed during the COVID-19
25
The UI Trust Fund finances the costs of administering unemployment insurance programs,
federal loans made to state unemployment insurance funds, and extended benefits during periods
of high unemployment. As it pertains to the COVID-19 pandemic, Mississippi replenished the UI
Trust Fund balance with CRF proceeds for eligible claimants receiving unemployment benefit
payments.
16
Desk Review of the State of Mississippi
pandemic. We tested two transactions claimed within the Aggregate Payments to
Individuals payment type totaling $206,782,674 without any exceptions noted.
As mentioned in the Unemployment Replenishment Analysis above, we noted
Mississippi had more eligible unemployment claim expenditures than reimbursed
with CRF proceeds; however, we identified potential unemployment
overpayments of $474 million reported by Mississippi’s State Auditors. We
obtained and reviewed the Mississippi State Auditor’s report entitled, “Historic
Unemployment Fraud” dated September 2023, where the State Auditor estimated
at least $590 million of federal funds for unemployment related expenditures were
misspent between fiscal years 2020 and 2021. The Mississippi Department of
Employment Security asserted the potential overpayments were estimates that
were extrapolated from single audit testing associated with a prior year finding. In
addition, they explained the actual known overpayment was related to the testing
of the prior year finding totaling $62,434,776. Given this information, we were
unable to determine whether any of the potential overpayments noted by the
State Auditors were reimbursed with CRF proceeds. As a result, we recommend
Treasury OIG follow-up with Mississippi to determine the feasibility of conducting
a limited scope review of unemployment expenditures.
Conclusion
We determined that the expenditures related to the Contracts greater than or
equal to $50,000 and Grants greater than or equal to $50,000 payment types
complied with the CARES Act and Treasury’s Guidance. Additionally, we found
that the Aggregate Reporting less than $50,000 payment type complied with the
CARES Act, but did not comply with Treasury Guidance. Further, we found that
the expenditures related to the Direct Payments greater than or equal to $50,000
and Aggregate Payments to Individuals payment types did not comply with the
CARES Act and Treasury’s Guidance.
We identified total unsupported questioned costs of $1,324,066. Also, we
identified GrantSolutions portal reporting misclassification issues which were
non-compliant with Treasury’s Guidance. Additionally, Mississippi’s risk of
unallowable use of funds is moderate.
Castro recommends that Treasury OIG follow-up with Mississippi’s management
to confirm if the $1,324,066 noted as unsupported expenditures within the Direct
Payments greater than or equal to $50,000 and Aggregate Payments to Individuals
payment types can be supported. If support is not provided, Treasury OIG should
recoup the funds or request Mississippi management to provide support for
replacement expenses, not previously charged, that were eligible during the CRF
period of performance.
17
Desk Review of the State of Mississippi
Further, based on Mississippi’s responsiveness to Treasury OIG’s requests and its
ability to provide sufficient documentation and/or replace unsupported
transactions charged to CRF with valid expenditures, Castro recommends
Treasury OIG determine the feasibility of conducting an audit for the Direct
Payments greater than or equal to $50,000 and Aggregate Payments to Individuals
payment types.
At the time of our fieldwork, Castro noted that Mississippi had findings in their
Single Audit report for fiscal year 2021. Castro recommends that Treasury OIG
follow-up with Treasury’s Office of Capital Access to ensure that management
decision letters are issued on the findings identified by the auditor in the Single
Audit reports, which we have summarized below.
o Mississippi’s fiscal year 2020 Single Audit report was published on
July 28, 2021, and the auditor did not identify any CRF related
questioned costs.
o Mississippi’s fiscal year 2021 Single Audit report was published on
November 11, 2022, and the auditor found unsupported questioned
costs specific to the CRF in the amount of $5,910,417.
o Mississippi’s fiscal year 2022 Single Audit report was published on
July 31, 2022, and the auditor did not identify any CRF related
questioned costs.
We recommend Treasury OIG follow-up on any CRF specific questioned costs
reported in the fiscal year 2021 report.
Castro also identified the following other matter throughout the course of our
desk review, which warrants a recommendation to Treasury OIG for additional
action:
As mentioned in the Unemployment Insurance Trust Fund Replenishment
Analysis, we noted potential unemployment overpayments related to fraud
reported by Mississippi’s State Auditors. The Mississippi Department of
Employment Security asserted the potential overpayments were estimates
that were extrapolated from single audit testing associated with a prior year
finding. In addition, they explained that the actual known overpayment was
related to the testing of the prior year finding. Given this information, we
were unable to determine whether the potential fraudulent claims noted by
the State Auditors were reimbursed with CRF proceeds. As a result, we
recommend Treasury OIG follow-up with Mississippi to determine the
feasibility of conducting a limited scope review of its unemployment
expenditures.
18
Desk Review of the State of Mississippi
*****
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.26 We appreciate the courtesies
and cooperation provided to our staff during the desk review.
Sincerely,
Wayne Ference
Partner, Castro & Company, LLC
26
https://www.ignet.gov/sites/default/files/files/Silver%20Book%20Revision%20-%208-20-12r.pdf
19
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