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DEPARTMENT OF THE TREASURY
W ASHINGTON, D.C. 20220
OFFICE OF
December 17, 2024
INSPECTOR GENERAL
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 Utah’s Use of Coronavirus
Relief Fund Proceeds (OIG-CA-25-018)
Please find the attached desk review memorandum1 on State of Utah’s (Utah) 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 37 transactions reported in the quarterly Financial Progress Reports
(FPR) and identified unsupported and ineligible questioned costs of $40,308,738
and $6,852,799, respectively, with total questioned costs of $47,161,537 (see
attached schedule of monetary benefits).
Castro determined the expenditures related to the Direct Payments greater than or
equal to $50,000 payment type complied with the CARES Act and the Department
of the Treasury’s (Treasury) Guidance. Castro found that the Contracts greater
than or equal to $50,000, Grants greater than or equal to $50,000, Transfers
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.
Page 2
greater than or equal to $50,000,2 Aggregate Reporting less than $50,000,3 and
Aggregate Payments to Individuals4 payment types did not comply with the
CARES Act and Treasury’s Guidance. Castro also identified grant-reporting portal
misclassification issues related to the Grants greater than or equal to $50,000 and
Aggregate Reporting less than $50,000 payment types, which were non-compliant
with Treasury’s Guidance. Additionally, Castro determined that Utah’s risk of
unallowable use of funds is high.
Castro recommends that Treasury Office of Inspector General (OIG) follow-up with
Utah’s management to confirm if the $40,308,738 noted as unsupported
expenditures within the Contracts greater than or equal to $50,000, Grants greater
than or equal to $50,000, Transfers greater than or equal to $50,000, Aggregate
Reporting less than $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 Utah management to provide support for replacement
expenses, not previously charged, that were eligible during the CRF period of
performance.
In addition, Castro recommends that Treasury OIG request Utah management to
provide support for replacement expenses, not previously charged, that were
eligible during the CRF period of performance for the $6,852,799 of ineligible costs
charged to the Contracts greater than or equal to $50,000, Grants greater than or
equal to $50,000, Transfers greater than or equal to $50,000, and Aggregate
Payments to Individuals payment types. If support is not provided, Treasury OIG
should recoup the funds.
Further, based on Utah management’s responsiveness to Treasury OIG’s requests
and management’s ability to provide sufficient documentation and/or replace
unsupported and ineligible transactions charged to CRF with valid expenditures,
Castro recommends Treasury OIG determine the feasibility of conducting an audit
for the Contracts greater than or equal to $50,000, Grants greater than or equal to
$50,000, Transfers greater than or equal to $50,000, Aggregate Reporting less than
$50,000, and Aggregate Payments to Individuals payment types.
2 A transfer to another government entity is a disbursement or payment to a government entity
that is legally distinct from the prime recipient.
3 Recipients are required to report CRF transactions greater than or equal to $50,000 in detail in the
grant-reporting portal. Transactions less than $50,000 can be reported as an aggregate lump-sum
amount by type (contracts, grants, loans, direct payments, and transfers to other government
entities).
4 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 3
Treasury OIG and Castro met with Utah’s management to discuss the questioned
costs. Utah management stated that they would provide additional documentation
to Treasury OIG to support the questioned costs or replace them with other
eligible expenditures.
At the time of desk review fieldwork, Castro noted that Utah had findings in their
Single Audit Act Reports for fiscal years 2020, 2021, and 2022. 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, as summarized below.
• Utah’s fiscal year 2020 Single Audit Act report was published on
December 18, 2020, and the auditor found unsupported questioned costs
specific to the CRF in the amount of $14,430,192.
• Utah’s fiscal year 2021 Single Audit Act report was published on
December 21, 2021, and the auditor found unsupported questioned costs
specific to the CRF in the amount of $17,675,204.
• Utah’s fiscal year 2022 Single Audit Act report was published on
December 14, 2022, and the auditor found unsupported questioned costs
specific to the CRF in the amount of $643,375.
• Utah’s fiscal year 2023 Single Audit Act report was published on
December 22, 2023, and did not include any CRF related questioned costs.
Castro recommends Treasury OIG follow-up on any CRF specific questioned costs
reported in the fiscal year 2020, 2021, and 2022 Single Audit Act reports.
Castro also identified other matters throughout the course of the desk review,
which warrant recommendations to Treasury OIG for additional action. Castro
recommends Treasury OIG follow-up on these issues:
1) Castro identified unsupported questioned costs totaling $11,985,002 claimed by
Utah under a $20,456,023 contract for broadband enhancement services. Since
Castro identified unsupported questioned costs related to the broadband
enhancement service contract transactions tested, Castro recommends Treasury
OIG determine the feasibility of performing additional follow-up with Utah to
determine if there were other instances of unsupported costs within the
$8,471,021 remaining, untested balance;
2) Castro identified unsupported questioned costs related to marketing campaigns
created and run by a marketing agency under the Contracts greater than or equal
to $50,000 payment type. Castro recommends Treasury OIG determine the
feasibility of performing additional follow-up with Utah to determine if there were
Page 4
other instances of unsupported balances related to the advertising campaigns
created through a third-party vendor;
3) Follow-up with Utah management and request that management performs an
analysis over all of their grant-reporting portal balances to determine if there were
other instances of subscription costs, separate from those tested by Castro,
included in the CRF reported expenditures and review those expenditures to
determine if there were subscription costs that extended past September 30, 2022;
4) Castro identified unsupported questioned costs related to the Thrive 125 grants
project. Castro recommends Treasury OIG determine the feasibility of performing
additional follow-up with Utah to determine if there were other instances of
unsupported costs within the other two awards issued under this program that
were not tested by Castro; and
5) Castro identified unsupported questioned costs related to a transfer to the
County of Weber to fund a non-profit grant program. Castro recommends
Treasury OIG determine the feasibility of performing additional follow-up with
Utah to determine if there were other instances of unsupported grants within the
amount of $1,790,107 not tested by Castro.
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 Utah’s use of the CRF proceeds. Castro is responsible for
the attached desk review memorandum and the conclusions expressed therein.
Our review found no instances in which Castro did not comply in all material
respects with the Quality Standards for Federal Offices of Inspectors General.
We appreciate the courtesies and cooperation provided to Castro and our staff
during the desk review. If you have any questions or require further information,
please contact me at (202) 486-1420, or a member of your staff may contact Lisa
DeAngelis, Audit Director, at (202) 487-8371.
Page 5
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
Wayne Ference, Partner, Castro & Company, LLC
Duncan Evans, Senior Managing Director of Budget & Operations, State of
Utah
Page 6
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 405.
Recommendation Questioned Costs
Recommendation No. 1 $47,161,537
The questioned costs represent amounts provided by Treasury under the
Coronavirus Relief Fund. As discussed in the attached desk review, $47,161,537 is
Utah’s total 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 Utah
December 17, 2024
OIG-CA-25-018
MEMORANDUM FOR DEBORAH L. HARKER,
ASSISTANT INSPECTOR GENERAL FOR AUDIT
FROM: Wayne Ference
Partner, Castro & Company, LLC
SUBJECT: Desk Review of the State of Utah
On January 29, 2024, we initiated a desk review of the State of Utah’s (Utah) 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 Utah’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, 2023,3 as reported in the
GrantSolutions portal.
As part of our desk review, we performed the following:
1) reviewed Utah’s quarterly Financial Progress Reports (FPRs) submitted in
the GrantSolutions portal through September 30, 2023;
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
Utah fully expended their total CRF proceeds as of September 30, 2023. Castro set the scope end
date to September 30, 2023, which was the date of Utah’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 Utah
3) reviewed Treasury’s Office of Inspector General (OIG) Coronavirus Relief
Fund Frequently Asked Questions Related to Reporting and
Recordkeeping;5
4) reviewed Treasury OIG’s monitoring checklists6 of Utah’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 Utah’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 Utah’s uses of CRF proceeds;
7) interviewed key personnel responsible for preparing and certifying Utah’s
GrantSolutions portal quarterly FPR submissions, as well as officials
responsible for obligating and expending CRF proceeds;
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, the CARES Act, 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 17 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.
2
Desk Review of the State of Utah
8) made a non-statistical selection of Contracts, Grants, Transfers, 9 Direct 8F
Payments, Aggregate Reporting, 10 and Aggregate Payments to Individuals11
9F
data identified through GrantSolutions reporting; and
9) evaluated documentation and records used to support Utah’s quarterly
FPRs.
Based on our review of Utah’s documentation supporting the uses of its CRF
proceeds as reported in the GrantSolutions portal, we determined that the
expenditures related to the Direct Payments greater than or equal to $50,000
payment type complied with the CARES Act and Treasury’s Guidance.
Additionally, we found that the Contracts greater than or equal to $50,000, Grants
greater than or equal to $50,000, Transfers greater than or equal to $50,000,
Aggregate Reporting less than $50,000, and Aggregate Payments to Individuals
payment types did not comply with the CARES Act and Treasury’s Guidance.
We identified unsupported and ineligible questioned costs of $40,308,738 and
$6,852,799, respectively, with total questioned costs of $47,161,537. Further, we
determined that Utah’s risk of unallowable use of funds is high.
Castro recommends Treasury OIG follow-up with Utah’s management to confirm
if the $40,308,738 noted as unsupported expenditures within the Contracts greater
than or equal to $50,000, Grants greater than or equal to $50,000, Transfers
greater than or equal to $50,000, Aggregate Reporting less than $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 Utah management
to provide support for replacement expenses, not previously charged, that were
eligible during the CRF period of performance.
In addition, Castro recommends that Treasury OIG request Utah management to
provide support for replacement expenses, not previously charged, that were
eligible during the CRF period of performance for the $6,852,799 of ineligible costs
charged to the Contracts greater than or equal to $50,000, Grants greater than or
equal to $50,000, Transfers greater than or equal to $50,000, and Aggregate
9
A transfer to another government entity is a disbursement or payment to a government entity
that is legally distinct from the prime recipient.
10
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).
11
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.
3
Desk Review of the State of Utah
Payments to Individuals payment types. If support is not provided, Treasury OIG
should recoup the funds.
Further, based on Utah’s responsiveness to Treasury OIG’s requests and its ability
to provide sufficient documentation and/or replace unsupported and ineligible
transactions charged to CRF with valid expenditures, Castro recommends
Treasury OIG determine the feasibility of conducting an audit for the Contracts
greater than or equal to $50,000, Grants greater than or equal to $50,000,
Transfers greater than or equal to $50,000, Aggregate Reporting less than $50,000,
and Aggregate Payments to Individuals payment types.
At the time of desk review fieldwork, Castro noted that Utah had findings in their
Single Audit Reports for fiscal years 2020, 2021, and 2022. Castro recommends
that Treasury OIG follow-up with Treasury’s Office of Capital Access to ensure that
management decision letters are issued on the CRF specific findings identified by
the auditor in these Single Audit reports, which we have summarized below:
▪ Utah’s fiscal year 2020 Single Audit report was published on
December 18, 2020, and the auditor found unsupported questioned costs
specific to the CRF in the amount of $14,430,192.
▪ Utah’s fiscal year 2021 Single Audit report was published on
December 21, 2021, and the auditor found unsupported questioned costs
specific to the CRF in the amount of $17,675,204.
▪ Utah’s fiscal year 2022 Single Audit report was published on
December 14, 2022, and the auditor found unsupported questioned costs
specific to the CRF in the amount of $643,375.
Utah’s fiscal year 2023 Single Audit report was published on December 22, 2023,
and did not include any CRF related questioned costs. We recommend Treasury
OIG follow-up on any CRF specific questioned costs reported in the fiscal year
2020, 2021, and 2022 Single Audit reports.
Non-Statistical Transaction Selection Methodology
Treasury issued a $934,765,677 CRF payment to Utah. As of September 30, 2023,
Utah’s cumulative obligations and expenditures were both $934,459,172. Utah
returned a total of $97,672 in CRF proceeds to Treasury. In addition, Utah reported
an outstanding balance of $208,833 of loans within the Aggregate Reporting less
than $50,000 payment type. Due to the outstanding loan balance, the cumulative
obligations and expenditures differ from the amount of CRF grant award. Utah’s
cumulative obligations and expenditures by payment type are summarized below.
4
Desk Review of the State of Utah
Cumulative Cumulative
Payment Type Obligations Expenditures
Contracts >= $50,000 $ 116,549,621 $ 116,549,621
Grants >= $50,000 $ 348,923,815 $ 348,923,815
Loans >= $50,000 $ - $ -
Transfers >= $50,000 $ 342,203,178 $ 342,203,178
Direct Payments >= $50,000 $ 242,274 $ 242,274
Aggregate Reporting < $50,000 $ 116,807,980 $ 116,807,980
Aggregate Payments to
Individuals (in any amount) $ 9,732,304 $ 9,732,304
Totals12 $ 934,459,172 $ 934,459,172
Castro made a non-statistical selection of the Contracts greater than or equal
to $50,000, Grants greater than or equal to $50,000, Transfers greater than or
equal to $50,000, Direct Payments greater than or equal to $50,000, Aggregate
Reporting less than $50,000, and Aggregate Payments to Individuals payment
types. Selections were made using auditor judgment based on information and
risks identified in reviewing audit reports, the GrantSolutions portal reporting
anomalies13 identified by the Treasury OIG CRF monitoring team, and review of
Utah’s FPR submissions. Utah did not obligate or expend CRF proceeds to the
Loans greater than or equal to $50,000 payment type;14 therefore, we did not make
a selection of transactions from this payment type.
The number of transactions (37) we selected to test was based on Utah’s total CRF
award amount and our overall risk assessment of Utah. To allocate the number of
transactions (37) by payment type (Contracts greater than or equal to $50,000,
Grants greater than or equal to $50,000, Transfers greater than or equal
to $50,000, Direct Payments greater than or equal to $50,000, Aggregate Reporting
less than $50,000, and Aggregate Payments to Individuals), we compared the
payment type dollar amounts as a percentage of cumulative expenditures as of
September 30, 2023.
Additionally, Treasury OIG provided information on anomalies identified for Utah.
We selected nine anomalies within our original transaction selections. Treasury
OIG also identified additional anomalies, in the form of potential duplicate
12
As of September 30, 2023, Utah reported a total available balance of $208,833 in the
GrantSolutions portal in Aggregate Reporting less than $50,000. Due to this outstanding loan
balance and amount of $97,672 returned to Treasury OIG, the cumulative obligation and
expenditure amounts differ from the amount of CRF proceeds awarded.
13
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.
14
Utah management reported the small business loans within the Aggregate Reporting less than
$50,000 payment type, as these individual loan balances did not exceed the $50,000 threshold.
5
Desk Review of the State of Utah
payment transactions which had not already been included within our transaction
selections, from which we selected 12 potential duplicates. We performed limited
testing on these 12 potential duplicate payments to determine whether the
payments were duplicates. We did not identify exceptions within this potential
duplicate testing. The transactions selected for testing were not selected
statistically, and therefore results could not be extrapolated to the total universe
of transactions.
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 $934,765,677
CRF payment to Utah. 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
(3) were incurred during the covered period between March 1, 2020 and
December 31, 2021.15
15
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.
6
Desk Review of the State of Utah
Section 15011 of the CARES Act required each covered recipient16 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 funds17,18 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 that it is
determined a recipient failed to comply with requirements of subsection 601(d) of
the Social Security Act, as amended, (42 U.S.C. 801(d)).
Desk Review Results
Financial Progress Reports
We reviewed Utah’s quarterly FPRs through September 30, 2023, and found that
Utah timely submitted quarterly FPRs in the GrantSolutions portal for the
reporting periods ending June 30, 2020 through September 30, 2023, indicating
Utah complied with Treasury OIG’s reporting requirements for those reporting
periods. Utah fully expended their total CRF proceeds as of September 30, 2023;
however, Utah personnel did not mark their last FPR submission as final within
the GrantSolutions portal.
Utah did not mark their last FPR submission as final due to existing CRF small
business loans with a remaining balance of $208,833. Given this information, we
requested Utah explain how the small business loan repayments would be
tracked as funds are returned to Treasury. Utah elaborated they are concurrently
tracking the outstanding loan balances and principal repayments reported on the
master loan schedule and returning CRF proceeds to Treasury. As such, Utah was
16
Section 15011 of P.L. 116-136, the CARES Act, 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.
17
Section 15010 of P.L. 116-136, the CARES Act, 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.
18
Section 15011 of P.L. 116-136 defined large, covered funds as covered funds that amounted to
more than $150,000.
7
Desk Review of the State of Utah
unable to close out CRF reporting due to the loan’s repayments subsequent to
September 30, 2023.
Summary of Testing Results
We found that the Direct Payments greater than or equal to $50,000 payment type
complied with the CARES Act and Treasury’s Guidance. Additionally, we found
that the Contracts greater than or equal to $50,000, Grants greater than or equal to
$50,000, Transfers greater than or equal to $50,000, Aggregate Reporting less than
$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 the table below, we have included a summary of $47,161,537 in
unsupported and ineligible expenditures identified as questioned costs through
our testing of detailed transactions, which did not comply with the CARES Act and
Treasury’s Guidance. See the Desk Review Results section below 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 Utah
Summary of Expenditures Testing and Recommended Results
As of September 30, 2023
Cumulative Unsupported Ineligible
Expenditure Cumulative Tested Tested Total Tested
Population Expenditure Questioned Questioned Questioned
Payment Type
Amount Tested Amount Costs Costs Costs
Contracts >=
$50,000 $ 116,549,621 $ 40,175,830 $ 19,632,639 $ 623,312 $ 20,255,951
Grants >= $50,000 $ 348,923,815 $ 44,243,909 $ 20,265,916 $ 6,216,250 $ 26,482,166
Loans >= $50,000 $ - $ - $ - $ - $ -
Transfers >=
$50,000 $ 342,203,178 $ 90,987,572 $ 400,000 $ 10,537 $ 410,537
Direct Payments
>= $50,000 $ 242,274 $ 107,806 $ - $ - $ -
Aggregate
Reporting <
$50,000 $ 116,807,980 $ 169,983 $ 7,630 $ - $ 7,630
Aggregate
Payments to
Individuals (in any
amount) $ 9,732,304 $ 42,292 $ 2,553 $ 2,700 $ 5,253
Totals $ 934,459,172 $ 175,727,392 $ 40,308,738 $ 6,852,799 $ 47,161,537
9
Desk Review of the State of Utah
Contracts Greater Than or Equal to $50,000
We determined Utah’s Contracts greater than or equal to $50,000 did not comply
with the CARES Act and Treasury’s Guidance. We tested transactions related to
nine contracts totaling $40,175,830. The contracts tested included expenditures
related to extending high speed broadband capabilities for distance learning and
telework for rural communities; expanding testing capacity by enabling drive
through testing and facilitation of supplies to residents; providing support for the
tourism industry experiencing losses due to COVID-19; contract consulting fees
for assessments of Utah’s COVID-19 situation and response approaches; assisting
the ski industry’s plan to safely open during the 2020-2021 winter ski season;
implementing a symptom checking and testing intake platform; conducting a
consumer survey for leadership to obtain and incorporate insights regarding
COVID-19 economic recovery and planning efforts, and implementing a
dashboard to record and track the COVID-19 response measures within hospitals.
We identified four exceptions resulting in unsupported questioned costs of
$19,632,639, and ineligible questioned costs of $623,312, respectively, with a total
of $20,255,951 in questioned costs, as detailed below.
Contract Exception #1 – Broadband Enhancement Costs
Utah’s Department of Transportation contracted with a vendor to procure
broadband enhancement services to install fiber cables to extend high-speed
broadband to rural communities with inadequate internet connectivity during the
pandemic. We tested five invoices totaling $11,985,002 claimed by Utah under a
$20,456,023 contract. We obtained and inspected vendor invoices and noted Utah
used competitive bidding and task orders to assign the scope of work for projects.
In addition, these bids/quotes were based on estimated totals and not the actual
expenditures captured in the invoices.
Castro noted the vendor invoices did not explicitly state the task order in
conjunction with the contract and the notice to proceed email sent to the vendor
to begin work on the project did not mention COVID-19, the use of CARES Act
funds, or define the associated project was related to the overall purpose of
expanding broadband to facilitate distance learning and remote work due to the
pandemic. Without the task orders linked to the invoices, we determined Utah did
not provide relevant and appropriate evidence to sufficiently support the
expenditure invoices were necessary related to the COVID-19 pandemic. Due to
Utah’s inability to properly maintain detailed invoices for the broadband
enhancements task orders, we identified $11,985,002 in unsupported questioned
costs.
10
Desk Review of the State of Utah
Castro identified unsupported questioned costs totaling $11,985,002 claimed by
Utah under a $20,456,023 contract for broadband enhancement services in
Contract Exception #1 above. Since Castro identified unsupported questioned
costs related to the broadband enhancement service contract transactions, we
recommend Treasury OIG determine the feasibility of performing additional
follow-up with Utah to determine if there were other instances of unsupported
costs within the $8,471,021 remaining, untested balance.
Contract Exception #2 – Tourism Marketing Costs
Utah’s Office of Tourism entered into a five-year contractual agreement with an
advertising agency on July 1, 2020, with a period of performance from
July 1, 2020 – June 30, 2025,19 to procure marketing and advertising materials as
requested by Utah. The purpose of this project was to support the tourism
industry that had experienced losses during the COVID-19 pandemic through a
combination of marketing campaigns and partnerships with local and regional
tourism and event organizations. We tested five invoices totaling $7,017,423 that
Utah claimed under the $7,647,637 contract.
For all five invoices tested, Castro obtained and reviewed the provided
advertisement invoices and correlating advertisements run under each of the
differing marketing campaigns. We noted the advertisements did not publicize the
resumption of activities and steps taken to ensure a safe experience that may be
needed due to the public health emergency. Based on Treasury’s CRF Guidance as
published in the Federal Register (January 15, 2021) FAQ #45,20 Utah management
was allowed to use CRF proceeds for marketing expenditures related to publicized
activities and steps taken to mitigate the COVID-19 pandemic. However, Utah
management used the marketing expenses to develop a long-term strategy or
plan for the tourism industry, which an ineligible use of the CRF. For the majority
of the advertisements reviewed, we were not provided documentation indicating
how the advertisements publicized COVID-19 guidelines and/or safety measures
19
Castro obtained and inspected the executed contract between Utah and the advertising agency.
We noted the period of performance was through June 30, 2025 which was outside Treasury’s
period for Utah to expend obligated funds from the CRF, September 30, 2022. However, the total
claimed costs under the contract of $7,647,637 were incurred expenditures within fiscal year 2020.
As a result, there were no concerns or issues noted in regard to out of period costs.
20
Per Treasury’s CRF Guidance as published in the Federal Register (January 15, 2021) FAQ #45
states, “May recipients use Fund payments to remarket the recipient's convention facilities and
tourism industry? Yes, if the costs of such remarketing satisfy the requirements of the CARES Act.
Expenses incurred to publicize the resumption of activities and steps taken to ensure a safe
experience may be needed due to the public health emergency. Expenses related to developing a
long-term plan to reposition a recipient's convention and tourism industry and infrastructure
would not be incurred due to the public health emergency and therefore may not be covered using
payments from the Fund.”
11
Desk Review of the State of Utah
as required. Specifically, several of the advertisements did not mention the words
COVID-19 or publicize safety procedures/guidelines of local national parks and ski
resorts, communicate mask mandates, or other COVID-19 safety information.
Additionally, Utah was unable to separate costs of the advertisements, as the
invoices received were for the marketing campaigns as a whole and did not break
out the individual advertisement costs. Based on the supporting documentation in
conjunction with Treasury’s Guidance, we identified unsupported questioned
costs for the entire contract amount of $7,647,637.
In response to this finding, Utah indicated that they already had a contract
established with a different creative firm that created advertisements focusing on
outdoor activities, such as skiing, and that none of the CARES Act funding had
been distributed to this vendor. Castro noted within the GrantSolutions portal that
$50,000 was paid to this firm under the overall Tourism Economic Support Project
reported under Contracts greater than or equal to $50,000. Since Castro identified
unsupported questioned costs within the marketing campaigns run by the
advertising agency noted within the above exception, we recommend Treasury
OIG determine the feasibility of performing additional follow-up with Utah to
determine if there were other instances of unsupported balances within the
advertising campaigns created through this other creative firm.
Contract Exception #3 – COVID-19 Dashboard Subscription
We tested five invoices totaling $3,494,800 claimed under the Utah Department of
Health’s contract with a vendor. These expenditures were related to COVID-19
dashboard subscription licenses to track treatment and testing measures for Utah
residents.
For one of the five invoices tested, we noted the service range was from
December 6, 2021, through December 5, 2022, and that the full amount of the
invoice totaling $966,738 was claimed in the GrantSolutions portal. Per Treasury’s
CRF Guidance as published in the Federal Register (January 15, 2021), recipients
are required to expend their funds received from the CRF to cover these
obligations by September 30, 2022.21 For the enterprise license subscription, we
determined the amount of time that would fall after September 30, 2022, and
utilized this to calculate the dollar amount of these prepaid expenses that were
21
Coronavirus Relief Fund Guidance as published in the Federal Register (December 14, 2021)
states: A cost associated with a necessary expenditure incurred due to the public health
emergency is considered to have been incurred by December 31, 2021, if the recipient has incurred
an obligation with respect to such cost by December 31, 2021. Treasury defines obligation for this
purpose as an order placed for property and services and entry into contracts, subawards, and
similar transactions that require payment. Recipients are required to expend their funds received
from the CRF to cover these obligations by September 30, 2022.”
12
Desk Review of the State of Utah
ineligible due to being outside Treasury’s covered period for Utah to expend
obligated funds from the CRF, September 30, 2022. Based on the guidance and
our calculation, we determined the ineligible portion of the total prepaid costs
portion of the expenditures were utilized to purchase additional licenses from the
vendor directly related to the COVID-19 pandemic response efforts; however, we
identified costs that occurred outside Treasury’s final period for Utah to expend
obligated funds from the CRF, resulting in ineligible questioned costs of $182,963.
Contract Exception #4 – COVID-19 Dashboard Platform Subscription
We tested one transaction totaling $1,960,090 claimed under Utah’s Department
of Technology Services for a contract with a vendor to provide cloud solutions for
remote support licenses as part of Utah’s COVID-19 planning and response
efforts. Under the contract, Utah purchased a business intelligence application, as
part of an emergency procurement to quickly create the Utah Leads Together
Operational Dashboard to track key COVID-19 response measures including
hospital capacity, testing, contact tracing, and personal protective equipment.
The $1,960,090 invoice tested was for the software license renewal after the
original subscription expired that was purchased for the COVID-19 pandemic
planning and response efforts. We noted within the invoice that the service range
was from December 31, 2021 – December 20, 2022, which was outside Treasury’s
final period for Utah to expend obligated funds from the CRF,
September 30, 2022.22 For the license renewal, we determined the amount of time
that would fall after September 30, 2022, and utilized this to calculate the dollar
amount associated with the portion of these prepaid subscriptions that was
unused and therefore not fully expended prior to September 30, 2022. Castro
determined the ineligible questioned costs portion of the total prepaid
expenditures claimed by Utah was $440,349 for license subscription time outside
of Treasury’s period to expend funds received from the CRF.
22
Coronavirus Relief Fund Guidance as published in the Federal Register (December 14, 2021)
states: A cost associated with a necessary expenditure incurred due to the public health
emergency is considered to have been incurred by December 31, 2021, if the recipient has incurred
an obligation with respect to such cost by December 31, 2021. Treasury defines obligation for this
purpose as an order placed for property and services and entry into contracts, subawards, and
similar transactions that require payment. Recipients are required to expend their funds received
from the CRF to cover these obligations by September 30, 2022.”
13
Desk Review of the State of Utah
Other Matter for Treasury OIG Consideration – Additional Potential Ineligible
Subscription Costs
Castro noted multiple instances of subscription costs that extended past
Treasury’s final period for Utah to expend obligated funds from the CRF reported
under Contracts greater than or equal to $50,000. In addition, we identified
ineligible subscription costs in the Grants greater than or equal to $50,000 and
Transfers greater than or equal to $50,000 payment types as described in the
results of those payment types below. Since Castro identified ineligible
questioned costs within multiple payment types reported in the GrantSolutions
portal, we recommend Treasury OIG follow-up with Utah and request that Utah
management perform an analysis over all of their GrantSolutions portal reported
balances to determine if there were other instances of subscription costs included
in the CRF reported expenditures and review those expenditures to determine if
there were other instances of subscription costs that extended past September 30,
2022.
Grants Greater Than or Equal to $50,000
We determined Utah’s Grants greater than or equal to $50,000 did not comply
with the CARES Act and Treasury’s Guidance. We tested transactions related to
seven grants totaling $44,243,909. The grants tested included expenditures related
to increasing remote learning and social distancing measures; expanding
software licenses to facilitate remote learning for students; teleworking
capabilities for teachers; providing grants to Utah’s hospitals to offset financial
needs and testing costs due to the COVID-19 pandemic; providing business
assistance through a COVID-19 Impacted Businesses Grant Program; and
acquiring multifamily housing units for vulnerable and low-income tenants
impacted by the pandemic. We identified exceptions related to five grants,
resulting in unsupported questioned costs of $20,265,916 and ineligible
questioned costs of $6,216,250, with total questioned costs of $26,482,166, as
detailed below.
Additionally, we identified two reporting misclassification errors related to Grants
greater than or equal to $50,000 that we determined should have been reported as
Transfers greater than or equal to $50,000 in the GrantSolutions portal, resulting
in non-compliance with Treasury’s Guidance.
Grant Exception #1 – Purchase of Subscription for Learning Management System
We tested two invoices totaling $7,585,254 that Utah claimed for expenditures
related to purchases for additional wireless capacity for indoor and outdoor
wireless coverage for its Learning Management System in key locations across a
university campus. In addition, the invoices included expenditures to expand the
14
Desk Review of the State of Utah
scale of the Learning Management System licenses that were utilized by Utah’s
higher education system, which included 16 universities, colleges, and technical
colleges.
For one of the two invoices, we noted the project funds were used to add
additional tier one support by the vendor to expand the scale of the Learning
Management System licenses, which helped meet the increased demand and
continuity required for COVID-19 distance learning. We reviewed the support
provided, including the purchase order and invoice and noted that the software
subscription service was purchased for $11,166,871 for the period of July 1, 2020
through June 30, 2025, which was outside Treasury’s final period for Utah to
expend obligated funds from the CRF, September 30, 2022.23 For the software
license, we determined the amount of time that would fall after September 30,
2022, and utilized this to calculate the dollar amount associated with the portion of
this prepaid license that was unused and therefore not fully expended prior to
September 30, 2022. Out of the total purchase amount of $11,166,871, Utah paid
$6,288,579 with CRF funding proceeds and paid the remaining $4,878,292 with
non-CRF funding. As a result, Castro calculated the pro-rata ineligible portion of
the $6,288,579 total prepaid expenditures claimed by Utah utilizing CRF funds as
$1,265,017. Castro questioned $1,265,017 as ineligible since the amounts
associated with the license subscription time were outside of Treasury’s period to
expend funds received from the CRF.
For one invoice tested, Utah management erroneously reported a payment to
themselves, which we identified as a reporting error that was non-compliant with
Treasury’s Guidance. We determined Utah management disbursed CRF proceeds
authorized by the State legislature to appropriate funding to the Utah Education
and Telehealth Network, a component unit which should have been reported as
part of the primary government. Further, the sub-recipient’s name was not
properly reported in the GrantSolutions portal as of September 30, 2023.
Grant Exception #2 - Purchase of Subscription for Student Engagement Platform
We tested two invoices totaling $12,406,160 that Utah claimed for expenditures
related to a purchase of a K-12 student engagement platform, and for the costs to
extend the cloud-based software’s availability for use in student homes. These
23
Coronavirus Relief Fund Guidance as published in the Federal Register (December 14, 2021)
states: “A cost associated with a necessary expenditure incurred due to the public health
emergency is considered to have been incurred by December 31, 2021, if the recipient has incurred
an obligation with respect to such cost by December 31, 2021. Treasury defines obligation for this
purpose as an order placed for property and services and entry into contracts, subawards, and
similar transactions that require payment. Recipients are required to expend their funds received
from the CRF to cover these obligations by September 30, 2022.”
15
Desk Review of the State of Utah
purchases were for the purpose of facilitating distance learning for K-12 students
during COVID-19 public health restrictions.
We reviewed the provided purchase order and invoice and noted that the
$9,000,000 license subscription was purchased for the period of July 1, 2020 –
June 30, 2025.
Per Treasury’s Guidance, recipients are required to expend their funds received
from the CRF to cover these obligations by September 30, 2022.24 Utilizing the
purchase order and invoice, we performed a calculation and identified the amount
eligible outside Treasury’s covered period for Utah to expend obligated funds
from the CRF, September 30, 2022. Based on the guidance and our calculation, we
determined that a portion of the expenditures utilized to purchase the subscription
occurred outside Treasury’s final period for Utah to expend obligated funds from
the CRF, September 30, 2022, resulting in ineligible questioned costs of
$4,951,233.
For one transaction, Utah management erroneously reported a payment to the
Utah Education and Telehealth Network (the same entity in Grant Exception #1
above), which we identified as a reporting error that was non-compliant with
Treasury’s Guidance.
Grant Exception #3 – Distribution of Grants to Cover Hospital’s COVID-19
Treatment Costs
We tested one grant totaling $10,600,923 in expenditures awarded to a hospital
group for the purpose of offsetting economic impacts that the hospitals
experienced as a result of the COVID-19 pandemic. We noted the summary report
provided by Utah indicated the grant funds were intended for payroll costs related
to COVID-19. However, Utah did not provide requested payroll distribution reports
associated with the payroll costs reimbursed with CRF proceeds by the end of
fieldwork. According to Utah, the awardee used the full grant amount to cover
revenue losses experienced by the hospital, calculated using budgeted revenue
amounts against actual revenue. Utah also received $228 million in payments
from the U.S. Department of Health and Human Services, Health Resources and
Services Administration’s Provider Relief Fund related to their lost revenue
24
Coronavirus Relief Fund Guidance as published in the Federal Register (December 14, 2021)
states: A cost associated with a necessary expenditure incurred due to the public health
emergency is considered to have been incurred by December 31, 2021, if the recipient has incurred
an obligation with respect to such cost by December 31, 2021. Treasury defines obligation for this
purpose as an order placed for property and services and entry into contracts, subawards, and
similar transactions that require payment. Recipients are required to expend their funds received
from the CRF to cover these obligations by September 30, 2022.”
16
Desk Review of the State of Utah
assessment. As a result, the total amount of awards received for lost revenue was
$240 million.
To determine the actual loss, Castro obtained and analyzed the sub-recipient’s
2019 and 2020 monthly financial statements. As part of our analysis, we noted
that for the months of March through May 2020, the hospital experienced net
operating income losses of $139 million. Additionally, Castro noted that for the
period of January through September 2020, one month before the grant funding
was received, the hospital's net operating income was $92 million. Castro
requested, but Utah did not provide appropriate supporting documentation for
how the hospital group had specifically suffered losses due to the COVID-19
pandemic that warranted additional relief funding. Per Treasury’s Guidance
included in the Federal Register, payments to support public or private hospitals
were allowable to the extent that the costs were necessary expenditures incurred
due to the COVID-19 public health emergency.25
Castro determined that Utah did not provide sufficient evidence to support the
payroll expenditures or any other relevant expenditures due to the pandemic. In
addition, Utah was unable to substantiate that the actual loss amounts exceeded
the estimated losses previously covered with the U.S. Department of Health and
Human Services, Health Resources and Services Administration’s Provider Relief
Fund. As a result, Castro identified $10,600,923 as unsupported questioned costs.
Grant Exception #4 – COVID-19 Testing Costs
Castro tested one grant totaling $9,589,993 in expenditures awarded to the same
hospital group described above to offset the impact of uncompensated COVID-19
testing costs. Castro reviewed the funding agreement between Utah and the
hospital group and noted that the purpose of the grant funding was to offset
economic impacts attributable to uncompensated COVID-19 testing costs.
Additionally, Castro reviewed the testing, cost, revenue, and loss values reflected
within the hospital losses for COVID-19 testing summary file and noted that the
grantee was reimbursed for 80 percent of their calculated loss amounts with CRF
proceeds. As such, Castro requested the underlying details that supported the
summary values for the testing, test costs, and revenue for the purpose of
confirming the actual amounts. Utah provided a document that further elaborated
25
Coronavirus Relief Fund Guidance as published in the Federal Register (December 14, 2021)
states: #17. To what extent may a government use Fund payments to support the operations of
private hospitals? Governments may use Fund payments to support public or private hospitals to
the extent that the costs are necessary expenditures incurred due to the COVID-19 public health
emergency, but the form such assistance would take may differ. In particular, financial assistance
to private hospitals could take the form of a grant or a short-term loan.
17
Desk Review of the State of Utah
on how these testing amounts were generated, but they did not provide the
underlying files cited throughout the document by the end of fieldwork.
Further, Castro was unable to locate a requirement within the funding agreement
that stated that Utah had agreed to reimburse 80 percent of the testing costs nor
was an amended agreement provided. Castro was unable to verify the actual
amount of testing completed, cost of completed testing, and revenue figures from
testing efforts. As a result, we identified $9,589,993 as unsupported questioned
costs.
Grant Exception #5 – Grant Program for Utah’s Creative Arts Industry Performers
We tested $75,000 in CRF claimed expenses related to concert costs that were
claimed under a grant that the Utah Department of Heritage and Arts awarded to a
non-profit organization as part of the Thrive 125 project.26
Castro reviewed the grant agreement and noted that the scope of work indicated
that funds will be used to support the staging of free concerts in 8 - 10 rural
communities throughout Utah, with an approximate cost of $10,000 per concert.
Concerts will take place between May and December 2021. Funds will be used to
pay musicians, travel expenses, sound/lighting expenses, and other expenses
related to the presentation of these concerts free to the public. Castro noted that
the agreement did not communicate CARES Act guidance to the sub-recipient or
mention COVID-19. Utah did not provide grant applications, grant agreements,
eligibility requirements, eligibility documentation, or program guidelines that
indicated that artists were required to perform at concerts in exchange for receipt
of the grant funding. All artists and events were arranged and carried out with
verbal communication indicating there were no written agreements executed.
Additionally, Castro selected audio costs for concerts livestreamed from a theatre
on April 12, 2021, and May 4, 2021, as well as total costs for a concert held at a
public school and park on September 24, 2021 for further testing. As part of our
requests for expenditure documentation, Castro requested purchase orders,
quotes, and invoices to support the cost of the concerts selected. Utah explained
that the communication and coordination with the artists was informal, and that
the sub-recipient did not use any formal documentation. The main support
provided for who was paid for which events were the bank statements and check
records, which were used to provide the concert spending reports. Due to the lack
26
Utah provided the following description for the Thrive 125 Project; “The Thrive 125 program
provided economic assistance grants to small businesses and organizations impacted by COVID-
19. Utah’s creative arts industry, particularly performing artists, were significantly impacted by
COVID-19. As part of the program, the grant recipients were required to provide free performances
for the community, which enabled marketing opportunities for artists.”
18
Desk Review of the State of Utah
of sufficient supporting documentation provided and the fact the grant agreement
did not indicate that the award was for performing artists impacted by the
pandemic, we identified $75,000 in unsupported questioned costs.
Other Matter for Treasury OIG Consideration – Additional Potential Unsupported
Thrive 125 Project Costs
Castro noted that three grant awards were reported in the GrantSolutions portal
that had the award descriptions of either “Thrive 125 statehood grant” or “Thrive
125 program.” The total of all three awards was $275,000. Utah indicated these
transactions were all associated with the Thrive 125 program, which was in the
planning process prior to the pandemic and designed to celebrate Utah’s 125
years of statehood. Since Castro identified unsupported questioned costs related
to funds received by one awardee of the Thrive 125 project, we recommend
Treasury OIG determine the feasibility of performing additional follow-up with
Utah to determine if there were other instances of unsupported costs within the
other two awards issued under this grant program.
Transfers Greater Than or Equal to $50,000
We determined Utah’s Transfers greater than or equal to $50,000 did not comply
with the CARES Act and Treasury’s Guidance. We tested transactions related to
eight transfers totaling $90,987,572. The transfers tested related to financial
assistance provided to school districts; purchase of a group home for isolation;
quarantine measures; laptops and personal protective equipment purchases for
students; not-for-profit small business grants; public health and safety payroll;
purchase of an airport hangar to use as storage of COVID-19 supplies; purchase of
a generator as backup for power supply to water pumps to be accessible for
people remotely; purchase of ambulances to respond to medical emergencies;
and unemployment benefits costs. Castro noted that out of the $342,203,178
reported within the Transfers greater than or equal to $50,000 payment type, Utah
used $109,335,649 in CRF proceeds related to unemployment replenishment
payments (see Unemployment Insurance Replenishment Analysis below for
further details).
We identified exceptions related to two tested transfers resulting in unsupported
questioned costs of $400,000 and ineligible questioned costs of $10,537,
respectively, as detailed below.
19
Desk Review of the State of Utah
Transfer Exception #1 – Purchase of a Group Home for Isolating and Quarantine
Measures
As part of its local government allocation, Utah transferred a total of $31,447,863
to the County of Davis. Castro selected two invoices totaling $4,174,662 for
testing. These invoices were related to expenditures incurred by a behavioral
health center and a school district.
For one of the two invoices, we noted the health center received $603,662 in
funding for the purchase of a group home in Clearfield, Utah to isolate and
quarantine individuals with COVID-19. Of this funding, $500,000 was used for the
purchase of the group home, while $103,662 was utilized for the renovation costs
of the home.
During our review of the renovation costs, Castro found that the health center had
purchased a heating and air conditioning system for the group home that included
10-year parts warranty costs within the total invoice amount of $14,666. Per
Treasury’s Guidance,27 recipients are required to expend their funds received from
the CRF to cover these obligations by September 30, 2022. Utilizing the purchase
order and invoice, we performed a calculation and identified the amount eligible
for Treasury’s final period for Utah to expend obligated funds through
September 30, 2022. Based on the guidance and our calculation, we determined
that a portion of the expenditures utilized to purchase the heating and air
conditioning system occurred outside of Treasury’s final period for Utah to
expend obligated funds. As a result, we identified ineligible questioned costs of
$10,537.
Transfer Exception #2 – Transfer to the County of Weber to Fund Non-Profit
Organizations Grant Programs
As part of its local government allocation, Utah transferred $2,190,107 to the
County of Weber, who granted the CRF proceeds to 13 non-profit organizations.
Castro tested two invoices totaling $400,000 that were related to expenditures
incurred by two non-profit organizations run by one of the cities within the County
of Weber.
27
Coronavirus Relief Fund Guidance as published in the Federal Register (December 14, 2021) states:
A cost associated with a necessary expenditure incurred due to the public health emergency is
considered to have been incurred by December 31, 2021, if the recipient has incurred an obligation
with respect to such cost by December 31, 2021. Treasury defines obligation for this purpose as an
order placed for property and services and entry into contracts, subawards, and similar transactions
that require payment. Recipients are required to expend their funds received from the CRF to cover
these obligations by September 30, 2022.”
20
Desk Review of the State of Utah
For the two invoices tested for $200,000 each, we reviewed grant agreements and
noted that grantees were required to submit performance/progress reports with
each request for disbursement along with documentation of all the CRF eligible
expenses to be reimbursed (vouchers, invoices, receipts). Castro requested this
supporting documentation, and received Nonprofit Grant Increase Request Forms
for each of the tested applicants that did not tie back to the $200,000 grant award
amounts and appeared to be requests for additional funding, not the original
request/application for funding.
We followed up with Utah for clarification on whether the amounts reflected
within the grant increase request forms were a part of the initial $200,000 awarded
to each applicant. Utah did not provide a response regarding the correct amount.
Additionally, we requested the original funding request, underlying expenditure
details, the grantee’s review process surrounding how they determined applicants
to be eligible, submission of eligibility documentation, and performance/progress
reports. Castro did not receive sufficient supporting documentation or responses
to these requests. As a result, we identified unsupported questioned costs of
$400,000.
Within the provided supporting documentation related to Transfer Exception #2
above, Castro identified that there were 13 non-profit organizations that were
included within the total $2,190,107 issued under the non-profit grant program.
Castro selected two of these organizations for testing and identified unsupported
questioned costs of $400,000. We recommend Treasury OIG determine the
feasibility of performing additional follow-up with Utah to determine if there were
other instances of unsupported grants within the amount of $1,790,107 not tested
by Castro.
Unemployment Insurance Replenishment Analysis
The Unemployment Insurance (UI) Trust Fund28 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 during 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, Utah experienced significant increases in
unemployment claims which decreased the reserve fund balance increasing the
risk of insolvency.
28
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, Utah replenished the UI Trust
Fund Balance with CRF proceeds for eligible claimants receiving unemployment benefit payments.
21
Desk Review of the State of Utah
Utah experienced a decline in its UI Trust Fund balance from March 2020 through
March 2021 of $431,043,154. We reviewed Utah’s Unemployment Claims Analysis,
which summarized the inflows and outflows of the UI Trust Fund balance during
the covered period and identified a decrease of $431,043,154, of which Utah used
CRF proceeds in the amount of $109,335,649 to replenish the UI Trust Fund
balance. This indicated Utah did have enough eligible CRF related unemployment
benefit claims to support its $109,335,649 replenishment payment.
Castro also obtained written confirmation from Utah management that Utah
utilized other federal funding sources to reimburse for unemployment related
expenditures; however, those funds were for specific, enhanced unemployment
benefits and administrative costs resulting from the pandemic and only used to
reimburse for those expenses. Utah also stated that those federal funds did not
replenish any of the balance decreases experienced by the UI Trust Fund balance.
Castro reviewed the expenditure details and noted Utah adequately tracked the
expenditures by the federal funding programs. Castro accounted for those in our
analysis and noted that Utah’s UI Trust Fund balance decreased by more than the
amount of other federal funding sources used. Castro concluded that Utah’s use
of CRF proceeds for unemployment related expenditures consisted of an UI Trust
Fund 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.
Direct Payments Greater Than or Equal to $50,000
We determined Utah’s Direct Payments greater than or equal to $50,000 complied
with the CARES Act and Treasury’s Guidance. We tested one direct payment
totaling $107,806 and identified no exceptions. The direct payment tested included
expenditures for compliance expenses for the State of Utah’s fiscal year 2021
Single Audit Act costs.
Aggregate Reporting Less Than $50,000
We determined Utah’s Aggregate Reporting less than $50,000 did not comply with
the CARES Act and Treasury’s Guidance. We tested transactions related to seven
aggregate reporting transactions totaling $169,983. The aggregate reporting
transactions tested included expenditures related to caregiver
compensation/respite payments; small business loans; and the conversion of
small business loans into grants. We identified one exception, resulting in
unsupported questioned costs of $7,630, as detailed below.
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Desk Review of the State of Utah
Additionally, we identified one reporting misclassification related to Aggregate
Reporting less than $50,000 that we determined should have been reported in
Contracts greater than or equal to $50,000 or Aggregate Payments to Individuals
in the GrantSolutions portal, which was non-compliant with Treasury’s Guidance.
Aggregate Reporting Exception – Temporary Caregiver Compensation to
Vulnerable Patients
We tested five invoices totaling $19,463 that Utah claimed under a $649,625
contract for caregiver compensation and/or respite payments to waitlisted
individuals with disabilities with the most critical needs during the COVID-19
pandemic. We determined this was a reporting misclassification that did not
comply with Treasury’s Guidance, as the overall contract amount was greater
than $50,000 and as such should have been reported under Contracts greater than
or equal to $50,000 or Aggregate Payments to Individuals in the GrantSolutions
portal.
For the five individuals selected, Castro reviewed the provided timesheets and
paystubs for each individual who received respite care payments for their efforts
in caring for a family member. We noted that the amounts listed on the paystub
did not tie to the amount noted in the check register. Additionally, several of the
timesheets reviewed had a total number of hours that did not match the total
amount of hours listed on the paystub. We identified a variance amount of $7,630
between the total payment amounts of $19,463 listed in the check register files
and the amount of $11,833 evidenced in the paystubs. As a result, we question the
$7,630 variance amount as unsupported questioned costs.
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 Aggregate
Payments to Individuals consisted of the following broad types of potential costs
which we have defined from Treasury’s guidance as published in the Federal
Register,29 where applicable. Prime recipients may or may not have claimed all of
these types of expenditures.
29
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
23
Desk Review of the State of Utah
▪ Public Safety/Health Payroll30 – consisted of payroll costs for public
health and safety department personnel.
▪ Substantially Dedicated Payroll31 – 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 Payroll32 – 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.
30
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.”
31
Substantially dedicated payroll costs means that personnel must have dedicated over 50 percent
of their time to responding or mitigating COVID-19. Treasury’s Federal Register guidance states
that: “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.”
32
Payroll costs that are not substantially dedicated means payroll costs that are not public health
and safety, and which are not substantially dedicated to performing COVID-19 related tasks.
Treasury’s Federal Register guidance defines more stringent tracking requirements for these types
of payroll costs. Specifically, the Treasury’s Federal Register states that agencies must: “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.”
24
Desk Review of the State of Utah
The Utah Aggregate Payments to Individuals balance consisted of payroll and other
transactions from the following categories of claimed costs.
Total Expenses
Aggregate Payments to Individuals Category Types
Claimed
Public Health and Safety Payroll $ 6,905,106
Substantially Dedicated Payroll $ 125,035
Non-Substantially Dedicated Payroll $ 2,702,163
Totals33 $ 9,732,304
Castro noted that public health and safety payroll transactions were subject to
Treasury’s administrative accommodation,34 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 and non-substantially dedicated payroll
balances were not subject to this administrative accommodation, and therefore,
Castro tested these transactions by reviewing payroll distribution files and also by
performing tests over specific employee timesheet submissions. Transactions
classified as non-payroll expenditures vary depending on the type of expenses
that were reimbursed with CRF, and therefore, Castro performed analytical
procedures and testing on transactions by reviewing the applicable underlying
guidelines and details provided as support by Utah.
We determined Utah’s Aggregate Payments to Individuals did not comply with the
CARES Act and Treasury’s Guidance. We tested transactions related to five
Aggregate Payments to Individuals transactions totaling $42,292. Transactions
tested related to payroll for public health and safety employees and non-
substantially dedicated payroll costs. We identified one exception that resulted in
unsupported questioned costs of $2,553 and ineligible questioned costs of $2,700,
respectively, totaling $5,253 of questioned costs, as detailed below.
33
Utah did not report any non-payroll expenditures, including unemployment related expenditures
within its Aggregate Payments to Individuals payment type within the GrantSolutions portal as of
September 30, 2023. As mentioned above, Utah management reported unemployment related
costs within its Transfers greater than or equal to $50,000 payment type.
34
Treasury’s Federal Register guidance stated that an administrative accommodation was, “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.”
25
Desk Review of the State of Utah
Aggregate Payments to Individuals Exception – Incentive Payments for the Utah
Governor’s Office of Economic Opportunity Personnel
Utah claimed $135,677 in expenditures for non-substantially dedicated employees
to cover payroll related costs for the Utah Governor’s Office of Economic
Opportunity in connection with the State planning of the COVID-19 pandemic
response, and we selected five payments totaling $12,650 for testing. These
payments were made to personnel on the Utah Marketing and Communications
team for pay periods between July 2020 and December 2020. Utah was unable to
provide adequate support to evidence the payroll related costs were eligible and
allowable in conjunction with the CARES Act and Treasury’s Guidance, resulting
in unsupported questioned costs of $2,553, and ineligible questioned costs of
$2,700, respectively, as detailed below.
For one payment, Castro obtained and reviewed the submitted timesheet, job title,
incentive award justification, and description of tasks performed by the Utah
Marketing and Communications team for that pay period. Utah did not provide the
specific COVID-19 tasks performed by this employee. In addition, we noted the
employee charged time to the employee’s default time code and could not
separate their COVID-19 task hours from their regular assigned duty hours. As a
result, we identified $2,553 in unsupported questioned costs.
For four payments totaling $2,700, Utah issued incentive payments to four
employees. The incentive payments made by Utah to these employees were
bonuses that were a key part of the employee's total compensation and were paid
on a quarterly basis. Per Treasury’s Guidance in the Federal Register, bonuses
were not eligible expenditures that could be reimbursed with CRF proceeds unless
they were related to hazard pay.35 Although Utah provided incentive justification
sheets to demonstrate that bonuses were awarded to employees based upon their
efforts within the COVID-19 response, the incentive sheets did not mention hazard
pay as a justification for the bonus payments. Castro questioned these incentive
payments of $2,700 as ineligible.
Additionally, Castro noted within its testing procedures that payroll expenditures
claimed for non-substantially dedicated personnel were not adequately
supported. Additionally, Castro identified several instances of ineligible bonuses
paid to non-substantially dedicated employees. Since Castro identified
unsupported payroll costs and ineligible bonuses, we recommend Treasury OIG
35
Coronavirus Relief Fund Guidance as published in the Federal Register (January 15, 2021) states:
29. The Guidance includes workforce bonuses as an example of ineligible expenses but provides
that hazard pay would be eligible if otherwise determined to be a necessary expense. Is there a
specific definition of "hazard pay"? Hazard pay means additional pay for performing hazardous
duty or work involving physical hardship, in each case that is related to COVID-19.
26
Desk Review of the State of Utah
determine the feasibility of performing additional follow-up with Utah to
determine if there were instances of unsupported payroll costs and ineligible
bonuses within the remainder of the $2,702,163 categorized as non-substantially
dedicated payroll.
Conclusion
We determined the expenditures related to the Direct Payments greater than or
equal to $50,000 payment type complied with the CARES Act and Treasury’s
Guidance. Additionally, we found that the Contracts greater than or equal to
$50,000, Grants greater than or equal to $50,000, Transfers greater than or equal
to $50,000, Aggregate Reporting less than $50,000, and Aggregate Payments to
Individuals payment types did not comply with the CARES Act and Treasury’s
Guidance.
We identified unsupported and ineligible questioned costs of $40,308,738 and
$6,852,799, respectively, with total questioned costs of $47,161,537. Also, we
identified GrantSolutions portal reporting misclassification issues related to the
Grants greater than or equal to $50,000 and Aggregate Reporting less than
$50,000 payment types, which were non-compliant with Treasury’s Guidance.
Additionally, Utah’s risk of unallowable use of funds is high.
Castro recommends that Treasury OIG follow-up with Utah’s management to
confirm if the $40,308,738 noted as unsupported expenditures within the
Contracts greater than or equal to $50,000, Grants greater than or equal to
$50,000, Transfers greater than or equal to $50,000, Aggregate Reporting less than
$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 Utah
management to provide support for replacement expenses, not previously
charged, that were eligible during the CRF period of performance.
In addition, Castro recommends that Treasury OIG request Utah management to
provide support for replacement expenses, not previously charged, that were
eligible during the CRF period of performance for the $6,852,799 of ineligible costs
charged to the Contracts greater than or equal to $50,000, Grants greater than or
equal to $50,000, Transfers greater than or equal to $50,000, and Aggregate
Payments to Individuals payment types. If support is not provided, Treasury OIG
should recoup the funds.
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Desk Review of the State of Utah
Further, based on Utah’s responsiveness to Treasury OIG’s requests and its ability
to provide sufficient documentation and/or replace unsupported and ineligible
transactions charged to CRF with valid expenditures, Castro recommends
Treasury OIG determine the feasibility of conducting an audit for the Contracts
greater than or equal to $50,000, Grants greater than or equal to $50,000,
Transfers greater than or equal to $50,000, Aggregate Reporting less than $50,000,
and Aggregate Payments to Individuals payment types.
At the time of desk review fieldwork, Castro noted that Utah had findings in their
Single Audit Reports for fiscal years 2020, 2021, and 2022. 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 report, which we have summarized below.
o Utah’s fiscal year 2020 Single Audit report was published on
December 18, 2020, and the auditor found unsupported
questioned costs specific to the CRF in the amount of $14,430,192.
o Utah’s fiscal year 2021 Single Audit report was published on
December 21, 2021, and the auditor found unsupported
questioned costs specific to the CRF in the amount of $17,675,204.
o Utah’s fiscal year 2022 Single Audit report was published on
December 14, 2022, and the auditor found unsupported
questioned costs specific to the CRF in the amount of $643,375.
o Utah’s fiscal year 2023 Single Audit report was published on
December 22, 2023, and did not include any CRF related
questioned costs.
We recommend Treasury OIG follow-up on any CRF specific questioned costs
reported in the fiscal year 2020, 2021, and 2022 Single Audit reports.
Castro also identified other matters throughout the course of our desk review,
which warrant recommendations to Treasury OIG for additional action. Castro
recommends Treasury OIG follow-up on these issues:
▪ Castro identified unsupported questioned costs totaling $11,985,002
claimed by Utah under a $20,456,023 contract for broadband
enhancement services. Since Castro identified unsupported questioned
costs related to the broadband enhancement service contract
transactions, we recommend Treasury OIG determine the feasibility of
performing additional follow-up with Utah to determine if there were
other instances of unsupported costs within the $8,471,021 remaining,
untested balance.
28
Desk Review of the State of Utah
▪ Castro identified unsupported questioned costs related to marketing
campaigns created and run by a marketing agency under the Contracts
greater than or equal to $50,000 payment type, we recommend Treasury
OIG determine the feasibility of performing additional follow-up with
Utah to determine if there were other instances of unsupported balances
within the advertising campaigns created through a third-party vendor.
▪ Follow-up with Utah and request Utah perform an analysis over all of
their GrantSolutions portal reported balances to determine if there were
other instances of subscription costs included in the CRF reported
expenditures and review those expenditures to determine if there were
other instances of subscription costs that extended past September 30,
2022.
▪ Castro identified unsupported questioned costs related to the Thrive 125
grants project, we recommend Treasury OIG determine the feasibility of
performing additional follow-up with Utah to determine if there were
other instances of unsupported costs within the other two awards issued
under this program.
▪ Castro identified unsupported questioned costs related to a transfer to
the County of Weber to fund a non-profit grant program, we recommend
Treasury OIG determine the feasibility of performing additional follow-up
with Utah to determine if there were other instances of unsupported
grants within the amount of $1,790,107 not tested by Castro.
▪ Castro identified unsupported and ineligible questioned costs related to
non-substantially dedicated payroll, we recommend Treasury OIG
determine the feasibility of performing additional follow-up to determine
if there were other instances of unsupported costs and ineligible bonuses
within the remainder of the amount categorized as non-substantially
dedicated payroll.
29
Desk Review of the State of Utah
*****
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.36 We appreciate the courtesies
and cooperation provided to our staff during the desk review.
Sincerely,
Wayne Ference
Partner, Castro & Company, LLC
36
https://www.ignet.gov/sites/default/files/files/Silver%20Book%20Revision%20-%208-20-12r.pdf
30