OIG Ca 25 021 Desk Review Of The State Of New Hampshire S Use Of Coronavirus Relief Fund Proceeds
Summary
A Department of the Treasury Office of Inspector General memorandum dated December 18, 2024, transmitting the Desk Review of the State of New Hampshire's Use of Coronavirus Relief Fund Proceeds (OIG-CA-25-021), performed under contract by Castro & Company, LLC. The review covers obligation and expenditure data for March 1, 2020 through September 30, 2023 and a non-statistical selection of 30 transactions. It identifies unsupported questioned costs of $14,027,288 and ineligible questioned costs of $2,397,551, for total questioned costs of $16,424,839, and rates New Hampshire's risk of unallowable use of funds as moderate. Castro recommends that Treasury OIG follow up to obtain support or recoup the funds and assess the feasibility of an audit of the Grants and Direct Payments payment types. It includes a schedule of monetary benefits and the contractor's memorandum.
Summary drafted by a model from the document's text below and checked by script against that text before publication. It is a navigation aid, not a reading of what the document proves. Where AI is used
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DEPARTMENT OF THE TREASURY
W ASHINGTON, D.C. 20220
OFFICE OF
INSPECTOR GENERAL
December 18, 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 New Hampshire’s Use of
Coronavirus Relief Fund Proceeds (OIG-CA-25-021)
Please find the attached desk review memorandum1 on the State of New
Hampshire’s (New Hampshire) 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 a combination of unsupported and ineligible questioned costs
of $14,027,288 and $2,397,551, respectively, resulting in total questioned costs of
$16,424,839 (see attached schedule of monetary benefits).
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
Castro determined that the expenditures related to the Transfers greater than or
equal to $50,000, 2 Aggregate Reporting less than $50,000, 3 and Aggregate
Payments to Individuals4 payment types complied with the CARES Act and the
Department of the Treasury’s (Treasury) Guidance. Also, we determined that the
expenditures related to the Contracts greater than or equal to $50,000 payment
type complied with the CARES Act but did not comply with Treasury’s Guidance.
In addition, we determined that the expenditures related to the Grants greater
than or equal to $50,000 and Direct Payments greater than or equal to $50,000
payment types did not comply with the CARES Act and Treasury’s Guidance.
Additionally, Castro determined that New Hampshire’s risk of unallowable use of
funds is moderate.
Castro recommends that Treasury Office of Inspector General (OIG) follow-up with
New Hampshire’s management to confirm if the $14,027,288 noted as
unsupported expenditures within the Direct Payments greater than or equal to
$50,000 payment type can be supported. If support is not provided, Treasury OIG
should recoup the funds or request New Hampshire 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 New Hampshire
management to provide support for replacement expenses, not previously
charged, that were eligible during the CRF period of performance for the
$2,397,551 of ineligible costs charged to the Grants greater than or equal to
$50,000 payment type. If support is not provided, Treasury OIG should recoup the
funds.
Further, based on New Hampshire 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 Grants greater than or equal to $50,000 and Direct
Payments greater than or equal to $50,000 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
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
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 with New Hampshire management and request that they
perform an analysis over all of their grant-reporting portal balances to
determine if there were other instances of subscription costs, separate
from those identified by Castro, included in the CRF reported
expenditures and review those expenditures to determine if the
subscription costs extended past September 30, 2022.
Determine the feasibility of performing additional follow-up with New
Hampshire to determine if there were other instances, separate from
those identified by Castro, of unsupported balances within the Direct
Payments greater than or equal to $50,000 grant programs (Emergency
Healthcare System Relief Fund, Non-Profit Emergency Relief Fund, Self
Employed Livelihood Fund, and COVID-19 Business Expense Relief) for
pandemic- related revenue loss and defrayed operating costs.
Treasury OIG and Castro met with New Hampshire management to discuss the
report. New Hampshire management stated they would provide additional
documentation to Treasury OIG to support the questioned costs or replace them
with other eligible expenditures.
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 New Hampshire’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 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 4
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
Steven Giovinelli, Federal Financial Reporting Administrator/Finance
Director, State of New Hampshire
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 $16,424,839
The questioned cost represents amounts provided by Treasury under the
Coronavirus Relief Fund. As discussed in the attached desk review, $16,424,839 is
New Hampshire’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 New Hampshire
December 18, 2024
OIG-CA-25-021
MEMORANDUM FOR DEBORAH L. HARKER,
ASSISTANT INSPECTOR GENERAL FOR AUDIT
FROM: Wayne Ference
Partner, Castro & Company, LLC
SUBJECT: Desk Review of the State of New Hampshire
On April 16, 2024, we initiated a desk review of the State of New Hampshire’s
(New Hampshire) 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 New Hampshire’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 New Hampshire’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
New Hampshire 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 New Hampshire’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 New Hampshire
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 New Hampshire’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 New Hampshire’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 New Hampshire’s uses of CRF
proceeds;
7) interviewed key personnel responsible for preparing and certifying New
Hampshire’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 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.
2
Desk Review of the State of New Hampshire
8) made a non-statistical selection of Contracts, Grants, Transfers, 9 Direct
Payments, Aggregate Reporting,10 and Aggregate Payments to Individuals11
data identified through GrantSolutions reporting; and
9) evaluated documentation and records used to support New Hampshire’s
quarterly FPRs.
Based on our review of New Hampshire’s documentation supporting the uses of
its CRF proceeds as reported in the GrantSolutions portal, we determined that the
expenditures related to the Transfers greater than or equal to $50,000, Aggregate
Reporting less than $50,000, and Aggregate Payments to Individuals payment
types complied with the CARES Act and Treasury’s Guidance. Also, we
determined that the expenditures related to the Contracts greater than or equal
to $50,000 payment type complied with the CARES Act but did not comply with
Treasury’s Guidance. In addition, we determined that the expenditures related to
the Grants greater than or equal to $50,000 and Direct Payments greater than or
equal to $50,000 payment types did not comply with the CARES Act and
Treasury’s Guidance.
We identified unsupported and ineligible questioned costs of $14,027,288, and
$2,397,551, respectively, with total questioned costs of $16,424,839. We also
determined New Hampshire’s risk of unallowable use of funds is moderate.
Castro recommends that Treasury OIG follow-up with New Hampshire’s
management to confirm if the $14,027,288 noted as unsupported expenditures
within the Direct Payments greater than or equal to $50,000 payment type can be
supported. If support is not provided, Treasury OIG should recoup the funds or
request New Hampshire management to provide support for replacement
expenses, not previously charged, that were eligible during the CRF period of
performance.
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 New Hampshire
In addition, Castro recommends that Treasury OIG request New Hampshire
management to provide support for replacement expenses, not previously
charged, that were eligible during the CRF period of performance for the
$2,397,551 of ineligible costs charged to the Grants greater than or equal to
$50,000 payment type. If support is not provided, Treasury OIG should recoup the
funds.
Further, based on New Hampshire 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 Grants greater than or equal to $50,000 and Direct
Payments greater than or equal to $50,000 payment types.
Non-Statistical Transaction Selection Methodology
Treasury issued a $1,250,000,000 CRF payment to New Hampshire. As of
September 30, 2023, New Hampshire’s cumulative obligations and expenditures
were both $1,249,214,018. New Hampshire returned a total of $785,982 in CRF
proceeds to Treasury. New Hampshire’s cumulative obligations and expenditures
by payment type are summarized below.
Cumulative Cumulative
Payment Type Obligations Expenditures
Contracts >= $50,000 $ 126,657,177 $ 126,657,177
Grants >= $50,000 $ 171,220,337 $ 171,220,337
Loans >= $50,000 $ - $ -
Transfers >= $50,000 $ 122,523,320 $ 122,523,320
Direct Payments >= $50,000 $ 687,484,566 $ 687,484,566
Aggregate Reporting < $50,000 $ 123,264,170 $ 123,264,170
Aggregate Payments to
Individuals (in any amount) $ 18,064,448 $ 18,064,448
Totals $ 1,249,214,018 $ 1,249,214,018
Castro made a non-statistical selection of Contracts greater than or equal
to $50,000, Grants greater than or equal to $50,000, Transfers greater than or
equal to $50,000, Direct Payments greater than or equal to $50,000, Aggregate
Reporting less than $50,000, and Aggregate Payments to Individuals payment
types. Selections were made using auditor judgment based on information and
risks identified in reviewing audit reports, the GrantSolutions portal reporting
4
Desk Review of the State of New Hampshire
anomalies12 identified by the Treasury OIG CRF monitoring team, and review of
New Hampshire’s FPR submissions.
The number of transactions (30) we selected to test was based on New
Hampshire’s total CRF award amount and our overall risk assessment of New
Hampshire. To allocate the number of transactions (30) 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. 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 $1,250,000,000
CRF payment to New Hampshire. 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. 13
12
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.
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.
5
Desk Review of the State of New Hampshire
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 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 New Hampshire’s quarterly FPRs through September 30, 2023, and
found that New Hampshire completed quarterly FPRs for the reporting periods
ending June 30, 2020 through September 30, 2023, except New Hampshire failed
to submit a quarterly FPR in the GrantSolutions portal for the reporting period
ending June 30, 2023, resulting in non-compliance with Treasury OIG’s reporting
requirements for that reporting period.
Summary of Testing Results
We found that the Transfers greater than or equal to $50,000, Aggregate
Reporting less than $50,000, and Aggregate Payments to Individuals payment
types complied with the CARES Act and Treasury’s Guidance. We also found that
the Contracts greater than or equal to $50,000 payment type complied with the
CARES Act but did not comply with Treasury’s Guidance. Additionally, we found
that the Grants greater than or equal to $50,000 and Direct Payments greater than
or equal to $50,000 payment types did not comply with the CARES Act and
14
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.
15
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.
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 New Hampshire
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 unsupported and
ineligible expenditures identified as questioned costs, which did not comply with
the CARES Act and Treasury’s Guidance. See the Desk Review Results section
below this table for a detailed discussion of questioned costs and other issues
identified throughout the course of our desk review.
Summary of Expenditures Testing and Recommended Results
As of September 30, 2023
Cumulative
Expenditure Cumulative Unsupported Ineligible Total
Population Expenditure Questioned Questioned Questioned
Payment Type
Amount Tested Amount Costs Costs Costs
Contracts >=
$50,000 $ 126,657,177 $ 6,341,427 $ - $ - $ -
Grants >= $50,000
$ 171,220,337 $ 21,364,991 $ - $ 2,397,551 $ 2,397,551
Loans >= $50,000
$ - $ - $ - $ - $ -
Transfers >=
$50,000 $ 122,523,320 $ 110,624,370 $ - $ - $ -
Direct Payments
>= $50,000 $ 687,484,566 $ 41,729,499 $ 14,027,288 $ - $ 14,027,288
Aggregate
Reporting <
$50,000 $ 123,264,170 $ 63,547 $ - $ - $ -
Aggregate
Payments to
Individuals (in any
amount) $ 18,064,448 $ 271,958 $ - $ - $ -
Totals $ 1,249,214,018 $ 180,395,792 $ 14,027,288 $ 2,397,551 $ 16,424,839
7
Desk Review of the State of New Hampshire
Contracts Greater Than or Equal to $50,000
We determined New Hampshire’s Contracts greater than or equal to $50,000
complied with the CARES Act, but not Treasury’s Guidance due to the
misclassifications of two transactions. We tested four contracts totaling $6,341,427
and identified no exceptions. The contracts tested included expenditures for
hazard payroll stipends to incentivize public health and safety17 frontline workers
to remain in or rejoin the workforce during the pandemic; the costs of acquisition,
installation, and configuration of New Hampshire’s Statewide Interoperability
System to securely communicate and enable rapid monitoring, coordination, and
response among first responders and emergency management agencies during
the pandemic; an increase in the efforts to address alcohol addiction and related
issues which increased during the COVID-19 pandemic; and to allow more
accessible at-home COVID-19 tests to be ordered by individuals through a
vendor’s portal and to receive the tests directly at the individuals’ residence.
We identified two transactions that were considered misclassified under Contracts
greater than or equal to $50,000 instead of Grants greater than or equal to $50,000
in the GrantSolutions portal, resulting in non-compliance with Treasury’s
Guidance.
Grants Greater Than or Equal to $50,000
We determined New Hampshire’s Grants greater than or equal to $50,000 did not
comply with the CARES Act and Treasury’s Guidance. We tested four grants
totaling $21,364,991. The grants tested included expenditures related to
reimbursements for universities to enable remote, online learning and degree
programs, and provide COVID-19 testing and contact tracing for students, faculty
and staff; eviction prevention and to disperse resources into the community for
individuals in need of financial support due to the increased expenses directly
related to COVID-19; support for healthcare providers to maintain treatment
capacity during the pandemic; and assistance to shelter facilities to cover
operating costs and modifications to adapt the spaces with social distancing
measures in order to comply with the COVID-19 related prevention and mitigation
guidelines. We identified exceptions related to one grant, resulting in ineligible
questioned costs of $2,397,551, as detailed below.
8
Desk Review of the State of New Hampshire
Grants Exception - Enhanced Data Security for Remote Learning License
Subscription Costs
The State of New Hampshire and its sub-recipient, the University of New
Hampshire, entered into a $33 million grant agreement to provide funds for
COVID-19 testing, contact tracing, personal protective equipment, increased utility
costs, and enhanced data security infrastructure for remote students. These
programs were critical for the University of New Hampshire’s ability to open
campuses to ensure resumption of classes, research, and other programming. We
tested two transactions totaling $4,061,403 out of the $33 million claimed, and
identified ineligible questioned costs related to one transaction, as detailed below.
For one transaction tested, we noted New Hampshire purchased enhanced data
security support for remote operations (cybersecurity). We reviewed the purchase
order and invoice and noted that the $2,934,552 license subscription was
purchased for the period of December 2, 2021 through November 2, 2026.
Castro noted that the subscription would be active through 2026, which a portion
was outside of Treasury’s final period for New Hampshire to expend obligated
funds from the CRF, September 30, 2022. 18 For each subscription, we determined
the amount of time that would occur after September 30, 2022, and utilized this to
calculate the dollar amount associated with the portion of these prepaid
subscriptions that were not fully expended prior to September 30, 2022. Castro
questioned $2,397,551 as ineligible expenditures related to prepaid subscription
costs outside of Treasury’s period to expend funds received from the CRF.
17
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.”
18
Coronavirus Relief Fund Guidance as published in the Federal Register (December 14, 2021)
states: “Costs incurred during the period that begins on March 1, 2020, and ends on December 31,
2021. The CARES Act provides that payments from the Fund may only be used to cover costs that
were incurred during the period that begins on March 1, 2020, and ends on December 31, 2021 (the
“covered period”). 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.”
9
Desk Review of the State of New Hampshire
Since Castro identified ineligible questioned costs related to subscriptions in the
GrantSolutions portal, we recommend Treasury OIG follow-up with New
Hampshire to identify if there were other instances of subscription costs that
extended past September 30, 2022.
Transfers Greater Than or Equal to $50,000
We determined New Hampshire’s Transfers greater than or equal to $50,000
complied with the CARES Act and Treasury’s Guidance. We tested four transfers
totaling $110,624,370 and identified no exceptions. The transfers tested included
expenditures for reimbursement of New Hampshire's Department of Employment
Security Unemployment Insurance Trust Fund Balance,19 and for the Audit Set
Aside Fund,20 which was used to pay for financial and compliance audits as
required by the Federal government or by State statute.
Unemployment Insurance Replenishment Analysis
The unemployment transactions reviewed consisted of $109,383,334 in payments
from March 2020 through September 2022 to replenish New Hampshire’s
Unemployment Insurance Trust Fund. In conjunction with the transactions tested,
New Hampshire provided the New Hampshire Department of Employment
Security unemployment claims analysis supporting how the state determined that
the change in this balance (unemployment claims paid) occurred due to the
COVID-19 pandemic and not due to unemployment claims that would have been
paid regardless of the pandemic.
New Hampshire experienced a significant decline of $223,880,703 in the
Unemployment Insurance Trust Fund balance from March 2020 through
October 2020. New Hampshire’s unemployment claims analysis summarized the
inflows and outflows of the Unemployment Insurance Trust Fund balance during
the covered period. Upon inspection of New Hampshire’s unemployment claims
analysis, we noted actual COVID-19 unemployment benefits expenditures were
$429,757,887. The increase in unemployment benefits claimed directly impacted
New Hampshire’s Unemployment Insurance Trust Fund balance, which increased
the risk of potential insolvency. Castro also obtained a written confirmation from
19
The federal Unemployment Insurance 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 pertained to the COVID-19
pandemic, New Hampshire replenished the Unemployment Insurance Trust Fund balance with
CRF proceeds for eligible claimants receiving unemployment benefit payments.
20
The audit set aside fund is a pool of restricted monies applied to the total appropriated federal
program revenue to cover professional audit services related to financial statement and uniform
guidance (compliance audits) costs based on a specified percentage threshold determined by a
state government in conjunction with federal laws, regulations, and policies.
10
Desk Review of the State of New Hampshire
the New Hampshire personnel responsible for managing the Unemployment
Insurance Trust Fund, which stated that New Hampshire utilized other federal
funding sources to reimburse unemployment related expenditures; however,
Castro accounted for those in our analysis and noted that New Hampshire’s
Unemployment Insurance Trust Fund balance decreased by more than the
amount of other federal funding sources used.
Castro concluded that New Hampshire’s CRF payment to the New Hampshire
Unemployment Insurance Trust Fund was a replenishment payment and not an
augmentation to the Unemployment Insurance 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 New Hampshire’s Direct Payments greater than or equal to
$50,000 did not comply with the CARES Act and Treasury’s Guidance. We tested
14 direct payments totaling $41,729,499. The direct payments tested included
expenditures for:
• emergency financial relief through different grant programs to eligible
hospitals, healthcare providers, local school districts, self-employed
individuals, nonprofits, and for-profit businesses;
• support provided for increased operational costs due to closures and
reduced enrollment as recovery and stabilization efforts to programs;
• consulting services to upgrade the New Hampshire Department of Health
and Human Services New Heights System, which increased the capacity
and efficiency to respond to COVID-19 related issues such as demand for
integrated software to track individuals who contracted COVID-19;
• and to implement modifications and strengthen fraud prevention/detection
in the Pandemic Unemployment Assistance and Pandemic Emergency
Unemployment Compensation benefit payment processes.
We identified exceptions related to six direct payments, resulting in unsupported
questioned costs of $14,027,288, as detailed below. Additionally, we identified
nine of the 14 direct payment transactions tested were misclassified and should
have been correctly reported under the Grants greater than or equal to $50,000
payment type, resulting in non-compliance with Treasury’s Guidance.
11
Desk Review of the State of New Hampshire
Direct Payment Revenue Loss and Defrayed Operating Costs Grant Programs
Exceptions Summary
During our review of New Hampshire’s Direct Payments greater than or equal to
$50,000 payment type, we noted the Governor issued executive orders to
establish the following pandemic related grant programs: Emergency Healthcare
System Relief Fund (EHSRF), Non-Profit Emergency Relief Fund (NERF), Self
Employed Livelihood Fund (SELF), and COVID-19 Business Expense Relief for
expenditures related to pandemic related revenue loss and defrayed operating
costs. We obtained and reviewed the grant program requirements to determine
an applicant’s eligibility and allowability. Upon inspection of the grant program
requirements, we noted grant applicants were required to maintain supporting
documentation to evidence the actual revenue loss in fiscal year (FY) 2020 in
comparison to gross receipts from FY 2019.
When grantees completed the grant application and agreement, they utilized the
projected or estimated FY 2020 gross receipts. Given this information, the New
Hampshire Governor’s Office of Emergency Relief and Recovery (GOFERR)
performed a financial recoupment analysis to determine whether the grantee’s
actual FY 2020 gross receipts were less than the FY 2019 revenues. As a provision
to lack of revenue loss, GOFERR allowed grantees to maintain eligible
expenditures to be reimbursed with the award. If the grantee did not experience
revenue loss and did not have evidence of eligible expenditures, the excess of the
award was required to be recouped and reallocated for other purposes. We
identified exceptions related to six direct payments tested resulting in
unsupported questioned costs of $14,027,288, included in the below table.
Additionally, for six of the direct payments tested we noted these transactions
were misclassified and should have been correctly reported under Grants greater
than or equal to $50,000.
12
Desk Review of the State of New Hampshire
Direct Payment
Exception Amount Questioned
Project Name and Description
Number 21 Tested Costs
EHSRF Project: Provided financial relief
assistance to eligible healthcare providers for
Direct Payment
the expenses incurred and revenue losses as a $ 7,000,000 $ 7,000,000
Exception #1
result of the COVID-19 public health
emergency.
NERF Project: Provided financial assistance to
Direct Payment New Hampshire non-profit businesses due to
$ 52,500 $ 52,500
Exception #2 the economic disruption caused by the COVID-
19 pandemic.
SELF Project: Provided financial assistance to
Direct Payment self-employed businesses as emergency
$ 50,000 $ 50,000
Exception #3 financial relief due to the economic disruption
caused by COVID-19.
EHSRF Project: Provided financial relief
assistance to eligible healthcare providers for
Direct Payment
the expenses incurred and revenue losses as a $ 3,719,059 $ 3,719,059
Exception #4
result of the COVID-19 public health
emergency.
EHSRF Project: Provided financial relief
assistance to eligible healthcare providers for
Direct Payment
the expenses incurred and revenue losses as a $ 5,000,000 $ 3,154,389
Exception #5
result of the COVID-19 public health
emergency.
COVID-19 Business Expense Relief Program
Project: Provided financial assistance designed
Direct Payment
to reimburse New Hampshire for-profit $ 51,340 $ 51,340
Exception #6
businesses for unmet COVID-19 related
expenses.
Total $ 15,872,899 $ 14,027,288
Direct Payments 1 through 3
For Direct Payments Exception numbers 1 through 3, we requested that New
Hampshire management provide the supporting documentation to substantiate
the revenue loss and eligible expenditures included in the supplemental grant
award files. However, management did not provide sufficient documentation to
substantiate the figures and details in the submitted grant award documents (such
as revenues from the income statements, general ledger expense details, and
vendor invoices). Without adequate underlying documents, we were unable to
21
For Direct Payments Exception #’s 1 through 5, according to the grant agreement, the grantee
was required to (1) submit a final grant report demonstrating all necessary business expenditures
incurred with respect to the COVID-19 pandemic between March 1, 2020 through
December 30, 2020 and (2) supporting documentation to evidence the actual revenue loss in FY
2020 in comparison to gross receipts from FY 2019.
13
Desk Review of the State of New Hampshire
confirm the amount of actual revenue loss or eligible expenditures, resulting in
unsupported questioned costs as follows:
• Direct Payment Exception 1 - $7,000,000
• Direct Payment Exception 2 - $52,500
• Direct Payment Exception 3 - $50,000
Direct Payments Exception 4
For the Direct Payment Exception 4 totaling $3,719,059, we noted New Hampshire
management failed to provide FY 2019 and FY 2020 income statements, and FY
2020 general ledger expense details to substantiate the eligible healthcare
providers experienced revenue loss or used the CRF proceeds to defray the
increased operating costs. We questioned $3,719,059 as unsupported costs
because we were unable to confirm the actual revenue loss or eligible
expenditures.
Direct Payments Exception 5
For the Direct Payment 5 totaling $5,000,000, New Hampshire management
provided general ledger details of $1,845,611 to partially support the total
$5,000,000 award amount. Within the documentation, we identified general ledger
support that reconciled back to the figures presented in the grant award
documents in the amount of $1,845,611. However, New Hampshire management
failed to provide FY 2019 and FY 2020 income statements to substantiate the
eligible healthcare providers experienced revenue loss. We concluded that
without adequate underlying documents, we questioned $3,154,389 as
unsupported costs because we were unable to confirm the actual revenue loss.
Direct Payment Exception 6
GOFERR transferred an additional $10,000,000 in CRF proceeds for the purpose of
facilitating the COVID-19 Business Expense Relief Program, which was designed
to reimburse New Hampshire for-profit businesses for their unmet COVID-19
related expenses. GOFERR reported a total of $8,397,446 in CRF proceeds to this
project. The transactions selected for testing totaled $51,340.
The COVID-19 Business Expense Relief Program provided a pro rata, capped
reimbursement of qualified COVID-19 related business expenses. Eligible
businesses received reimbursement for costs incurred while closed due to COVID-
19 such as prorated rent, mortgage payments, and utilities; costs incurred as a
result of reopening after COVID-19 related closure such as personal protective
equipment, workforce safety training, and installation of physical measures; and
14
Desk Review of the State of New Hampshire
increased costs of doing business as a result of COVID-19 such as heating,
ventilation and air conditioning improvements, and increased costs due to supply
chain shortages.
New Hampshire was unable to provide sufficient supporting documentation to
evidence the reimbursement of expenditures. The recipient of the tested grant
reported using CRF for rent expenses and costs for the purchase of equipment.
Castro requested the rent agreement and other related invoices for the purchase
of equipment to substantiate the amounts reimbursed under the program. New
Hampshire was unable to provide relevant and appropriate supporting
documentation to substantiate the expenditures reimbursed under the program.
As a result, we identified unsupported questioned costs of $51,340.
Castro tested $15,872,899 out of $109,697,391 of the program expenditures
discussed above and identified unsupported questioned costs of $14,027,288.
Listed in the table below is the untested costs related to these programs. Castro
recommends Treasury OIG determine the feasibility of following up on the
remaining untested portion of this balance of $93,824,492 to determine if the
remaining balance may be similarly unsupported.
Direct Payment Exception - Program Name22 Amount Untested
Direct Payment Exception 1 - EHSRF Project $ 32,186,993
Direct Payment Exception 2 – NERF Project $ 33,435,815
Direct Payment Exception 3 - SELF Project $ 4,550,000
Direct Payment Exception 4 & 5 – EHSRF Project $ 15,305,578
Direct Payment Exception 6 – COVID-19 Business
$ 8,346,106
Expense Relief Program Project
Total Untested Amount $ 93,824,492
Aggregate Reporting Less Than $50,000
We determined New Hampshire’s Aggregate Reporting less than $50,000
complied with the CARES Act and Treasury’s Guidance. We tested two
transactions totaling $63,547 and identified no exceptions. The transactions tested
included promotion and marketing expenses related to COVID-19 safety measures
and precautions, and reimbursements of costs due to business interruption in
support of performance venues that were facing revenue losses due to COVID-19.
22
As noted in the table above, the program name associated with Exceptions #’s (1, and 4-6) were
given the same project name by New Hampshire; however, they assigned different program
numbers as agreements were amended or modified during the covered period.
15
Desk Review of the State of New Hampshire
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, 23 where applicable. Prime recipients may or may not have claimed all of
these types of expenditures.
Public Safety/Health Payroll – consisted of payroll costs for public
health and safety department personnel.
Substantially Dedicated Payroll24 – 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 Payroll25 – 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.
23
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
24
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.”
25
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 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.”
16
Desk Review of the State of New Hampshire
The New Hampshire Aggregate Payments to Individuals balance consisted of
payroll and other transactions from the following categories of reported costs.
Total Expenses
Aggregate Payments to Individuals Category Types
Reported
Public Health and Safety Payroll $ 6,271,866
Substantially Dedicated Payroll $ 3,044,084
Non-Substantially Dedicated Payroll $ 8,447,159
Non-Payroll Expenditures $ 271,856
Uncategorized Costs Charged to API26 $ 29,483
Totals $ 18,064,448
Castro noted that public health and safety payroll transactions were subject to
Treasury’s administrative accommodation,27 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. Non-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.
We determined New Hampshire’s Aggregate Payments to Individuals complied
with the CARES Act and Treasury’s Guidance. We tested two transactions totaling
$271,958 and identified no exceptions. We tested Aggregate Payments to
Individuals transactions related to upgrades that included a purchase of tablets to
allow staff to effectively work remotely, and to reimburse non-substantially
dedicated payroll costs for employees working directly to mitigate the response of
the COVID-19 pandemic.
26
We noted New Hampshire’s Aggregate Payments to Individuals analysis reconciled to the
cumulative expenditures claimed in the GrantSolutions portal as of September 2023, however,
New Hampshire was unable to categorize $29,483 of expenditures in the Aggregate Payments to
Individuals category types above. We did not note this as an exception since the variances
occurred due to New Hampshire’s inability to categorize $29,483, and these transactions were still
subject to our transaction selections for testing. We concluded that New Hampshire sufficiently
reconciled the total cumulative expenditures based on the performance of the general ledger detail
tie-out.
27
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.”
17
Desk Review of the State of New Hampshire
Conclusion
We determined that the expenditures related to the Transfers greater than or
equal to $50,000, Aggregate Reporting less than $50,000, and Aggregate
Payments to Individuals payment types complied with the CARES Act and
Treasury’s Guidance. Also, we determined that the expenditures related to the
Contracts greater than or equal to $50,000 payment type complied with the
CARES Act but not Treasury’s Guidance. Additionally, we determined that the
expenditures related to the Grants greater than or equal to $50,000 and Direct
Payments greater than or equal to $50,000 payment types did not comply with the
CARES Act and Treasury’s Guidance.
We identified unsupported and ineligible questioned costs of $14,027,288 and
$2,397,551, respectively, with total questioned costs across all payment types of
$16,424,839. Also, we identified GrantSolutions portal misclassification issues
related to the Contracts greater than or equal to $50,000 and Direct Payments
greater than or equal to $50,000 payment types that did not comply with
Treasury’s Guidance.
Additionally, New Hampshire’s risk of unallowable use of funds is moderate.
Castro recommends that Treasury OIG follow-up with New Hampshire’s
management to confirm if the $14,027,288 noted as unsupported expenditures
within the Direct Payments greater than or equal to $50,000 payment type can be
supported. If support is not provided, Treasury OIG should recoup the funds or
request New Hampshire 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 New Hampshire
management to provide support for replacement expenses, not previously
charged, that were eligible during the CRF period of performance for the
$2,397,551 of ineligible costs charged to the Grants greater than or equal to
$50,000 payment type. If support is not provided, Treasury OIG should recoup the
funds.
Further, based on New Hampshire 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 Grants greater than or equal to $50,000 and Direct
Payments greater than or equal to $50,000 payment types.
18
Desk Review of the State of New Hampshire
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 with New Hampshire management and request they 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 the subscription costs extended past September 30, 2022.
Determine the feasibility of performing additional follow-up with New
Hampshire to determine if there were other instances of unsupported
balances within the Direct Payments greater than or equal to $50,000
grant programs: Emergency Healthcare System Relief Fund, Non-Profit
Emergency Relief Fund, Self Employed Livelihood Fund, and COVID-19
Business Expense Relief for expenditures related to pandemic related
revenue loss and defrayed operating costs.
*****
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.28 We appreciate the courtesies
and cooperation provided to our staff during the desk review.
Sincerely,
Wayne Ference
Partner, Castro & Company, LLC
28
https://www.ignet.gov/sites/default/files/files/Silver%20Book%20Revision%20-%208-20-12r.pdf
19
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