OIG Ca 25 028 Desk Review Of The State Of Nebraska S Use Of Coronavirus Relief Fund Proceeds
Summary
Treasury Office of Inspector General memorandum OIG-CA-25-028, dated December 19, 2024, transmitting a desk review of the State of Nebraska's use of Coronavirus Relief Fund (CRF) proceeds performed by Castro & Company, LLC under contract. The review covers a non-statistical selection of 25 transactions and identifies unsupported questioned costs of $15,800,129 and ineligible questioned costs of $30,001, for total questioned costs of $15,830,130. It finds that the Grants, Transfers, Aggregate Reporting and Aggregate Payments to Individuals payment types did not comply with the CARES Act and Treasury guidance, that Contracts complied, and that Nebraska's risk of unallowable use of funds is high. The attached Castro memorandum reports a $1,083,865,742 CRF payment to Nebraska, fully expended as of December 31, 2022, and recommends further follow-up.
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
December 19, 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 Nebraska’s Use of
Coronavirus Relief Fund Proceeds
(OIG-CA-25-028)
Please find the attached desk review memorandum 1 on the State of Nebraska’s
(Nebraska) 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 25 transactions reported in the quarterly Financial Progress Reports
(FPR) and identified a combination of unsupported and ineligible questioned costs
of $15,800,129 and $30,001, respectively, with total questioned costs across all
payment types of $15,830,130 (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 Grants greater than or equal to
$50,000, Transfers 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 Department of the Treasury’s (Treasury)
Guidance. Castro also determined that the expenditures related to the Contracts
greater than or equal to $50,000 payment type complied with both the CARES Act
and Treasury’s guidance. Castro determined that Nebraska’s risk of unallowable
use of funds is high.
Castro recommends that Treasury Office of Inspector General (OIG) follow-up with
Nebraska management to confirm the transactions noted as unsupported or
ineligible expenditures within the 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 are recouped or replaced
by other eligible expenditures, not previously charged to CRF, that were incurred
during the period of performance. Based on Nebraska management’s
responsiveness to Treasury OIG’s requests and management’s ability to provide
sufficient documentation, Castro recommends Treasury OIG determine the
feasibility of conducting an audit for the 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.
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) Request that Nebraska perform an assessment over whether there were any
additional indirect costs claimed within its Transfers greater than or equal to
$50,000 CRF submission, in addition to those tested by Castro. Castro
recommends Treasury OIG determine if these costs should be recouped or
replaced by other eligible expenditures, not previously charged to CRF, that were
incurred during the period of performance; and
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
2) Castro tested $6,075 out of the total amount of $1,597,068 in Substantially
Dedicated Payroll5 costs claimed by Nebraska. Since Castro identified ineligible
questioned costs within these Aggregate Payments to Individuals Substantially
Dedicated Payroll expenditures tested, Castro recommends Treasury OIG
determine if there were other instances of ineligible balances within the remaining
portion of this balance.
Treasury OIG and Castro met with Nebraska management to discuss the report.
Nebraska 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 Nebraska’s use of CRF proceeds. Castro is responsible for
the attached desk review memorandum and the conclusions expressed therein.
Our review found no instances in which Castro did not comply in all material
respects with Quality Standards for Federal Offices of Inspectors General .
We appreciate the courtesies and cooperation provided to Castro and our staff
during the desk review. If you have any questions or require further information,
please contact me at (202) 486-1420, or a member of your staff may contact Lisa
DeAngelis, Audit Director, at (202) 487-8371.
cc: Michelle. A. Dickerman, Deputy Assistant General Counsel, Department of
the Treasury
Danielle Christensen, Deputy Chief Program Officer, Office of Capital
Access, Department of the Treasury
Wayne Ference, Partner, Castro & Company, LLC
Philp Olsen, Administrator, State Accounting, Nebraska Department of
Administrative Services
5
Substantially dedicated payroll costs means that personnel must have dedicated over 50 percent
of their time to responding to 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.”
Page 4
Attachment
Schedule of Monetary Benefits
According to the Code of Federal Regulations, 6 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 Treasury’s Joint Audit Management
Enterprise System (JAMES).7 The amount will also be included in the 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 $15,830,130
The questioned costs represent amounts provided by Treasury under the
Coronavirus Relief Fund. As discussed in the attached desk review, $15,830,130 is
Nebraska’s expenditures reported in the grant-reporting portal that were ineligible
or lacked supporting documentation.
6
2 CFR § 200.84 – Questioned Cost
7
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 Nebraska
December 19, 2024
OIG-CA-25-028
MEMORANDUM FOR DEBORAH L. HARKER,
ASSISTANT INSPECTOR GENERAL FOR AUDIT
FROM: Wayne Ference
Partner, Castro & Company, LLC
SUBJECT: Desk Review of the State of Nebraska
On November 7, 2023, we initiated a desk review of the State of Nebraska’s
(Nebraska) 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 Nebraska’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 December 31, 2022, 3 as reported in
the GrantSolutions portal.
As part of our desk review, we performed the following:
1) reviewed Nebraska’s quarterly Financial Progress Reports (FPRs) submitted
in the GrantSolutions portal through December 31, 2022;
2) reviewed the Department of the Treasury’s (Treasury) Coronavirus Relief
Fund Guidance as published in the Federal Register on January 15, 2021; 4
1
P.L. 116-136 (March 27, 2020).
2
GrantSolutions, a grant and program management Federal shared service provider under the
United States (U.S.) Department of Health and Human Services, developed a customized and user-
friendly reporting solution to capture the use of CRF payments from prime recipients.
3
Nebraska fully expended their total CRF proceeds as of December 31, 2022. Castro set the scope
end date to December 31, 2022, which was the date of Nebraska’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 Nebraska
3) reviewed Treasury Office of Inspector General’s (OIG) Coronavirus Relief
Fund Frequently Asked Questions Related to Reporting and
Recordkeeping;5
4) reviewed Treasury OIG’s monitoring checklists6 of Nebraska’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 Nebraska’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 Nebraska’s use of CRF proceeds;
7) interviewed key personnel responsible for preparing and certifying
Nebraska’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 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 Nebraska
8) made a non-statistical selection of Contracts, Grants, Transfers9, Aggregate
Reporting, 10 and Aggregate Payments to Individuals11 data identified
F
through GrantSolutions portal reporting; and
9) evaluated documentation and records used to support Nebraska’s quarterly
FPRs.
Based on our review of Nebraska’s documentation supporting the uses of its CRF
proceeds as reported in the GrantSolutions portal, we determined that the
expenditures related to the 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. Also, we determined that the expenditures related
to the Contracts greater than or equal to $50,000 payment type complied with the
CARES Act and Treasury’s Guidance.
We identified unsupported and ineligible questioned costs of $15,800,129 and
$30,001, respectively, with total questioned costs of $15,830,130. We also
determined Nebraska’s risk of unallowable use of funds is high.
Castro recommends that Treasury OIG confirm the transactions noted as
unsupported or ineligible expenditures within the 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 are recouped or
replaced by other eligible expenditures, not previously charged to CRF, that were
incurred during the period of performance. Based on Nebraska management’s
responsiveness to Treasury OIG’s requests and management’s ability to provide
sufficient documentation, we recommend Treasury OIG determine the feasibility
of conducting an audit for the 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.
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 Nebraska
Non-Statistical Transaction Selection Methodology
Treasury issued a $1,083,865,742 CRF payment to Nebraska. As of
December 31, 2022, Nebraska expended all of its CRF funds. Nebraska’s
cumulative obligations and expenditures by payment type are summarized below.
Cumulative Cumulative
Payment Type
Obligations Expenditures
Contracts >= $50,000 $ 28,205,940 $ 28,205,940
Grants >= $50,000 $ 190,193,365 $ 190,193,365
Loans >= $50,000 $ - $ -
Transfers >= $50,000 $ 132,473,812 $ 132,473,812
Direct Payments >= $50,000 $ - $ -
Aggregate Reporting < $50,000 $ 350,767,314 $ 350,767,314
Aggregate Payments to
Individuals (in any amount) $ 382,225,311 $ 382,225,311
Totals $ 1,083,865,742 $ 1,083,865,742
Castro made a non-statistical selection of payments in the Contracts greater than
or equal to $50,000, Grants greater than or equal to $50,000, Transfers 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 anomalies12 identified by the Treasury OIG CRF
monitoring team, and review of Nebraska’s FPR submissions. Nebraska did not
obligate or expend CRF proceeds to Loans greater than or equal to $50,000 or
Direct Payments greater than or equal to $50,000 payment types; therefore, we did
not select transactions from these payment types.
The number of transactions (25) we selected to test was based on Nebraska’s total
CRF award amount and Castro’s overall risk assessment of Nebraska. To allocate
the number of transactions (25) 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, Aggregate Reporting less than $50,000, and Aggregate
Payments to Individuals), we compared the total payment type dollar amounts as
a percentage of cumulative expenditures as of December 31, 2022.
Also, Treasury OIG identified additional anomalies in the form of potential
duplicate payments, which had not already been included within our transaction
selections, of which we selected six potential duplicates for review. We performed
limited testing on these six potential duplicate payments to determine whether
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.
4
Desk Review of the State of Nebraska
the payments were duplicates, and identified no exceptions. 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 $1,083,865,742
CRF payment to Nebraska. 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
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.
13
P.L. 116-260 (December 27, 2020). The covered period end date of the CRF was extended through
December 31, 2021 by the Consolidated Appropriations Act, 2021. The covered period end date for
tribal entities was further extended to December 31, 2022 by the State, Local, Tribal, and Territorial
Fiscal Recovery, Infrastructure, and Disaster Relief Flexibility Act, Division LL of the Consolidated
Appropriations Act, 2023, P.L. 117-328, December 29, 2022, 136 Stat. 4459.
14
Section 15011 of P.L. 116-136 defined a covered recipient as any entity that received large,
covered funds and included any State, the District of Columbia, and any territory or possession of
the United States.
15
Section 15010 of P.L. 116-136 defined covered funds as any funds, including loans, that were
made available in any form to any non-Federal entity, not including an individual, under Public
Laws 116-123, 127, and 136, as well as any other law which primarily made appropriations for
Coronavirus response and related activities.
16
Section 15011 of P.L. 116-136 defined large, covered funds as covered funds that amounted to
more than $150,000.
5
Desk Review of the State of Nebraska
The CARES Act assigned Treasury OIG the responsibility for compliance
monitoring and oversight of the receipt, disbursement, and use of CRF proceeds.
Treasury OIG also has the authority to recoup funds in the event it is determined a
prime recipient failed to comply with requirements of subsection 601(d) of the
Social Security Act, as amended, (42 U.S.C. 801(d)).
Desk Review Results
Financial Progress Reports
We reviewed Nebraska’s quarterly FPRs through December 31, 2022, and found
that Nebraska timely filed quarterly FPRs in the GrantSolutions portal in
compliance with Treasury OIG’s reporting requirements for the periods ending
June 30, 2020 through December 31, 2022.
Summary of Testing Results
We found that the 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. We also found that the Contracts greater
than or equal to $50,000 payment type complied with the CARES Act and
Treasury’s Guidance. The transactions selected for testing were not selected
statistically, and therefore results could not be extrapolated to the total universe
of transactions.
Within Table 1 below, we have included a summary of $14,617,860 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. Castro also identified other matters throughout the course
of our desk review procedures which we considered to be questioned costs that
were not part of our testing of detailed transactions. Table 2 below combines the
questioned costs identified in Table 1 with the other questioned costs of
$1,212,270 identified separately from our detailed transaction testing to account
for total questioned costs of $15,830,130. See the Desk Review Results section
below Table 2 for a detailed discussion of questioned costs and other issues
identified throughout the course of our desk review.
6
Desk Review of the State of Nebraska
Table 1 - Summary of Expenditures Testing and Recommended Results
As of December 31, 2022
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 $ 28,205,940 $ 1,122,660 $ - $ - $ -
Grants >= $50,000 $ 190,193,365 $ 11,532,279 $ 5,012,888 $ - $ 5,012,888
Loans >= $50,000 $ - $ - $ - $ - $ -
Transfers >= $50,000 $ 132,473,812 $ 68,570,321 $ 9,596,834 $ - $ 9,596,834
Direct Payments >=
$50,000 $ - $ - $ - $ - $ -
Aggregate Reporting <
$50,000 $ 350,767,314 $ 25,324 $ - $ 2,063 $ 2,063
Aggregate Payments to
Individuals (in any
amount)
$ 382,225,311 $ 188,751,045 $ - $ 6,075 $ 6,075
Totals
$ 1,083,865,742 $ 270,001,629 $ 14,609,722 $ 8,138 $ 14,617,860
7
Desk Review of the State of Nebraska
Table 2 - Summary of Tested and Other Matters Identified Questioned Costs
As of December 31, 2022
G=(C+F)
(B) (E)
Total
(A) Unsupported (C=A+B) (D) Ineligible F=(D+E)
Questioned
Unsupported Questioned Total Ineligible Questioned Total
Costs
Questioned Costs Unsupported Questioned Costs Ineligible
(Tested &
Costs (Other Questioned Costs (Other Questioned
Other Matter)
Payment Type (Tested) Matter) Costs (Tested) Matter) Costs
Contracts >= $50,000 $ - $ - $ - $ - $ - $ - $ -
Grants >= $50,000 $ 5,012,888 $ 1,190,407 $ 6,203,295 $ - $ - $ - $ 6,203,295
Loans >= $50,000 $ - $ - $ - $ - $ - $ - $ -
Transfers to Other
Government Agencies >=
$50,000 $ 9,596,834 $ - $ 9,596,834 $ - $ 21,863 $ 21,863 $ 9,618,697
Direct Payments >= $50,000 $ - $ - $ - $ - $ - $ - $ -
Aggregate Reporting < $50,000 $ - $ - $ - $ 2,063 $ - $ 2,063 $ 2,063
Aggregate Payments to
Individuals (in any amount) $ - $ - $ - $ 6,075 $ - $ 6,075 $ 6,075
Totals $ 14,609,722 $ 1,190,407 $ 15,800,129 $ 8,138 $ 21,863 $ 30,001 $ 15,830,130
8
Desk Review of the State of Nebraska
Contracts Greater Than or Equal to $50,000
We determined Nebraska’s Contracts greater than or equal to $50,000 complied
with the CARES Act and Treasury’s Guidance. We selected one contract for testing
totaling $1,122,660 and had no exceptions. The contract tested was issued to a
company that provided a hotline for Nebraska citizens seeking information about
the COVID-19 vaccinations newly available to the general population in 2021.
Grants Greater Than or Equal to $50,000
We determined Nebraska’s Grants greater than or equal $50,000 did not comply
with the CARES Act and Treasury’s Guidance. We tested eight grants totaling
$11,532,279. The grants tested included expenditures related to scholarships for a
community college workforce initiative training program; public health and safety
payroll; food purchases for food banks; phone system upgrades; headsets for food
bank call centers; and grant awards made to Nebraska based companies with 500
or fewer full time equivalent employees who suffered an economic hardship due
to the pandemic.
We identified unsupported questioned costs of $5,012,888 related to four grants
tested, as detailed below. Additionally, as part of our reconciliation procedures
performed related to Grant Exception #1 below, Castro identified a reconciling
error (other matter) resulting in unsupported questioned costs in the amount of
$1,190,407, as detailed below. We questioned this amount, increasing our total
questioned costs to 6,203,295.
Grant Exception #1 - Other Matter - Unsupported Questioned Costs Related to
Scholarships for Unemployed and Underemployed Individuals
Nebraska claimed $5,990,710 in grant expenses for the Nebraska Workforce
Retraining Initiative, where the Nebraska Department of Economic Development
(DED) utilized the Nebraska community college system's training infrastructure
and connection to businesses to assist underemployed and unemployed workers
that were negatively impacted by COVID-19. The scholarships were made to
individuals who applied and had lost their jobs and/or were underemployed as a
result of COVID-19. Castro tested two beneficiary level payments over this grant
totaling $1,450, and did not identify any testing exceptions. However, we
identified reconciling errors related to this grant, as detailed below.
During Castro’s reconciliation procedures over balances related to the Nebraska
Workforce Retraining Initiative grant, we attempted to reconcile the $5,990,710
grant amount reported in the GrantSolutions portal to the sub-recipient’s general
ledger (GL) detail listing. Castro identified GL detail amounts totaling $4,800,303
9
Desk Review of the State of Nebraska
out of $5,990,710, resulting in a variance of $1,190,407. Nebraska responded that
the community college requested that DED authorize additional administrative
expenses and additional scholarships for the balance of $1,190,407, and that the
community college’s request was pending with DED. We determined this
response to be insufficient because Nebraska did not provide an accurate and
complete sub-recipient GL detail and determined this variance to be a $1,190,407
reconciling error. We questioned this amount of $1,190,407 as unsupported
questioned costs.
Grants Exception #’s 2 & 3 - Crisis Response Staffing Services
Nebraska claimed two grants for a hospital grantee, totaling $10,356,480, which
consisted of two separate rounds of funding to the same grantee: the first was
$5,178,240 (Grant Exception #2) and the second was $5,178,240 (Grant Exception
#3); Castro confirmed these balances did not represent duplicate transactions.
Castro tested these grants together and selected four invoice level transactions for
testing totaling $84,513.
For two out of four invoice level transactions totaling $77,163, Castro tested
reimbursable grant transactions related to claims for public health and safety
payroll for hospital staff. Castro was unable to arrive at the amounts submitted for
reimbursement, as the total gross pay identified within the hospital’s paystubs
were less than the amount submitted within the GrantSolutions portal. Castro
reviewed the hospital paystubs and utilized the total hours presented and
Nebraska’s cost detail file calculation methodology to assist in determining the
amount submitted for CRF reimbursement. Within the cost detail file, we noted
that Nebraska personnel stated that the wage rates and hours were adjusted to
accurately reflect the total claimed amount given by the applicant, and that all
payroll related costs associated with the testing selections were validated by
supporting documentation in the form of paystubs following the policies and
procedures. However, we were unable to recalculate the amount entered into the
GrantSolutions portal utilizing the support provided, as the pay rates and hours
had been adjusted within Nebraska's calculations. Castro reviewed the paystub
information provided and recalculated the first transaction as $26,250, but the
amount claimed was $37,717, resulting in a variance of $11,467. Castro
recalculated the second transaction as $38,025, but the amount claimed was
$39,446, resulting a variance of $1,421. As a result, Castro questioned $12,888 in
related expenditures to be unsupported.
10
Desk Review of the State of Nebraska
Grant Exception #4 - Zoo Stimulus Grant Program
Castro tested $5,000,000 related to a grant award to a zoo under the Nebraska Zoo
Stimulus Program. The Nebraska DED designed the program to benefit zoos in
Nebraska that experienced declines in revenue, increased expenses, and
employee layoffs as a result of the COVID-19 pandemic. Castro reviewed the grant
application guide and noted that applicants were required to submit supporting
documentation such as a Nebraska Income Tax Withholding Form for the first
quarter of 2020 to indicate their business designation and withholding
information.
Castro requested that Nebraska provide all supporting documentation reviewed to
confirm the zoo’s eligibility for the program and were told that all three of
Nebraska zoos were automatically eligible for this program. As a result, no
supporting documentation was submitted by the applicant. No tax forms and/or
financial form W-9's17 were reviewed. Nebraska management also stated that this
program did not require the review of financial statements or profit and loss
statements to evidence a net revenue loss. Instead, the program required the
applicant describe the negative impact COVID-19 had on the applicant's business.
Castro noted that the zoo submitted a grant application but did not provide the
required eligibility supporting documentation required by Nebraska’s grant
program. Therefore, Castro could not determine if the eligibility requirements
were met and questioned the entire grant award of $5,000,000 as unsupported.
Transfers Greater Than or Equal to $50,000
We determined Nebraska’s Transfers greater than or equal to $50,000 did not
comply with the CARES Act and Treasury’s Guidance. We tested seven transfers
totaling $68,570,321. The transfers tested included expenditures related to cities
and counties that incurred public health and safety payroll. We identified one
testing exception, resulting in unsupported questioned costs of $9,596,834 as
detailed below.
17
A W-9 is a U.S. Internal Revenue Service document utilized to obtain the tax identification
number of an individual or business entity and is utilized for eligibility verification purposes.
11
Desk Review of the State of Nebraska
Additionally, while performing an analysis of the Transfers greater than or equal
to $50,000 Items Not Listed Above (INLA)18 expenditure category, Castro identified
$21,863 in indirect costs19 claimed that we consider to be ineligible questioned
costs, as detailed below. We questioned this amount, increasing our total
questioned costs to $9,618,697.
Transfer Exception #1 - City of Lincoln Public Health and Safety Payroll
Castro tested $9,596,834 in transfer payments made to the City of Lincoln. This
funding was utilized to assist local entities in covering public health and safety
payroll expenses. Castro received a payroll claims summary, which we reconciled
to the amounts claimed within the GrantSolutions portal without exception. The
summary included pay types, benefits, employee names, amounts claimed, and
departments that were claiming these payroll expenses. However, Castro
requested and Nebraska was unable to provide the employees’ positions. Without
the employee positions, Castro could not verify these amounts related to public
health and safety payroll expenses. Castro questioned the entire transfer payment
of $9,596,834 as unsupported.
Additionally, Castro received the expenditure general ledger GL detail summary
and noted that the City of Lincoln’s public health and safety employees were listed
within the fringe benefits file with a fringe benefit rate of 343 percent. There were
also several employees with total payroll fringe benefit percentages over 100
percent. We requested additional payroll documents to facilitate further validation
of the fringe benefit rate calculation for the employees listed. In its response,
Nebraska indicated that the fringe benefit rates was so high because they were
calculated utilizing the claimed amount instead of the employee’s annual salary.
Additionally, Nebraska noted the value of each benefit contribution was included
within the payroll claim summary for each pay period claimed, but that it was
necessary for these values to be adjusted to reach the correct final claimed cost
due to the way that the template calculated wage rates against benefit rates.
Within its response, Nebraska referenced several values from paystubs; however,
Castro noted that Nebraska did not provide underlying pay stubs needed to verify
this response, despite several follow-ups for this information. Castro questioned
the entire transfer payment balance of $9,596,834 as unsupported.
18
Prime recipients were required to select a specific expenditure category from the available
options from a dropdown menu in the GrantSolutions portal for each expenditure claimed. If the
expenditure did not fit one of the pre-defined categories, a prime recipient was able to select the
Items Not Listed Above expenditure category, to include other eligible expenses that were not
captured in the available expenditure categories.
19
Indirect costs are not identifiable with a specific product, function, activity, or particular final cost
objective, such as a Federal award.
12
Desk Review of the State of Nebraska
Other Matter - Transfers greater than or equal to $50,000 Items Not Listed Above
Expenditure Category Ineligible Questioned Costs
While performing our Transfers greater than or equal to $50,000 INLA expenditure
category analysis, Castro identified an INLA description of “de minimis 20 Costs &
Shelving.” These total INLA costs of $22,194 consisted of a home improvement
store expenditure for shelving for $331 and $21,863 for the de minimis costs. For
the de minimis costs, Nebraska provided us with a sub-recipient claim invoice
which detailed that this indirect administrative cost amount was calculated as 10
percent of total direct costs incurred under the grant program. Although this
transaction was not part of our original transactions selections made in the desk
review, we followed up with Nebraska management for additional details
regarding this transaction. Based on documentation provided, Castro did not
identify any exceptions related to the $331 shelving purchase, however, Nebraska
allowed its sub-recipient to claim indirect administrative costs in the amount of
$21,863. Castro considered this to be ineligible, because Treasury’s Guidance
does not permit CRF prime recipients to charge indirect costs to their CRF award.
Nebraska and its sub-recipient claimed indirect cost rates by employing guidance
from the Code of Federal Regulations (CFR), 2 CFR 200.414(f)), Grants and
Agreements, Uniform Administrative Requirements, Cost Principles, and Audit
Requirements for Federal Awards, Direct and Indirect (F&A) Costs. 21 This guidance
defined indirect cost rates and set forth the 10 percent de minimis indirect cost
rate that could be used indefinitely instead of charging the actual administrative
costs.
However, Treasury’s Guidance published in the Federal Register stated that this
provision did not apply to the use of CRF funds and recipients could not apply
their indirect costs rates to payments received from the CRF. Therefore, Nebraska,
by applying the indirect cost rate, did not comply with Treasury’s Guidance,
resulting in an unallowable use of CRF funding in the amount of $21,863 of
ineligible questioned costs.
20
De minimis means lacking significance or importance: so minor as to merit disregard.
21
Code of Federal Regulations (CFR), 2 CFR 200.414(f)), Grants and Agreements, Uniform
Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, Direct
and Indirect (F&A) Costs states: “…any non-Federal entity that does not have a current negotiated
(including provisional) rate…may elect to charge a de minimis rate of 10% of modified total direct
costs (MTDC) which may be used indefinitely. No documentation is required to justify the 10% de
minimis indirect cost rate. As described in § 200.403, costs must be consistently charged as either
indirect or direct costs, but may not be double charged or inconsistently charged as both. If
chosen, this methodology once elected must be used consistently for all Federal awards until such
time as a non-Federal entity chooses to negotiate for a rate, which the non-Federal entity may
apply to do at any time.”
13
Desk Review of the State of Nebraska
Castro recommends that Treasury OIG request that Nebraska management
performs an assessment over whether there were any additional indirect costs
claimed within its Transfers greater than or equal to $50,000 CRF submission, and
identify those for removal and repayment to Treasury, as applicable. We
recommend Treasury OIG determine the feasibility of following up with Nebraska
regarding the results of this assessment and determine if these costs should be
recouped or replaced by other eligible expenditures, not previously charged to CRF,
that were incurred during the period of performance.
Aggregate Reporting Less Than $50,000
We determined that Nebraska's Aggregate Reporting less than $50,000 did not
comply with the CARES Act and Treasury's Guidance. Castro tested four
transactions totaling $25,324. The transactions tested included expenditures related
to disinfectant wipes; Nebraska information technology personnel who were
performing work on a COVID-19 accounting to grant management system interface
development effort to streamline the ability to meet CRF reporting requirements;
and business stabilization grants issued to small businesses that were shut down
during the pandemic. We identified one exception, which resulted in ineligible
questioned costs of $2,063, as detailed below.
We also identified GrantSolutions portal reporting misclassifications that we
determined were non-compliant with Treasury’s Guidance. Castro noted that
Nebraska had payroll for Nebraska state employees reported as Aggregate
Reporting less than $50,000, when they should have been reported as Aggregate
Payments to Individuals.
Aggregate Reporting Exception – Drone Operator Trainings
For one transaction totaling $2,063, Castro received an invoice, a payment form,
and accounts payable vouchers for the transaction related to drone operator
trainings purchased by Nebraska. Castro requested that Nebraska management
provide documentation to show how this expenditure was related to COVID-19,
and the response we received stated that this expense was incurred for the DED
communications team to attend an in-person training to practice taking drone
recordings. The recordings were then used to make videos as to how CARES Act
dollars helped businesses and agricultural operations. The expense of training
DED staff was less than hiring an outside agency to make said videos. This
expense was not included in the State of Nebraska's annual budget and the
expense was incurred after March 1, 2020, as a result of the COVID-19 pandemic.
Castro then asked to receive a video that was made with the drones to see how
the videos related to COVID-19; to this, Nebraska then responded that DED's
previous statement was incorrect. DED's drone training was still pending as DED
14
Desk Review of the State of Nebraska
staff was required to pass a drone test before staff could take videos or
photographs. DED staff had not yet passed the required test. Nebraska personnel
did not complete the tests, and therefore did not make videos or take photographs
needed to evidence that they utilized these funds as they had indicated. As such,
Castro questions these costs as ineligible in the amount of $2,063.
Aggregate Payments to Individuals
CRF payments made to individuals, regardless of amount, were required to be
reported in the aggregate in the GrantSolutions portal to prevent inappropriate
disclosure of personally identifiable information. Castro notes that the Aggregate
Payments to Individuals payment type consisted of the below broad types of
potential costs, which we have defined from Treasury’s guidance as published in
the Federal Register.22 Prime recipients may or may not have claimed all of these
types of expenditures.
22
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
15
Desk Review of the State of Nebraska
Public Health and Safety Payroll23 – 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
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.”
24
Substantially dedicated payroll costs meant that personnel must have dedicated over 50 percent
of their time to responding to or mitigating COVID-19. Treasury’s Federal Register guidance stated:
“The full amount of payroll and benefits expenses of substantially dedicated employees may be
covered using payments from the Fund. Treasury has not developed a precise definition of what
"substantially dedicated" means given that there is not a precise way to define this term across
different employment types. The relevant unit of government should maintain documentation of
the "substantially dedicated" conclusion with respect to its employees.”
25
Payroll costs that were not substantially dedicated were payroll costs that were not public health
and safety, and which were not substantially dedicated to performing COVID-19 related tasks.
Treasury’s Federal Register guidance defined more stringent tracking requirements for these types
of payroll costs. Specifically, Treasury’s Federal Register stated: “track time spent by employees
related to COVID-19 and apply Fund payments on that basis but would need to do so consistently
within the relevant agency or department. This means, for example, that a government could
cover payroll expenses allocated on an hourly basis to employees' time dedicated to mitigating or
responding to the COVID-19 public health emergency.”
16
Desk Review of the State of Nebraska
The Nebraska Aggregate Payments to Individuals balance consisted only of
payroll transactions from the following types of claimed costs.
Aggregate Payments to Individuals Total Expenses
Category Types26 Claimed
Public Health and Safety Payroll $ 83,698,936
Substantially Dedicated Payroll $ 1,597,068
Non-Payroll Expenditures27 $ 296,929,307
Totals $ 382,225,311
Castro noted that public health and safety payroll transactions were subject to
Treasury’s administrative accommodation,28 and therefore, were subject to less
detailed documentation requirements. Castro tested public health and safety
payroll transactions by reviewing itemized payroll distribution reports to support
these balances. Substantially dedicated payroll balances were not subject to this
administrative accommodation, and therefore, Castro tested these transactions by
reviewing Nebraska’s documentation of the "substantially dedicated" conclusion
with respect to its employees.
We determined that Nebraska's Aggregate Payments to Individuals did not
comply with the CARES ACT and Treasury's Guidance. We tested five transactions
totaling $188,751,045. Out of those five transactions, two were for public health
and safety payroll, one was for substantially dedicated payroll, and two were for
non-payroll transactions. The costs for one of the non-payroll transactions related
to Nebraska’s self-insurance program, and so we selected five COVID-19 medical
claims made under Nebraska’s self-insurance program. The second non-payroll
transaction was for unemployment insurance replenishment payments that
Nebraska made into its Unemployment Insurance Trust Fund. As a result of our
testing, we identified exceptions only related to substantially dedicated payroll
that included ineligible costs in the amount of $6,075, as detailed below.
26
Nebraska did not report any non-substantially dedicated payroll within its Aggregate Payments
to Individuals payment type, and so these were not included within the Aggregate Payments to
Individuals Category Types.
27
Castro noted that $285,722,096 out of $296,929,307 of these non-payroll costs were related to
unemployment payments. We have captured those in our unemployment replenishment analysis
below.
28
Treasury’s Federal Register guidance indicated 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 Nebraska
Substantially Dedicated Payroll Exception
For the substantially dedicated payroll transaction tested totaling $6,075, Castro
did not receive sufficient timesheets, but did review GL details and interagency
bills where the Nebraska Department of Administrative Services State Accounting
was billing the Nebraska Department of Revenue for work performed pertaining to
the Nebraska Department of Revenue Specialized Office Services (SOS) temporary
employees. Castro requested documentation of Nebraska’s "substantially
dedicated" conclusion with respect to these employees, including activity logs
further elaborating on tasks that these substantially dedicated employees worked
on during this time, to include descriptions of how those tasks related to COVID-
19. Castro noted that the timesheets provided did not include any activity logs
detailing tasks worked on by the employees or how their work related to COVID-
19. Castro was unable to reconcile the amounts claimed to the amounts provided
through the timesheets.
Nebraska responded to our requests by stating the SOS program was
administered by the Department of Administrative services and charged a 24
percent administrative fee, which was why the amounts did not agree to the
claimed amount in the GrantSolutions portal. Employees were referred to as SOS
Temporary Employees or Revenue Operations Clerks. The reason Nebraska hired
SOS employees was to assist with the shortage of employees due to COVID-19.
The SOS employees’ tasks were performing "regular duties” like assisting with tax
processing, which consisted of opening mail, data entry, and proofing tax
numbers. They were supervised by various Revenue Operation Supervisors and
there were no official logs that would keep track of what they were doing on a
daily basis.
Per Treasury’s Guidance – Federal Register Volume One, Section 4184 "Payroll or
benefits expenses for employees whose work duties were not substantially
dedicated to mitigating or responding to the COVID-19 public health emergency"
was specifically listed as ineligible expenditures for CRF funds. Castro did not
consider regular job functions of these employees to be substantially dedicated to
COVID-19. After reviewing the documentation provided, Castro questioned the
entire $6,075 as ineligible costs.
Castro tested $6,075 out of the total amount of $1,597,068 in Substantially
Dedicated Payroll claimed by Nebraska. Since Castro identified ineligible
questioned costs within these Aggregate Payments to Individuals Substantially
Dedicated Payroll expenditures tested, we recommend Treasury OIG determine
the feasibility of performing additional follow-up with Nebraska to determine if
there were other instances of ineligible balances within the remaining portion of
this balance.
18
Desk Review of the State of Nebraska
Nebraska’s Self-Insurance Program
Nebraska had a self-insurance health care program that was managed by the
Nebraska Department of Administrative Services – Risk Management Division. 29
Nebraska utilized this self-insurance plan to pool risks within all state agencies to
spread the financial impact of potential health claims across all participants in an
effort to mitigate and efficiently manage risk. Nebraska’s health insurance fund
covered medical and prescription drug benefits and associated administrative
costs. Nebraska withheld both employer and employee premiums to fund this
plan. A third-party administrator was responsible for managing and processing
health claims and making payments from the risk pool.30 The third-party
administrator provided Nebraska with the total amount of COVID-19 related
claims (COVID health claims, vaccinations, and testing) incurred by the plan prior
to Nebraska’s final December 31, 2022 GrantSolutions portal reporting, which
totaled $16,706,393. Nebraska then made an infusion of $7,111,096 of CRF
proceeds into Nebraska’s health insurance fund to offset the significant negative
impact COVID-19 had on health claims against the state’s health plans. Castro
made testing selections for five COVID-19 medical claims made under Nebraska’s
self-insurance program and verified that the explanation of benefits included a
COVID-19 diagnosis code. Castro tested these transactions without exception.
Nebraska Unemployment Insurance Replenishment Analysis
The non-payroll transaction tested consisted of a payment of $167,908,114 made
in July 2020 to replenish Nebraska’s Unemployment Insurance Trust Fund. We
obtained the Nebraska Department of Labor’s (DOL) unemployment claim
analysis supporting how it 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.
Castro obtained and inspected the bank statements/Fund Balance with Treasury
statements to support key Unemployment Insurance Trust Fund balances included
within Nebraska’s unemployment claim analyses and which were needed to
29
The State of Nebraska Department of Administrative Services, Health Insurance Plan Annual
Report, dated November 2019, defined Self-Insured as the following: The State assumes the
financial risk for providing health care benefits to its employees and contracts with a major
healthcare company to process the claims. Instead of paying fixed premiums to the healthcare
company, which may be inflated to include profit margins and taxes, the State collects
contributions from employees and State agencies itself and deposits them in a State trust fund,
using the premiums to pay health care claims for plan participants after copays and deductibles.
30
Per the State of Nebraska Department of Administrative Services, Health Insurance Plan Annual
Report, dated November 2019, the State of Nebraska Health Insurance Fund (risk pool) summarizes
the inflows and outflows of state employee contributions and distributions related to medical
claims.
19
Desk Review of the State of Nebraska
justify the eligibility of unemployment expenditures claimed as CRF expenditures.
Castro also obtained a written confirmation from the Nebraska DOL personnel
responsible for managing the Unemployment Insurance Trust fund stating that
Nebraska properly accounted for and did not double count unemployment claims
for reimbursement under any other Federal program. Nebraska DOL personnel
made total unemployment payments of $201,372,719 with Federal funding
sources. Of that total, Nebraska DOL was reimbursed $17,688,273 with U.S.
Department of Labor federal funding sources and utilized state funding sources to
pay for $15,776,332. Nebraska DOL utilized CRF funding sources to pay for the
remaining $285,722,096 in unemployment replenishment costs.
Castro concluded that Nebraska’s CRF replenishment payment consisted of an
Unemployment Insurance Trust Fund 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.
Conclusion
We determined that the expenditures related to the 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 also determined that
the expenditures related to the Contracts greater than or equal to $50,000
payment type complied with the CARES Act and Treasury’s Guidance.
We identified unsupported and ineligible questioned costs of $15,800,129 and
$30,001, respectively, resulting in total questioned costs of $15,830,130.
Additionally, Nebraska’s risk of unallowable use of funds is high. As a result of
this desk review, we recommend Treasury OIG:
Confirm the transactions noted as unsupported or ineligible expenditures
within the 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 are recouped or
replaced by other eligible expenditures, not previously charged to CRF,
that were incurred during the period of performance. Based on Nebraska
management’s responsiveness to Treasury OIG’s requests and
management’s ability to provide sufficient documentation, we
recommend Treasury OIG determine the feasibility of conducting an
audit for the Grants greater than or equal to $50,000, Transfers greater
20
Desk Review of the State of Nebraska
than or equal to $50,000, Aggregate Reporting less than $50,000, and
Aggregate Payments to Individuals payment types.
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:
Request that Nebraska perform an assessment over whether there were
any additional indirect costs claimed within its Transfers greater than or
equal to $50,000 CRF submission. We recommend Treasury OIG
determine if these costs should be recouped or replaced by other eligible
expenditures, not previously charged to CRF, that were incurred during
the period of performance.
Castro tested $6,075 out of the total amount of $1,597,068 in Substantially
Dedicated Payroll claimed by Nebraska. Since Castro identified ineligible
questioned costs within these Aggregate Payments to Individuals
Substantially Dedicated Payroll expenditures tested, we recommend
Treasury OIG determine if there were other instances of ineligible
balances within the remaining portion of this balance.
*****
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.31 We appreciate the courtesies
and cooperation provided to our staff during the desk review.
Sincerely,
Wayne Ference
Partner, Castro & Company, LLC
31
https://www.ignet.gov/sites/default/files/files/Silver%20Book%20Revision%20-%208-20-12r.pdf
21
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