OIG Ca 25 029 Desk Review Of The State Of Connecticut S Use Of Coronavirus Relief Fund Proceeds
Summary
A Department of the Treasury Office of Inspector General memorandum, Desk Review of the State of Connecticut's Use of Coronavirus Relief Fund Proceeds (OIG-CA-25-029), dated December 20, 2024, transmitting a desk review performed under contract by Castro & Company, LLC. Reviewing a non-statistical selection of 28 transactions, Castro identified unsupported questioned costs of $167,633,232 and assessed Connecticut's risk of unallowable use of funds as high. It also found reporting misclassification issues and that Connecticut did not meet the required reporting timeline. The review recommends that Treasury OIG follow up to confirm support for the questioned costs, recoup funds or accept replacement expenses if support is not provided, and consider an audit. It also notes CRF questioned costs in Connecticut's Single Audit Act reports for fiscal years 2020, 2021 and 2022.
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 20, 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 Connecticut’s Use of
Coronavirus Relief Fund Proceeds (OIG-CA-25-029)
Please find the attached desk review memorandum 1 on the State of Connecticut’s
(Connecticut) 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 28 transactions 2 reported in the quarterly Financial Progress Reports
(FPR) and identified unsupported questioned costs of $167,633,232 (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.
2 Castro made a non-statistical selection of 32 transactions to test based on Connecticut’s total CRF
award amount and Castro’s overall risk assessment for Connecticut. Four (4) of the 32 transactions
were ultimately reimbursed with other Federal program funds and reversed by Connecticut in the
grant-reporting portal. In addition, Castro selected six potential duplicate payment transactions for
limited testing to determine if the payments were duplicates.
Page 2
Castro determined that the expenditures related to the Contracts greater than or
equal to $50,000, Grants greater than or equal to $50,000, Transfers greater than
or equal to $50,000, 3 Direct Payments Greater than or equal to $50,000, Aggregate
Reporting less than $50,000, 4 and Aggregate Payments to Individuals 5 payment
types did not comply with the CARES Act and Department of the Treasury’s
(Treasury) Guidance. Castro also identified grant-reporting portal misclassification
issues related to the Transfers 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. Castro also determined that Connecticut did not
comply with the reporting timeline as required under Treasury Office of Inspector
General’s (OIG) Guidance, Coronavirus Relief Fund Reporting and Record
Retention Requirements (OIG-CA-20-021).
Additionally, Castro determined that Connecticut’s risk of unallowable use of
funds is high.
Castro recommends that Treasury OIG follow-up with Connecticut’s management
to confirm if the $167,633,232 noted as unsupported expenditures within the
Contracts greater than or equal to $50,000, Grants greater than or equal to
$50,000, Transfers greater than or equal to $50,000, Direct Payments greater than
or equal to $50,000, Aggregate Reporting less than $50,000, and Aggregate
Payments to Individuals payment types can be supported. If support is not
provided, Treasury OIG should recoup the funds or request that Connecticut’s
management provide support for other eligible replacement expenses, not
previously charged to CRF, that were incurred during the period of performance.
Further, based on Connecticut’s responsiveness to Treasury OIG’s requests and
management’s ability to provide sufficient documentation and/or replace
unsupported transactions charged to CRF with valid expenditures, Castro
recommends Treasury OIG determine the feasibility of conducting an audit for the
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.
3 A transfer to another government entity is a disbursement or payment to a government entity
that is legally distinct from the prime recipient.
4 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).
5
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
Castro also noted that Connecticut had findings in its Single Audit Act reports for
fiscal years 2020, 2021, and 2022.
1) Connecticut’s fiscal year 2020 Single Audit Act report was published on
February 19, 2021, and the auditor identified unsupported questioned
costs specific to the CRF in the amount of $479,551.
2) Connecticut’s fiscal year 2021 Single Audit Act report was published on
February 24, 2022, and the auditor identified unsupported questioned
costs specific to the CRF in the amount of $1,343,753.
3) Connecticut’s fiscal year 2022 Single Audit Act report was published on
February 24, 2023, and the auditor identified $144,342 in unsupported
questioned costs specific to the CRF.
Castro recommends that Treasury OIG follow-up with Treasury’s Office of Capital
Access to ensure that management decision letters are issued on the CRF specific
findings identified by the auditor in these Single Audit Act reports. Castro also
recommends Treasury OIG follow-up on any CRF specific questioned costs
reported in the fiscal year 2023 Single Audit Act report that was published on
March 27, 2024, after Castro’s desk review planning and fieldwork procedures
were completed.
Treasury OIG and Castro met with Connecticut’s management to discuss the
report. Connecticut’s management stated that 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 Connecticut’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.
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
Paul Potamianos, Deputy Secretary, State of Connecticut
Greg Messner, Executive Budget Officer, State of Connecticut
Page 5
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 the Department of the Treasury’s
(Treasury) Joint Audit Management Enterprise System (JAMES). 7 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 $167,633,232
The questioned costs represent amounts provided by Treasury under the
Coronavirus Relief Fund. As discussed in the attached desk review, $167,633,232
is Connecticut’s expenditures reported in the grant-reporting portal that 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 Connecticut
December 20, 2024
OIG-CA-25-029
MEMORANDUM FOR DEBORAH L. HARKER,
ASSISTANT INSPECTOR GENERAL FOR AUDIT
FROM: Wayne Ference
Partner, Castro & Company, LLC
SUBJECT: Desk Review of the State of Connecticut
On November 6, 2023, we initiated a desk review of the State of Connecticut’s
(Connecticut) 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 Connecticut’s documentation supporting its uses of CRF proceeds
as reported in the GrantSolutions 2 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 Connecticut’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
Connecticut 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 Connecticut’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 Connecticut
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 checklists 6 of Connecticut’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 Connecticut’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 Connecticut’s uses of CRF proceeds;
7) interviewed key personnel responsible for preparing and certifying
Connecticut’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 16 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 Connecticut
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 Connecticut’s
quarterly FPRs.
Based on our review of Connecticut’s documentation supporting the uses of its
CRF proceeds as reported in the GrantSolutions portal, we were unable to verify
whether the expenditures related to the Contracts greater than or equal to
$50,000, Grants greater than or equal to $50,000, Transfers greater than or equal
to $50,000, Direct Payments 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 identified unsupported questioned costs of $167,633,232. We also determined
Connecticut’s risk of unallowable use of funds is high.
Castro recommends that Treasury OIG follow-up with Connecticut’s
management to confirm the $167,633,232 noted as unsupported expenditures
within the Contacts 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 can be supported. If support is not
provided, Treasury OIG should recoup the funds or request Connecticut
management provide support for other eligible replacement expenses, not
previously charged to CRF, that were incurred during the period of performance.
Further, based on Connecticut’s responsiveness to Treasury OIG’s requests and
management’s ability to provide sufficient documentation and/or replace
unsupported transactions charged to CRF with valid expenditures, Castro
recommends Treasury OIG determine the feasibility of conducting an audit for the
Contacts 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.
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 Connecticut
At the time of the desk review fieldwork, Castro noted that Connecticut had
findings in their Single Audit Reports for fiscal years 2020, 2021, and 2022, which
we have summarized below:
o Connecticut’s fiscal year 2020 Single Audit report was published on
February 19, 2021, and the auditor identified unsupported questioned
costs specific to the CRF in the amount of $479,551.
o Connecticut’s fiscal year 2021 Single Audit report was published on
February 24, 2022, and the auditor identified unsupported questioned
costs specific to the CRF in the amount of $1,343,753.
o Connecticut’s fiscal year 2022 Single Audit report was published on
February 24, 2023, and the auditor identified $144,342 unsupported
questioned costs specific to the CRF.
Castro recommends that Treasury OIG follow-up with Treasury’s Office of Capital
Access to ensure that management decision letters are issued on the CRF specific
findings identified by the auditor in these Single Audit reports. We also
recommend Treasury OIG follow-up on any CRF specific questioned costs
reported in the fiscal year 2023 Single Audit report that was published on
March 27, 2024, after Castro’s desk review planning and fieldwork procedures
were completed.
Non-Statistical Transaction Selection Methodology
Treasury issued a $1,382,477,973 CRF payment to Connecticut. As of
December 31, 2022, Connecticut’s cumulative obligations and expenditures were
both $1,381,952,408. Connecticut returned a total of $525,565 in CRF proceeds to
Treasury. Connecticut’s cumulative obligations and expenditures by payment type
are summarized below.
Cumulative Cumulative
Payment Type Obligations Expenditures
Contracts >= $50,000 $ 378,539,466 $ 378,539,466
Grants >= $50,000 $ 258,403,987 $ 258,403,987
Loans >= $50,000 $ - $ -
Transfers >= $50,000 $ 64,610,622 $ 64,610,622
Direct Payments >= $50,000 $ 232,456,902 $ 232,456,902
Aggregate Reporting < $50,000 $ 20,815,222 $ 20,815,222
Aggregate Payments to
Individuals (in any amount) $ 427,126,209 $ 427,126,209
Totals $ 1,381,952,408 $ 1,381,952,408
4
Desk Review of the State of Connecticut
Castro made a non-statistical selection of the Contracts greater than or equal
to $50,000, Grants greater than or equal to $50,000, Transfers greater than or
equal to $50,000, Direct Payments greater than or equal to $50,000, Aggregate
Reporting less than $50,000, and Aggregate Payments to Individuals payment
types. Selections were made using auditor judgment based on information and
risks identified in reviewing audit reports, the GrantSolutions portal reporting
anomalies 12 identified by the Treasury OIG CRF monitoring team, and review of
Connecticut’s FPR submissions. Connecticut did not obligate or expend CRF
proceeds to the Loans greater than or equal to $50,000 payment type; therefore,
we did not make a selection of transactions from this payment type.
The number of transactions (28) 13 we selected to test was based on Connecticut’s
total CRF award amount and our overall risk assessment of Connecticut. To
allocate the number of transactions (28) 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 December 31, 2022.
Additionally, Treasury OIG provided information on anomalies identified for
Connecticut. We selected seven anomalies within our transaction selections.
Treasury OIG also identified additional anomalies in the form of potential
duplicates, which had not already been included within our transaction selections,
of which we selected six potential duplicates. We performed limited testing on
these six potential duplicate payments to determine if the payments were
duplicates. We identified exceptions within this potential duplicate testing. See
Contracts greater than or equal to $50,000 section in the Desk Review Results
below for further discussion. The transactions selected for testing were not
selected statistically, and therefore results could not be extrapolated to the total
universe of transactions.
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
During the transaction selection process, Castro initially selected 32 transactions for testing. We
noted that four of the 32 transactions were reimbursed with funds from the Department of
Homeland Security Federal Emergency Management Agency, and were ultimately reversed by
Connecticut in the GrantSolutions portal. As a result, we reduced the number of transactions by
four from 32 to 28 to recognize the reversed transactions. This transaction selection count
accurately reflects the expenditures reimbursed with CRF proceeds and tested during the desk
review.
5
Desk Review of the State of Connecticut
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 $1,382,477,973
CRF payment to Connecticut. 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. 14
Section 15011 of the CARES Act required each covered recipient 15 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 funds 16,17 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.
14
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.
15
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.
16
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.
17
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 Connecticut
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 Connecticut’s quarterly FPRs through December 31, 2022, and found
that Connecticut timely filed quarterly FPRs in the GrantSolutions portal in
compliance with Treasury OIG’s reporting requirements for the periods ending
June 30, 2020 and September 30, 2020, and the periods ending
March 31, 2021 through December 31, 2022. However, Connecticut failed to
submit the quarterly FPR in the GrantSolutions portal for the period ending
December 31, 2020, resulting in non-compliance with Treasury OIG’s reporting
requirements.
Population Reconciling and Financial Reporting Controls Issues
Connecticut noted the approach they used to report the payment types in the
GrantSolutions portal was not the same as the Treasury OIG’s reporting
requirements. Connecticut explained this may have resulted from human error
during the reconciliation process. We requested that Connecticut management
reperform the general ledger (GL) reconciliation to the amounts claimed in the
GrantSolutions portal. However, Connecticut was unable to clear the
reconciliation variances. The discrepancies in the reconciliation between the GL
details and GrantSolutions portal data were identified in both the obligations and
expenditures. The variances in the total expenditure population indicated there
were more expenditures than reimbursed with CRF proceeds. We noted
Connecticut’s controls surrounding the GrantSolutions portal reporting were
ineffective and inefficient. This was consistent with prior Connecticut Single Audit
Act report findings. Although the population reconciliation and financial control
reporting issues noted above did not generate questioned costs, we determined
the lack of controls in place contributed to the prior year Single Audit Act findings
specific to CRF proceeds. We were able to perform alternative procedures to make
our transaction selections across the payment types.
7
Desk Review of the State of Connecticut
Summary of Testing Results
We were unable to verify whether the Contracts greater than or equal to $50,000,
Grants greater than or equal to $50,000, Transfers greater than or equal
to $50,000, Direct Payments greater than or equal to $50,000, Aggregate Reporting
less than $50,000, and Aggregate Payments to Individuals payment types
complied with the CARES Act and Treasury’s Guidance because we were unable
to determine if all tested expenditures were necessary due to the COVID-19 public
health emergency, were not accounted for in the budget most recently approved
as of March 27, 2020, and were incurred during the covered period. The
transactions selected for testing were not selected statistically, and therefore
results could not be extrapolated to the total universe of transactions.
We determined for the majority of the transactions we selected for testing, that
Connecticut did not comply with Treasury OIG Coronavirus Relief Fund Recipient
Reporting and Record Retention Requirements (OIG-CA-20-021; July 2, 2020). This
guidance requires each prime recipient of CRF payments to maintain and make
available to Treasury OIG, upon request, all documents and financial records
sufficient to establish compliance with the CARES Act and the use of CRF
proceeds.
Within Table 1 below, we have included a summary of $154,074,571 in
unsupported expenditures identified as questioned costs through our testing of
detailed transactions, for which we were unable to verify compliance 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 $13,558,661 identified separately from our detailed
transaction testing to account for total questioned costs of $167,633,232. See the
Desk Review Results section below Table 2 for a detailed discussion of questioned
costs and other issues identified throughout the course of our desk review.
8
Desk Review of the State of Connecticut
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 $ 378,539,466 $ 83,840,621 $ 56,991,521 $ - $ 56,991,521
Grants >= $50,000 $ 258,403,987 $ 57,586,446 $ 57,586,446 $ - $ 57,586,446
Loans >= $50,000 $ - $ - $ - $ - $ -
Transfers >=
$ 258,659
$50,000 $ 64,610,622 $ 258,659 $ 258,659 $ -
Direct Payments
$ 18,082,583
>= $50,000 $ 232,456,902 $ 18,082,583 $ 18,082,583 $ -
Aggregate
Reporting <
$ 20,815,222 $ 36,500 $ 36,500 $ - $ 36,500
$50,000
Aggregate
Payments to
Individuals (in any
amount) $ 427,126,209 $ 21,171,607 $ 21,118,862 $ - $ 21,118,862
Totals $ 1,381,952,408 $ 180,976,416 $ 154,074,571 $ - $ 154,074,571
9
Desk Review of the State of Connecticut
Table 2 – Summary of Expenditures Testing and Other Matters and Recommended Results
As of December 31, 2022
(E)
(F=D+E) (G=C+F)
(B) (C=A+B) (D) Ineligible
(A) Total Total
Unsupported Total Ineligible Questioned
Unsupported Ineligible Questioned
Questioned Unsupported Questioned Costs
Questioned Questioned Costs (Tested &
Costs (Other Questioned Costs (Other
Costs (Tested) Costs Other Matters)
Matters) Costs (Tested) Matters)
Payment Type
Contracts >= $50,000 $ 56,991,521 $ 2,920,079 $ 59,911,600 $ - $ - $ - $ 59,911,600
Grants >= $50,000 $ 57,586,446 $ - $ 57,586,446 $ - $ - $ - $ 57,586,446
Loans >= $50,000 $ - $ - $ - $ - $ - $ - $ -
Transfers >= $50,000 $ 258,659 $ - $ 258,659 $ - $ - $ - $ 258,659
Direct Payments >= $50,000 $ 18,082,583 $ 494,492 $ 18,577,075 $ - $ - $ - $ 18,577,075
Aggregate Reporting <
$ 36,500 $ - $ 36,500 $ - $ - $ - $ 36,500
$50,000
Aggregate Payments to
$ 21,118,862 $ 10,144,090 $ 31,262,952 $ - $ - $ - $ 31,262,952
Individuals (in any amount)
Totals $ 154,074,571 $ 13,558,661 $ 167,633,232 $ - $ - $ - $ 167,633,232
10
Desk Review of the State of Connecticut
Contracts Greater Than or Equal to $50,000
We were unable to verify whether Connecticut’s Contracts greater than or equal to
$50,000 complied with the CARES Act and Treasury’s Guidance. We tested seven
contracts totaling $83,840,621. The contracts tested included expenditures for
COVID-19 cleaning, sanitizing, testing, and contact tracing; contracted services to
manage and oversee the distribution of rent assistance to eligible applicants; and
the purchase of equipment to facilitate distance learning in connection with school
closings. We identified exceptions related to five of the seven contracts tested,
which resulted in unsupported questioned costs totaling $56,991,521, as detailed
below.
Additionally, we tested six potential duplicate payments flagged by Treasury OIG
and noted Connecticut management failed to provide sufficient supporting
documentation to confirm the payments were not duplicated resulting in
additional Other Matter unsupported questioned costs of $172,000.
Further, we identified an Other Matter that warrants the attention of Treasury OIG
in regard to Connecticut’s ability to sufficiently elaborate upon Items Not Listed
Above (INLA) 18 expenditure category descriptions claimed in the GrantSolutions
portal resulting in unsupported questioned costs of $2,748,079, as detailed below.
The identified unsupported questioned costs totaled $59,911,600.
Due to the significant amount of questioned costs resulting from our Contracts
greater than or equal to $50,000 payment type testing, we recommend Treasury
OIG determine the feasibility of performing additional procedures on the
remaining untested amounts reported in the GrantSolutions portal for the
Contracts greater than or equal to $50,000 payment type.
Contracts Summary of Unsupported Questioned Costs
As part of our testing procedures, we requested that Connecticut management
provide supporting documentation in the form of obligations, expenditures,
disbursements, and justification statements to evidence the expenditures
complied with the CARES Act and Treasury Guidance. Connecticut failed to
provide expenditure support such as invoices or payment details to evidence the
selected expenditures were necessary due to the COVID-19 pandemic. Connecticut
management explained that Connecticut’s decentralized nature required the state
to reach out to other Connecticut departments and agencies for documentation.
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.
11
Desk Review of the State of Connecticut
Based on our understanding of Connecticut’s operating environment, we
determined Connecticut did not have effective or efficient internal controls
surrounding the requirement to keep and access documentation to support
expenditures. We concluded the decentralized nature of the state contributed to
Connecticut's inability to provide readily available support. We determined
Connecticut failed to provide sufficient supporting documentation to justify the
eligible and allowable use of CRF proceeds in conformity with CARES Act and
Treasury’s Guidance. We identified exceptions related to five contracts tested,
resulting in unsupported questioned costs of $56,991,521. See details in Table 3
below:
Table 3 – Contracts Greater Than or Equal to $50,000 Exception Summary
Contracts Unsupported
Exception Amount Questioned
Number Contract Description Tested Costs
Connecticut’s Department of Administrative Services
Contract entered into a contract with a third-party vendor related to
$ 113,840 $ 113,840
Exception #1 services for abatement and removal of asbestos, lead, mold,
and other hazardous materials.
Connecticut’s Department of Public Health contracted with a
hospital to collect specimens from staff and employees at
Contract
Connecticut long-term care facilities, perform contact $ 25,411,821 $ 25,411,821
Exceptions #2
tracing, and transport specimens to department identified
labs for COVID-19 testing.
Connecticut’s Department of Education contracted with a
Contract
vendor to facilitate distance learning required due to school $ 13,313,338 $ 13,313,338
Exception #3
closings as a result of the COVID-19 pandemic.
Connecticut’s Department of Public Health contracted with a
hospital to collect specimens from staff and employees at
Contract
Connecticut long-term care facilities, perform contact $ 10,903,650 $ 10,903,650
Exception #4
tracing, and transport specimens to department identified
labs for COVID-19 testing.
Connecticut’s Department of Education contracted with a
Contract
vendor to purchase technological equipment necessitated $ 7,248,872 $ 7,248,872
Exception #5
by school closings resulting from the COVID-19 pandemic.
Totals $ 56,991,521 $ 56,991,521
12
Desk Review of the State of Connecticut
Duplicate Payment Contract Exceptions 19
We selected six potential duplicate payments totaling $172,000 flagged by
Treasury OIG. However, Connecticut did not provide any relevant or appropriate
supporting documentation to evidence these expenditures were not duplicate
payments, resulting in Other Matter unsupported questioned costs of $172,000.
Items Not Listed Above Contract Exceptions
Castro reviewed the Contracts greater than or equal to $50,000 INLA expenditure
category descriptions and noted Connecticut management provided insufficient
responses to four INLA expenditure category descriptions totaling $2,748,079.
Specifically, Connecticut management did not provide a formal written response
or additional supporting documentation to elaborate on the INLA descriptions that
were outstanding. Within the INLA expenditure categories, Connecticut reported
the following vague expenditure category descriptions: “Software”, “Laptops”,
“Platform Services”, and “School Reopening”. Due to the lack of responses
provided by Connecticut to our questions about these expenditure category
descriptions, we identified these items as Other Matter unsupported questioned
costs totaling $2,748,079.
Grants Greater Than or Equal to $50,000
We were unable to verify whether Connecticut’s Grants greater than or equal to
$50,000 complied with the CARES Act and Treasury’s Guidance. We tested 10
invoices related to six grants, totaling $57,586,446. The grants tested included
expenditures for the costs related to reimbursements for small business
assistance; reimbursements for technological equipment purchases to facilitate
distance learning during school closures; purchases of personal protective
equipment for state libraries; and costs for medical expenses for vulnerable
communities. We identified exceptions related to all six grants tested, resulting in
unsupported questioned costs of $57,586,446 as detailed below.
Additionally, Castro noted there were exceptions identified in all of the Grants
greater than or equal to $50,000 transactions selected for testing. Of the total
$258,403,987 reported in the GrantSolutions portal as of December 31, 2022, we
tested $57,586,446 and identified unsupported questioned costs for the full
amount tested. Due to the significant amount of questioned costs resulting from
our Grants greater than or equal to $50,000 payment type testing, we recommend
Treasury OIG determine the feasibility of performing additional procedures on the
19
As part of the desk review procedures, testing over items classified as “Potential Duplicate
Payments” were subject to limited procedures. Castro’s testing objectives over Potential Duplicate
Payments was to confirm the claimed costs were not duplicated within the GrantSolutions portal.
13
Desk Review of the State of Connecticut
remaining untested amounts reported in the GrantSolutions portal for the Grants
greater than or equal to $50,000 payment type.
Grants Summary of Unsupported Questioned Costs
As part of our testing procedures, we requested that Connecticut management
provide supporting documentation in the form of obligations, expenditures,
disbursements, and justification statements to evidence the expenditures
complied with the CARES Act and Treasury Guidance. We requested the
documentation multiple times however, for two of six Grants, Connecticut was
unable to provide any appropriate or relevant supporting documentation to justify
the eligible and allowable use of CRF proceeds. Similarly, for the remaining four
Grants, Connecticut provided obligation support, but failed to provide expenditure
support such as invoices or payment details to evidence the selected expenditures
were necessary due to the COVID-19 pandemic. Connecticut management
explained that Connecticut’s decentralized nature required the state to reach out
to departments and agencies for documentation. Based on our understanding of
Connecticut’s operating environment, we determined Connecticut did not have
effective or efficient internal controls surrounding the desk review reporting
objectives. We concluded the decentralized nature of the state contributed to
Connecticut's inability to provide readily available support. We determined
Connecticut failed to provide sufficient supporting documentation to justify the
eligible and allowable use of CRF proceeds in conformity with CARES Act and
Treasury’s Guidance. We identified exceptions for the entire amount for all six
grants tested, resulting in unsupported questioned costs of $57,586,446. See
details in Table 4 below:
14
Desk Review of the State of Connecticut
Table 4 – Grants Greater Than or Equal to $50,000 Exception Summary
Grants Unsupported
Exception Amount Questioned
Number Grant Description Tested Costs
Connecticut’s Office of Early Childhood awarded CRF
proceeds to an educational council as part of a priority
Grant Exception $ 190,377 $ 190,377
school readiness stabilization grant in connection with the
#1
COVID–19 pandemic.
Connecticut’s Department of Education awarded CRF
Grant Exception proceeds to a charter school to ensure compliance with
$ 194,355 $ 194,355
#2 COVID-19 related health measures, such as facilitating
distance learning.
Connecticut’s State Library awarded CRF proceeds to a
Grant Exception public library to provide personal protective equipment,
$ 167,451 $ 167,451
#3 signage, and other supplies needed to make spaces safe
for people to use the library.
Connecticut’s Department of Economic and Community
Development passed through funds to Connecticut’s
Grant Exception
Department of Revenue Services to provide awards to $ 150,000 $ 150,000
#4
eligible businesses for a Business Recovery Grant
Program.
Connecticut’s Department of Economic and Community
Grant Exception Development awarded CRF proceeds to a lending
$ 50,000,000 $ 50,000,000
#5 company to issue supplemental small business support
grants.
Connecticut’s Department of Social Services awarded CRF
Grant Exception proceeds to a hospital to perform widespread testing of
$ 6,884,263 $ 6,884,263
#6 vulnerable members of high-risk populations to protect
the health and safety of the public from COVID-19.
Totals $ 57,586,446 $ 57,586,446
Transfers Greater Than or Equal to $50,000
We were unable to verify whether Connecticut’s Transfers greater than or equal to
$50,000 complied with the CARES Act and Treasury’s Guidance. We tested two
transfers totaling $258,659. The transfers tested included expenditures for a
transfer to the Western Connecticut Council of Governments for COVID-19
recovery planning projects and operating recovery coordination; and expanded
wi-fi infrastructure needed to facilitate distance learning, including technological
improvements due to the COVID-19 pandemic. We identified exceptions related to
both transfers tested, resulting in unsupported questioned costs of $258,659 as
detailed below.
Of the total $64,610,622 reported in the GrantSolutions portal as of December 31,
2022, we tested $258,659 and identified unsupported questioned costs for the full
amount tested. As a result, we recommend Treasury OIG determine the feasibility
15
Desk Review of the State of Connecticut
of performing additional procedures on the remaining untested amounts reported
in the GrantSolutions portal for the Transfers greater than or equal to $50,000
payment type.
Further, Castro identified a reporting misclassification that did not comply with
Treasury’s Guidance, as Connecticut reported a transfer within the Transfers
greater than or equal to $50,000 payment type when it should have been reported
under Grants or Direct Payments greater than or equal to $50,000.
Transfers Summary of Unsupported Questioned Costs
As part of our testing procedures, we requested that Connecticut management
provide supporting documentation in the form of obligations, expenditures,
disbursements, and justification statements to evidence the expenditures
complied with the CARES Act and Treasury Guidance. Connecticut failed to
provide expenditure support such as invoices or payment details to evidence the
selected expenditures were necessary due to the COVID-19 pandemic. Connecticut
management explained that Connecticut’s decentralized nature required the state
to reach out to departments and agencies for documentation. Based on our
understanding of Connecticut’s operating environment, we determined
Connecticut did not have effective or efficient internal controls surrounding the
requirement to keep and access documentation to support expenditures. We
concluded the decentralized nature of the state contributed to Connecticut's
inability to provide readily available support. We determined Connecticut failed to
provide sufficient supporting documentation to justify the eligible and allowable
use of CRF proceeds in conformity with CARES Act and Treasury’s Guidance. We
identified exceptions for the entire amount for both transfers tested, resulting in
unsupported questioned costs of $258,659. See details in Table 5 below:
16
Desk Review of the State of Connecticut
Table 5 – Transfers Greater Than or Equal to $50,000 Exception Summary
Transfer Unsupported
Exception Amount Questioned
Number Transfers Description Tested Costs
The Connecticut Office of Policy and Management
provided funding to the Western Connecticut Council of
Governments for COVID-19 recovery planning and
Transfer $ 63,301 $ 63,301
coordination. Expenditures were associated with
Exception #1
conducting a recovery planning project and operating a
recovery coordination office.
The Connecticut Department of Administrative Services
provided funding to the Connecticut Education Network to
Transfer
install public wi-fi infrastructure. The expanded wi-fi $ 195,358 $ 195,358
Exception #2
infrastructure was needed to facilitate distance learning
required due to COVID-19.
Totals $ 258,659 $ 258,659
Additionally, for the $195,358 transfer to Connecticut’s Education Network, Castro
noted that this entity was governed by the Connecticut Commission for Education
Technology defined as a component unit of the prime recipient’s government
under the umbrella of the Connecticut Department of Administrative Services.
Castro considered this a reporting misclassification that did not comply with
Treasury’s Guidance, as Connecticut reported this within the Transfers greater
than or equal to $50,000 payment type when it should have been reported under
Grants or Direct Payments greater than or equal to $50,000.
Direct Payments Greater Than or Equal to $50,000
We were unable to verify whether Connecticut’s Direct Payments greater than or
equal to $50,000 complied with the CARES Act and Treasury’s Guidance. We
tested four direct payments totaling $18,082,583. The direct payments tested
included expenditures for services and programs supporting youth employment,
including summer internships and recruitment and training of college students
during the pandemic; moving and storage to assist students moving out of dorms
and relocation during the pandemic; and support for the operation of private
hospitals during the pandemic. We identified exceptions related to all four direct
payments tested, resulting in unsupported questioned costs of $18,082,583 as
detailed below.
Additionally, we identified Other Matter unsupported questioned costs of
$494,492 related to our review of the direct payments INLA expenditure
categories. This increased the grand total of unsupported questioned costs from
$18,082,583 to $18,577,075.
17
Desk Review of the State of Connecticut
Further, Castro identified a reporting misclassification that did not comply with
Treasury’s Guidance, as Connecticut reported a transaction within the Direct
Payments greater than or equal to $50,000 payment type when it should have
been reported under Grants greater than or equal to $50,000.
Also, Castro noted there were exceptions identified in all of the Direct Payments
greater than or equal to $50,000 transactions selected for testing. Of the total
$232,456,902 reported in the GrantSolutions portal as of December 31, 2022, we
tested $18,082,583 and identified unsupported questioned costs for the full
amount tested. Due to the significant amount of questioned costs resulting from
our Direct Payments greater than or equal to $50,000 payment type testing, we
recommend Treasury OIG determine the feasibility of performing additional
procedures on the remaining untested amounts reported in the GrantSolutions
portal for the Direct Payments greater than or equal to $50,000 payment type.
Direct Payments Summary of Unsupported Questioned Costs
As part of our testing procedures, we requested that Connecticut management
provide supporting documentation in the form of obligations, expenditures,
disbursements, and justification statements to evidence the expenditures
complied with the CARES Act and Treasury Guidance. We requested
documentation multiple times; however, for three 20 of four Direct Payments,
Connecticut was unable to provide any appropriate or relevant supporting
documentation to justify the eligible and allowable use of CRF proceeds. For the
remaining Direct Payment transaction, we obtained and reviewed payment
support; however, Connecticut failed to provide underlying expenditure support
such as invoices to substantiate the payment.
Connecticut management explained that Connecticut’s decentralized nature
required the state to reach out to departments and agencies for documentation.
Based on our understanding of Connecticut’s operating environment, we
determined Connecticut did not have effective or efficient internal controls
surrounding the requirement to keep and access documentation to support
expenditures. We concluded the decentralized nature of the state contributed to
Connecticut's inability to provide readily available support. We determined
Connecticut failed to provide sufficient supporting documentation for all four
direct payments tested to justify the eligible and allowable use of CRF proceeds in
conformity with CARES Act and Treasury’s Guidance, resulting in unsupported
questioned costs of $18,082,583. See details in Table 6 below:
20
Refer to Direct Payment Exceptions #1 through #3 in Table 6.
18
Desk Review of the State of Connecticut
Table 6 – Direct Payments Greater Than or Equal to $50,000 Exception Summary
Direct Payment Unsupported
Amount
Exception Questioned
Direct Payment Description Tested
Number Costs
Connecticut claimed $430,137 in expenditures related to
Direct Payment higher education support during the pandemic. We were
$ 430,137 $ 430,137
Exception #1 unable to obtain any additional information related to
what this transaction entailed.
Connecticut claimed and we tested $908,989 in
expenditures passed through Connecticut’s Office of
Higher Education and awarded to a university to invest in
Direct Payment
services and programs supporting youth employment, $ 908,989 $ 908,989
Exception #2
including summer internships and recruitment and
training of college students to mentor children in summer
programs during the pandemic.
Connecticut claimed and we tested $443,457 in
expenditures passed through Connecticut’s State colleges
Direct Payment and universities and awarded to a company contracted to
$ 443,457 $ 443,457
Exception #3 move students out of dorms and relocate and store
dormitory equipment to be cleaned and disinfected due to
COVID-19.
Connecticut claimed and we tested $16,300,000 in
expenditures passed through Connecticut’s Department of
Direct Payment Social Services, which entered into an agreement with a
$ 16,300,000 $ 16,300,000
Exception #4 private hospital to support operations during the COVID-
19 pandemic, and to reimburse the hospital for COVID-19
related medical expenses. 21
Totals $ 18,082,583 $ 18,082,583
Castro identified reporting misclassification errors that did not comply with
Treasury Guidance, where transactions were reported as Direct Payments greater
than or equal to $50,000 within the GrantSolutions portal, but should have been
classified as Contracts greater than or equal to $50,000. Refer to Direct Payment
Exception #4.
21
For Direct Payment Exception #4, we obtained and reviewed the wire transfer request and notice
of CRF payment to the hospital, which detailed the specific conditions for the CRF payment and
noted the effective timeframe for expenses to be incurred was within the CRF covered period.
However, Connecticut management did not provide additional supporting documentation in the
form of invoices or track expenditures such as employee wages; hazard pay; personal protective
equipment; cleaning supplies; and COVID-19 testing kits as required by the conditions of the
award.
19
Desk Review of the State of Connecticut
Items Not Listed Above Direct Payments Exceptions
During our review of the Direct Payments greater than or equal to $50,000 INLA
expenditure category descriptions, we noted that Connecticut reported $494,492
of expenditures with the following INLA expenditure category description: “N/A.”
Connecticut provided insufficient responses to our follow-up requests for this
item. Specifically, Connecticut did not provide a formal written response or
additional supporting documentation to elaborate on the INLA descriptions that
were outstanding. Due to the lack of responses provided by Connecticut to our
questions about this vague expenditure category description and our inability to
determine the eligibility of these expenditures, we identified these items as Other
Matter unsupported questioned costs totaling $494,492.
Aggregate Reporting Less Than $50,000
We were unable to verify whether Connecticut’s Aggregate Reporting less than
$50,000 complied with the CARES Act and Treasury’s Guidance. We tested one
aggregate reporting transaction totaling $36,500. We did not receive any
obligation and expenditure supporting documentation related to this transaction
selection; therefore, we were unable to provide any additional details on what the
transaction entailed. Connecticut did not provide any relevant or appropriate
supporting documentation to evidence the selected expenditures were necessary
due to the COVID-19 pandemic. As a result, we identified unsupported questioned
costs of $36,500.
Of the total $20,815,222 reported in the GrantSolutions portal as of December 31,
2022, we tested $36,500 and identified unsupported questioned costs for the full
amount tested. As a result, we recommend Treasury OIG determine the feasibility
of performing additional procedures on the remaining untested amounts reported
in the GrantSolutions portal for the Aggregate Reporting less than $50,000
payment type.
20
Desk Review of the State of Connecticut
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.
Public Health and Safety Payroll 23 – consisted of payroll costs for public
health and safety department personnel.
Substantially Dedicated Payroll 24 – 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 Payroll 25 – 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.
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
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 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 guidance 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.”
21
Desk Review of the State of Connecticut
Castro noted that public health and safety payroll transactions were subject to
Treasury’s administrative accommodation, 26 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 and non-substantially dedicated payroll balances
were not subject to this administrative accommodation, and therefore, Castro
tested these transactions by reviewing the prime recipient’s substantially
dedicated conclusion with respect to its employees and payroll distribution files,
and by performing tests over specific employee timesheet submissions.
Castro requested Connecticut’s Aggregate Payments to Individuals (API) analysis
with the breakout of API category types described above. However, Connecticut
was unable to complete an accurate analysis. As a result, we performed
alternative procedures to make the API transaction selections in order to obtain
adequate coverage for testing purposes. We considered the universe of the GL
population categorized as API to be subject to selection as part of the transaction
selection methodology.
We recommend Treasury OIG request Connecticut management to properly
segregate the API expenditures based on the defined categories above. In
addition, based on those details and the significant number of API testing errors
detailed below, we recommend Treasury OIG determine the feasibility of
conducting an audit for the API payment type transactions that were not subject to
our desk review procedures.
We were unable to verify whether Connecticut’s Aggregate Payments to
Individuals complied with the CARES Act and Treasury’s Guidance. We tested a
total of $21,171,607 of expenditures for eight Aggregate Payments to Individuals
transactions. The one transaction tested without exception included expenditures
related to public health and safety payroll. For the remaining transactions, we
identified exceptions related to seven of the eight API transactions tested,
resulting in unsupported questioned costs totaling $21,118,862 as detailed below.
These transactions included expenditures related to payments for development,
technology, and personnel costs to support a call center to address the high
volume of inquiries related to unemployment insurance as a result of the COVID-
26
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.”
22
Desk Review of the State of Connecticut
19 pandemic; payroll related costs for Connecticut’s Department of
Developmental Services; payroll related costs for Connecticut’s Judicial
Department; hardship payments to foster care providers for maintenance costs
during the pandemic, which were payments made on behalf of foster children for
items such as clothing and personal allowances; and payments made to
commercial vendors through Connecticut’s Department of Public Health.
Additionally, within the Other Matters for Treasury OIG to consider, we noted
material variances of $10,144,090 between the expenditures provided by the GL
details and the amounts reported in GrantSolutions as of December 31, 2022,
which we have included as unsupported questioned costs, as detailed below.
Due to the significant amount of questioned costs resulting from our Aggregate
Payments to Individuals payment type testing, we recommend Treasury OIG
determine the feasibility of performing additional procedures on the remaining
untested amounts reported in the GrantSolutions portal for the Aggregate
Payments to Individuals payment type.
Aggregate Payments to Individuals Payroll Exception #1
Connecticut claimed and we tested $271,504 in expenditures awarded to
Connecticut’s Department of Labor to cover payments for development,
technology, and personnel costs to support a call center to address the high
volume of inquiries related to unemployment insurance as a result of the COVID-
19 pandemic. Castro considered support provided for this payroll amount to be
batched, as it did not contain sufficient details needed to verify whether these
payroll related costs were for public health and safety personnel, substantially
dedicated personnel, or non-substantially dedicated personnel. Castro requested
timesheets, paystubs, and other relevant payroll distribution support, but
Connecticut did not sufficiently respond to our requests. As a result, we
questioned the entire amount tested of $271,504 as unsupported.
Aggregate Payments to Individuals Exception #2
Connecticut claimed and we tested $20,445,974 in expenditures awarded to a
university. We did not receive any obligation and expenditure supporting
documentation related to this transaction selection. Connecticut did not provide
any relevant or appropriate supporting documentation to evidence the selected
expenditures were necessary due to the COVID-19 pandemic. We determined
Connecticut failed to provide sufficient supporting documentation to justify the
eligible and allowable use of CRF proceeds in conformity with the CARES Act and
Treasury’s Guidance. As a result, we questioned the entire amount tested of
$20,445,974 as unsupported.
23
Desk Review of the State of Connecticut
Aggregate Payments to Individuals Payroll Exception #3
Connecticut claimed and we tested $41,865 in expenditures awarded to
Connecticut’s Department of Developmental Services. We were unable to
determine if these payroll related costs were for public health and safety
personnel, substantially dedicated personnel, or non-substantially dedicated
personnel.
We obtained and reviewed the hours and earnings reports, timesheets, and pay
rate details. However, the support did not agree to the amounts claimed in the
GrantSolutions portal as of December 31, 2022. For instance, the paystubs and
timesheets appeared to only make up a portion of the claimed payroll costs. We
noted that Connecticut was unable to reperform the payroll calculations to arrive
at the selected expenditure amounts. Therefore, we were unable to determine if
Connecticut properly charged hours to COVID-19 related projects and if the payroll
costs claimed for reimbursement were accurate. We determined Connecticut
failed to provide sufficient supporting documentation to justify the eligible and
allowable use of CRF proceeds in conformity with the CARES Act and Treasury’s
Guidance. As a result, we questioned the entire amount tested of $41,865 as
unsupported.
Aggregate Payments to Individuals Payroll Exception #4
Connecticut claimed and we tested $140,219 in expenditures awarded to
Connecticut’s Judicial Department. Connecticut asserted these costs were payroll
related items for five employees. Of the five employees, we confirmed only one
employee was considered public health and safety personnel and tested their
associated payroll costs totaling $10,501 without exception. For the remaining
four employees, we were unable to determine if these payroll-related costs were
for substantially dedicated or non-substantially dedicated personnel, as detailed
below.
For four of five payroll employees tested totaling $129,718, we obtained and
reviewed payroll registers, paystubs, and attendance reports. However, we were
unable to verify whether the duties performed by the four employees were
COVID-19 related. Specifically, we obtained only partial supporting documentation
to sufficiently evidence the payroll related costs. We noted the four-payroll
employee’s COVID-19 job function was not described in the attendance log report.
In addition, justification statements were not provided to clearly distinguish the
diverted work functions of these employees.
Therefore, we determined Connecticut failed to provide sufficient supporting
documentation to justify the eligible and allowable use of CRF proceeds in
conformity with the CARES Act and Treasury’s Guidance. As a result, we
identified unsupported questioned costs of $129,718.
24
Desk Review of the State of Connecticut
Aggregate Payments to Individuals Hardship Payment Exception #5
Connecticut claimed and we tested $129,818 in expenditures awarded to
Connecticut’s Department of Children and Families to cover payments issued to
foster care providers for maintenance costs during the pandemic, which were
payments made on behalf of foster children for items such as clothing and
personal allowances. Connecticut management told us that these payments were
necessary as foster home food costs increased due to COVID-19 school closures
and foster parents contracted COVID-19 and were unable to work.
For four of the five transactions tested totaling $3,482, we received adequate
support and tested the transactions without exception. For one of five transactions
totally $126,336, we obtained and reviewed various supporting documentation.
However, the amounts in the documentation did not agree to the claimed
amounts in the GrantSolutions portal as of December 31, 2022. Connecticut did
not provide additional supporting documentation to recalculate the amounts
disbursed to the foster care providers. We determined Connecticut failed to
provide sufficient supporting documentation to justify the eligible and allowable
use of CRF proceeds in conformity with the CARES Act and Treasury’s Guidance.
As a result, we identified unsupported questioned costs of $126,336.
Aggregate Payments to Individuals Exception #s 6-7 – Payment to Commercial
Vendors
For Exceptions #6 and 7, Connecticut claimed, and we tested $57,056 and $46,409,
respectively, for a total of $103,465 in expenditures awarded to Connecticut’s
Department of Public Health. The payments were made to commercial vendors.
However, Connecticut did not provide sufficient support to determine if the costs
were payroll related, or any additional information related to what the
transactions entailed. Connecticut did not provide any relevant or appropriate
supporting documentation that sufficiently supported the selected expenditures
were related to the COVID-19 pandemic. We determined Connecticut failed to
provide sufficient supporting documentation to justify the eligible and allowable
use of CRF proceeds in conformity with the CARES Act and Treasury’s Guidance.
As a result, we identified total unsupported questioned costs of $103,465.
25
Desk Review of the State of Connecticut
API Reconciliation Errors Identified
Our initial transaction selections were at an aggregate level, which required
additional selections at the transaction level for detailed testing. For two
transaction selections, we noted material variances of $10,144,090 between the
expenditures provided in the GL and the amounts claimed in the GrantSolutions
portal as of December 31, 2022, which we have included as Other Matter
unsupported questioned costs. We requested that Connecticut management
elaborate on the issues we identified. However, Connecticut was unable to obtain
the supporting documentation from other state agencies due to the prime
recipient’s decentralized nature. As a result, we determined Connecticut failed to
ensure the cumulative expenditures reported within the GrantSolutions portal
were accurate and complete.
Conclusion
We were unable to verify whether the expenditures related to the Contracts
greater than or equal to $50,000, Grants greater than or equal to $50,000,
Transfers greater than or equal to $50,000, Direct Payments 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 identified unsupported questioned costs of $167,633,232. Also, we identified
GrantSolutions portal misclassification reporting issues related to the Transfers
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.
Castro also identified reporting errors within Connecticut’s quarterly FPR
submission for the period ending December 31, 2020. Connecticut failed to submit
the quarterly FPR in the GrantSolutions portal resulting in non-compliance with
Treasury OIG’s reporting requirements.
Additionally, Connecticut’s risk of unallowable use of funds is high.
Castro recommends that Treasury OIG follow-up with Connecticut’s management
to confirm if the $167,633,232 noted as unsupported expenditures within the
Contacts 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 can be supported. If support is not provided, Treasury
OIG should recoup the funds or request Connecticut management provide support
26
Desk Review of the State of Connecticut
for other eligible replacement expenses, not previously charged to CRF, that were
incurred during the period of performance.
Further, based on Connecticut’s responsiveness to Treasury OIG’s requests and its
ability to provide sufficient documentation and/or replace unsupported
transactions charged to CRF with valid expenditures, Castro recommends
Treasury OIG determine the feasibility of conducting an audit for the Contacts
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.
At the time of desk review fieldwork, Castro noted that Connecticut had findings in
their Single Audit Reports for fiscal years 2020, 2021, and 2022.
Connecticut’s fiscal year 2020 Single Audit Act report was published on
February 19, 2021, and the auditor identified unsupported questioned
costs specific to the CRF in the amount of $479,551.
Connecticut’s fiscal year 2021 Single Audit Act report was published on
February 24, 2022, and the auditor identified unsupported questioned
costs specific to the CRF in the amount of $1,343,753.
Connecticut’s fiscal year 2022 Single Audit Act report was published on
February 24, 2023, and the auditor identified $144,342 in unsupported
questioned costs specific to the CRF.
Castro recommends that Treasury OIG follow-up with Treasury’s Office of Capital
Access to ensure that management decision letters are issued on the CRF specific
findings identified by the auditor in these Single Audit reports. We also
recommend Treasury OIG follow-up on any CRF specific questioned costs
reported in the fiscal year 2023 Single Audit report that was published on March
27, 2024, after Castro’s desk review planning and fieldwork procedures were
completed.
27
Desk Review of the State of Connecticut
*****
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. 27 We appreciate the courtesies
and cooperation provided to our staff during the desk review.
Sincerely,
Wayne Ference
Partner, Castro & Company, LLC
27
https://www.ignet.gov/sites/default/files/files/Silver%20Book%20Revision%20-%208-20-12r.pdf
28
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- Our copy
- OIG-CA-25-029-desk-review-of-the-state-of-connecticut-s-use-of-coronavirus-relief-fund-proceeds.pdf
- Original
- oig.treasury.gov