Overview
MIL did not retain sufficient documentation to demonstrate that its National Guard members performed the services, specifically those related to its response to the COVID-19 pandemic, outlined in three interdepartmental service agreements (ISAs) that MIL had during the audit period. Two ISAs were with the Executive Office for Administration and Finance (A&F) and one ISA was with the Department of Elementary and Secondary Education (DESE).
Additionally, for the two ISAs with A&F, MIL could not provide sufficient evidence that it submitted the required number of biweekly reports (approximately 30 reports during the audit period) to A&F.
Without generating and retaining adequate documentation to support compliance with the ISAs’ terms and conditions, MIL cannot provide assurance that the funds it received from A&F and DESE were used for their intended purposes.
Authoritative Guidance
The Terms and Conditions section of each of the ISAs with A&F and DESE states,
The Buyer/Parent [A&F or DESE] and Seller/Child [MIL] shall maintain all ISA records in such detail as necessary to support claims for payment, including reimbursement or federal financial participation (FFP), for at least seven (7) years from the last payment under an ISA Seller/Child [MIL] [account, or such longer period as is necessary for the resolution of any litigation, claim, negotiation, audit or other inquiry involving an ISA. In addition to any specific progress, programmatic or expenditure reports specified in Attachment A, the Seller/Child [MIL] is required to provide the Buyer/Parent [A&F or DESE] (and to [the Office of the Comptroller of the Commonwealth], the State Auditor and the House and Senate Ways and Means Committees upon request) with full cooperation and access to all ISA information.
The Terms and Conditions section for each of MIL’s ISAs with A&F also outlines reporting requirements. Specifically, it requires MIL to send biweekly reports to A&F about costs and activities related to the contracted services.
Reasons for Noncompliance
MIL said that it only processed payroll data related to deployment of National Guard members and did not realize it was required to keep records regarding the services performed.
Regarding compliance with each ISA’s reporting requirements, MIL told us that its reporting consisted of having informal phone calls with A&F at various times and updating a Microsoft Excel spreadsheet template for A&F on estimated numbers of Guard members on duty each day.
Finally, MIL did not incorporate a COVID-19 response plan into its internal control plan, as required by the Office of the Comptroller of the Commonwealth’s “COVID-19 Pandemic Response Internal Controls Guidance,” issued September 30, 2020. One of the risks that agencies face as a result of the COVID-19 pandemic, as included in this guidance, is that “new programs, sources of funds, and/or working remotely may require doing normal business in different ways. Lack of documentation of changes to procedures, and the decisions leading to them, leave the department exposed to audit findings, and other operational and compliance compromises.” Had MIL incorporated this guidance into its internal control plan, it would have had to consider the risks posed by the COVID-19 pandemic and recognized the need to maintain proper documentation as evidence for activities related to its response.
Recommendation
MIL should create and implement adequate controls to ensure that it collects and retains sufficient supporting documentation related to the activities and reporting requirements of its ISAs.
Auditee’s Response
The MIL accepts [the Office of the State Auditor’s] findings. The department will work closely with all funding agencies in the future ISA to develop an actionable and practical performance matrix to ensure that adequate evidence in writing is retained during the ISA performance period. . . .
The department will develop mission-specific reporting structures with uniformed/armed branches at the commanding officer level to ensure bi-weekly or monthly mission status reports are created and retained per ISA. For large missions such as the pandemic response period, where several thousand national guardsmen/women are deployed, the department welcomes the [Office of the State Auditor’s] guidance and sample of acceptable documentation other than the abovementioned mission status report.
Auditor’s Reply
Based on MIL’s response, it is taking measures to address the concerns raised regarding this matter.
| Date published: | January 10, 2024 |
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