By Kurt Schlicker
August 01, 2018
Over the past few months we have discussed common findings related to allowable costs and cash management, compliance requirements that are generic and applicable to almost everyone. This month we will look at eligibility, a compliance requirement that is not found in every grant. Given that eligibility does not impact every grant, the likelihood for errors increases when it is applicable. Here are some common errors related to eligibility and what can be done to prevent them.
Reviewing the Input
Although eligibility requirements differ from grant to grant, one commonality is the need to review some sort of beneficiary application or case file. Regardless of whether the requirements are dependent on various socio-economic factors such as health, education or age, most grants with beneficiaries will require a yes/no determination as to their eligible status. There are rarely situations where the eligibility specialist determines the status incorrectly; staff are generally well trained and make appropriate determinations given the data provided. The breakdown usually occurs when the initial data input has errors.
Sometimes information in the application does not make it to the case file correctly—hard copy case files have applications but are missing the supporting documents, or electronic case files have data entry errors or mathematical errors. The eligibility specialist can only make the determination based on the facts presented, which makes it imperative that someone double checks the inputs used to determine eligibility. Are there internal controls in place to ensure someone is reviewing the data the case worker enters into the system? Is anyone double checking the application? If not, what processes are in place to make sure the data being used by the eligibility specialist is accurate? Implementing a review process on the data input, not just the eligibility determination itself, is key to preventing incorrect eligibility determinations and audit findings.
Reliance on Third Parties
Having a qualified third party perform eligibility determinations is becoming more common. The use of specialized knowledge and expertise can greatly benefit a program. However, organizations must remember that they are ultimately the responsible party. Given this, the grantee must maintain some level of involvement and internal control structure even when there is third-party involvement. What level of reliance is being placed on a third party? Does the third party receive a Service Organization Control (SOC) report? Are controls at the third party sufficient to ensure they are getting it right? The answers to these questions will dictate how much reliance you should place on the third party. Maintaining an appropriate internal control environment while considering the controls and sophistication of the third party is essential to avoiding findings.
Missing file documentation is one of the more frustrating findings for both the auditor and auditee. For example, case files are missing a copy of the application, the application has a page missing, or one of the original documents is missing from the file. This is common with grants that require re-determinations on a regular basis. The re-determination is made appropriately, but the original documents have been lost in the process. The prevalence of the finding relating to missing file documentation is increasing as more and more organizations are going paperless. One would believe that it should be easier to keep records electronically rather than in a paper file, but unfortunately, sometimes the electronic file doesn’t have all the records scanned in.
Yes/no re-determination checklists can be a great tool in a file, but auditors should be able to see support for all those “yes” answers. As with almost every audit, adequate record keeping is pivotal to success. This includes the eligibility case files, whether electronic or paper. Implementing a file review process on a scheduled routine rotational basis may be a process that will help ensure the completeness of record maintenance.
New Legislation or Changing Requirements
For many, there are new laws or requirements that come down the pike on a daily basis. New legislation can often impact eligibility requirements and often happens on a semi-regular basis. As the grant recipient, don’t rely on the federal agency or state (or other pass-through entity) to provide information about a change in requirements. Best practice should be to review the compliance supplement on an annual basis and to review the federal agency’s website every couple of months. New requirements will be accompanied by a media release that is usually posted on the federal agency’s website. Organizations can work to avoid eligibility findings as a result of new legislation by reviewing memos outlining new legislation and reviewing the compliance supplement and media announcements.
Should you have any questions regarding these matters, please don’t hesitate to reach out to your local Eide Bailly professional. Look at past articles from the series including, Cash Management and Activities Allowed and Allowable Costs. Watch for future articles in this series to learn more about the other compliance requirements.