Sneak Preview: HHS Using AI To Enforce Compliance With Single Audit Requirements
(The following was excerpted from a recent Thompson Grants Compliance Expert article.) While a new initiative by the Department of Health and Human Services (HHS) Office of the Assistant Secretary for Financial Resources (ASFR) to hold HHS grant recipients accountable for “persistent audit noncompliance” using artificial intelligence (AI) technology is under fire by some stakeholder organizations, recipients are advised to respond to this effort by taking steps to reduce their risks.
The Office of Management and Budget uniform guidance requires recipients of federal financial assistance that that expend $1 million or more in federal funds annually to undergo a single or program-specific audit (§200.501(a)) (see §312 in the Single Audit Information Service module). Provisions at §200.513(c) require federal agencies such as HHS to ensure audits are completed and submitted in a timely manner, and to follow up to ensure nonfederal entities take appropriate and timely corrective action. Recent reviews within HHS of single audit information have identified longstanding repeat findings, unresolved internal control deficiencies and delinquent audit submissions affecting HHS-funded programs.
In response, ASRF has launched the Audit Enforcement and Risk Oversight (AERO) initiative — a departmentwide program integrity effort designed to respond to persistent audit noncompliance. The agency sent a formal letter to all state governors and treasurers emphasizing that “chronic audit noncompliance, unresolved findings and delinquent audit submissions will no longer be tolerated,” and warning that states with delinquent submissions or persistent unresolved findings should expect further communication in the coming weeks.
“Years of audit reports documented serious vulnerabilities and failures in oversight, yet states and grantees faced little to no consequences,” said Gustav Chiarello, HHS assistant secretary for financial resources and chief financial officer. “Following revelations of fraud in various states, we examined their audits more closely and found years of unresolved findings hiding in plain sight. Grantees who want to work with us to fix these problems will have a partner. Those that don’t may face consequences.”
HHS has taken more drastic steps recently to curb fraud among its programs, including efforts to halt Medicaid funds to Democratic-leaning states.
HHS said it aims to enforce single audit requirements and implement remedies as allowed under the uniform guidance (§200.339) to hold recipients of federal funds accountable when they fail to submit required audits or repeatedly fail to address weaknesses identified in audit findings. In addition, the agency said it is evaluating whether single audits “are being conducted with sufficient rigor to detect vulnerabilities in the first place” and to ensure that “potential indicators of waste, fraud, abuse and misuse of federal funds are treated seriously and dealt with in a timely manner.”
(The full version of this story has now been made available to all for a limited time here.)
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