2021-007—Allowable Costs/Cost Principles
Federal program information:
Funding agency: U.S. Department of Health and Human Services
Title: COVID-19 Urban Indian Health Services
ALN: 93.193
Award number: 75H70720C00006
Award period: March 27, 2020 – September 30, 2021
Criteria: According to 2 CFR Part 225, to be allowable under federal awards, costs must be
adequately documented, be necessary and reasonable for the performance of the federal award
and be allocable thereto under the principles in 2 CFR Part 200, Subpart E. According to the
grant agreement for this award, this funding is to prevent, prepare for, and respond to COVID-
19, including COVID-19 related public health support, telehealth, other information technology
upgrades, and other activities to protect the safety of patients and staff. Additionally, non-Federal
entities receiving federal awards should establish and maintain internal control designed to
reasonably ensure compliance with Federal laws, regulations and program compliance
requirements.
Condition: Three of 28 nonpayroll transactions tested were for utility costs, which are not an
allowable cost of this federal award. For two additional nonpayroll transactions, we noted that
the transactions were not approved by the Program Manager, Grants Manager, CFO, or CEO as
required under the Finance policies and procedures.
Questioned Costs: Utility expenses totaling $731.
Context: Three of 28 nonpayroll disbursements tested represented utility costs, and two of 28
nonpayroll disbursements tested were not approved.
Cause: FNCH is not following its approved Finance policies and procedures related to
purchasing and accounts payable.
Effect: FNCH may not be able to demonstrate that the costs charged to federal programs are
allowable.
Auditor’s Recommendations: FNCH should implement its approved Finance policies and
procedures to ensure that amounts charged to federal programs are allowable and properly
approved.
Management’s Response: FNCH management agrees with the auditor’s recommendations. The
Finance Department faced significant staffing challenges due to the COVID-19 pandemic. These
challenges resulted in an 80% staff turnover, including the CFO. Additionally, the pandemic
made it difficult for the Finance Department to hire new staff in a timely manner. The COVID-
19 outbreak also impacted attendance, resulting in employees being absent from work for one to
two weeks.
To address this issue, FNCH will initiate the following corrective actions. The CFO will
implement internal measures, including creating a schedule of activities with due dates, progress
reports, and staff meetings, to monitor and ensure that the amounts charged to federal programs
are allowable and properly approved. Corrective action steps will be identified and implemented
as needed. The grant/contract staff will review the grant budgets, including line-item allocations,
to determine allowable expenses. The CFO will verify the monthly expenses are allowable and
approve the drawdown budgets of the grants accordingly.
2021-008—Reporting
Federal program information:
Funding agency: U.S. Department of Health and Human Services
Title: Urban Indian Health Services; COVID-19
Emergency Grants to Address Mental and
Substance Use Disorders During COVID-19
ALN: 93.193; 93.665
Award number: 75H70720C00006; H722IHS0133; H79FG000227;
H79FG000667
Award period: Various
Criteria: Quarterly Federal Financial Reports (SF-425) are required to be submitted to the
granting agency according to the Notice of Awards for these programs.
Condition: Three of four quarterly SF-425 reports were submitted past the 30-day deadline after
the end of each quarter.
Questioned Costs: N/A
Context: Three of four quarterly SF-425 reports for the Urban Indian Health Services grant
awards and three of four quarterly SF-425 reports for the Emergency Grants to Address Mental
and Substance Use Disorders During COVID-19 grant awards.
Cause: Program personnel did not review and approve the reports for submission in a timely
manner.
Effect: FNCH is not in compliance with reporting requirements for these programs.
Auditor’s Recommendations: FNCH should develop internal controls to ensure all program
reports are properly completed and submitted by the required due dates.
Management’s Response: FNCH management agrees with the auditor’s recommendations. The
Finance Department faced significant staffing challenges due to the COVID-19 pandemic. These
challenges resulted in an 80% staff turnover, including the CFO. Additionally, the pandemic
made it difficult for the Finance Department to hire new staff in a timely manner. The COVID-
19 outbreak also impacted attendance, resulting in employees being absent from work for one to
two weeks. As a result, the Finance Department could not submit the quarterly SF-425 reports
due to the lack of staff.
The CFO will implement internal measures, including
creating a schedule of activities with due dates, progress reports, and staff meetings, to monitor
and ensure the financial close and reporting process has been completed within the required
timeframes and are accurate. Corrective action steps will be identified and implemented as
needed. The grant/contract staff will maintain a log of when financial and other grant reports are
due. The CFO will review the log and track report submissions to ensure timely completion and
submission. To ensure timely completion, the staff will initiate activities to complete required
reports and financial close at least 60 days before the deadline. The CFO will be responsible for
ensuring the reporting deadlines have been met.
2021-008—Reporting
Federal program information:
Funding agency: U.S. Department of Health and Human Services
Title: Urban Indian Health Services; COVID-19
Emergency Grants to Address Mental and
Substance Use Disorders During COVID-19
ALN: 93.193; 93.665
Award number: 75H70720C00006; H722IHS0133; H79FG000227;
H79FG000667
Award period: Various
Criteria: Quarterly Federal Financial Reports (SF-425) are required to be submitted to the
granting agency according to the Notice of Awards for these programs.
Condition: Three of four quarterly SF-425 reports were submitted past the 30-day deadline after
the end of each quarter.
Questioned Costs: N/A
Context: Three of four quarterly SF-425 reports for the Urban Indian Health Services grant
awards and three of four quarterly SF-425 reports for the Emergency Grants to Address Mental
and Substance Use Disorders During COVID-19 grant awards.
Cause: Program personnel did not review and approve the reports for submission in a timely
manner.
Effect: FNCH is not in compliance with reporting requirements for these programs.
Auditor’s Recommendations: FNCH should develop internal controls to ensure all program
reports are properly completed and submitted by the required due dates.
Management’s Response: FNCH management agrees with the auditor’s recommendations. The
Finance Department faced significant staffing challenges due to the COVID-19 pandemic. These
challenges resulted in an 80% staff turnover, including the CFO. Additionally, the pandemic
made it difficult for the Finance Department to hire new staff in a timely manner. The COVID-
19 outbreak also impacted attendance, resulting in employees being absent from work for one to
two weeks. As a result, the Finance Department could not submit the quarterly SF-425 reports
due to the lack of staff.
The CFO will implement internal measures, including
creating a schedule of activities with due dates, progress reports, and staff meetings, to monitor
and ensure the financial close and reporting process has been completed within the required
timeframes and are accurate. Corrective action steps will be identified and implemented as
needed. The grant/contract staff will maintain a log of when financial and other grant reports are
due. The CFO will review the log and track report submissions to ensure timely completion and
submission. To ensure timely completion, the staff will initiate activities to complete required
reports and financial close at least 60 days before the deadline. The CFO will be responsible for
ensuring the reporting deadlines have been met.
2021-007—Allowable Costs/Cost Principles
Federal program information:
Funding agency: U.S. Department of Health and Human Services
Title: COVID-19 Urban Indian Health Services
ALN: 93.193
Award number: 75H70720C00006
Award period: March 27, 2020 – September 30, 2021
Criteria: According to 2 CFR Part 225, to be allowable under federal awards, costs must be
adequately documented, be necessary and reasonable for the performance of the federal award
and be allocable thereto under the principles in 2 CFR Part 200, Subpart E. According to the
grant agreement for this award, this funding is to prevent, prepare for, and respond to COVID-
19, including COVID-19 related public health support, telehealth, other information technology
upgrades, and other activities to protect the safety of patients and staff. Additionally, non-Federal
entities receiving federal awards should establish and maintain internal control designed to
reasonably ensure compliance with Federal laws, regulations and program compliance
requirements.
Condition: Three of 28 nonpayroll transactions tested were for utility costs, which are not an
allowable cost of this federal award. For two additional nonpayroll transactions, we noted that
the transactions were not approved by the Program Manager, Grants Manager, CFO, or CEO as
required under the Finance policies and procedures.
Questioned Costs: Utility expenses totaling $731.
Context: Three of 28 nonpayroll disbursements tested represented utility costs, and two of 28
nonpayroll disbursements tested were not approved.
Cause: FNCH is not following its approved Finance policies and procedures related to
purchasing and accounts payable.
Effect: FNCH may not be able to demonstrate that the costs charged to federal programs are
allowable.
Auditor’s Recommendations: FNCH should implement its approved Finance policies and
procedures to ensure that amounts charged to federal programs are allowable and properly
approved.
Management’s Response: FNCH management agrees with the auditor’s recommendations. The
Finance Department faced significant staffing challenges due to the COVID-19 pandemic. These
challenges resulted in an 80% staff turnover, including the CFO. Additionally, the pandemic
made it difficult for the Finance Department to hire new staff in a timely manner. The COVID-
19 outbreak also impacted attendance, resulting in employees being absent from work for one to
two weeks.
To address this issue, FNCH will initiate the following corrective actions. The CFO will
implement internal measures, including creating a schedule of activities with due dates, progress
reports, and staff meetings, to monitor and ensure that the amounts charged to federal programs
are allowable and properly approved. Corrective action steps will be identified and implemented
as needed. The grant/contract staff will review the grant budgets, including line-item allocations,
to determine allowable expenses. The CFO will verify the monthly expenses are allowable and
approve the drawdown budgets of the grants accordingly.
2021-008—Reporting
Federal program information:
Funding agency: U.S. Department of Health and Human Services
Title: Urban Indian Health Services; COVID-19
Emergency Grants to Address Mental and
Substance Use Disorders During COVID-19
ALN: 93.193; 93.665
Award number: 75H70720C00006; H722IHS0133; H79FG000227;
H79FG000667
Award period: Various
Criteria: Quarterly Federal Financial Reports (SF-425) are required to be submitted to the
granting agency according to the Notice of Awards for these programs.
Condition: Three of four quarterly SF-425 reports were submitted past the 30-day deadline after
the end of each quarter.
Questioned Costs: N/A
Context: Three of four quarterly SF-425 reports for the Urban Indian Health Services grant
awards and three of four quarterly SF-425 reports for the Emergency Grants to Address Mental
and Substance Use Disorders During COVID-19 grant awards.
Cause: Program personnel did not review and approve the reports for submission in a timely
manner.
Effect: FNCH is not in compliance with reporting requirements for these programs.
Auditor’s Recommendations: FNCH should develop internal controls to ensure all program
reports are properly completed and submitted by the required due dates.
Management’s Response: FNCH management agrees with the auditor’s recommendations. The
Finance Department faced significant staffing challenges due to the COVID-19 pandemic. These
challenges resulted in an 80% staff turnover, including the CFO. Additionally, the pandemic
made it difficult for the Finance Department to hire new staff in a timely manner. The COVID-
19 outbreak also impacted attendance, resulting in employees being absent from work for one to
two weeks. As a result, the Finance Department could not submit the quarterly SF-425 reports
due to the lack of staff.
The CFO will implement internal measures, including
creating a schedule of activities with due dates, progress reports, and staff meetings, to monitor
and ensure the financial close and reporting process has been completed within the required
timeframes and are accurate. Corrective action steps will be identified and implemented as
needed. The grant/contract staff will maintain a log of when financial and other grant reports are
due. The CFO will review the log and track report submissions to ensure timely completion and
submission. To ensure timely completion, the staff will initiate activities to complete required
reports and financial close at least 60 days before the deadline. The CFO will be responsible for
ensuring the reporting deadlines have been met.
2021-008—Reporting
Federal program information:
Funding agency: U.S. Department of Health and Human Services
Title: Urban Indian Health Services; COVID-19
Emergency Grants to Address Mental and
Substance Use Disorders During COVID-19
ALN: 93.193; 93.665
Award number: 75H70720C00006; H722IHS0133; H79FG000227;
H79FG000667
Award period: Various
Criteria: Quarterly Federal Financial Reports (SF-425) are required to be submitted to the
granting agency according to the Notice of Awards for these programs.
Condition: Three of four quarterly SF-425 reports were submitted past the 30-day deadline after
the end of each quarter.
Questioned Costs: N/A
Context: Three of four quarterly SF-425 reports for the Urban Indian Health Services grant
awards and three of four quarterly SF-425 reports for the Emergency Grants to Address Mental
and Substance Use Disorders During COVID-19 grant awards.
Cause: Program personnel did not review and approve the reports for submission in a timely
manner.
Effect: FNCH is not in compliance with reporting requirements for these programs.
Auditor’s Recommendations: FNCH should develop internal controls to ensure all program
reports are properly completed and submitted by the required due dates.
Management’s Response: FNCH management agrees with the auditor’s recommendations. The
Finance Department faced significant staffing challenges due to the COVID-19 pandemic. These
challenges resulted in an 80% staff turnover, including the CFO. Additionally, the pandemic
made it difficult for the Finance Department to hire new staff in a timely manner. The COVID-
19 outbreak also impacted attendance, resulting in employees being absent from work for one to
two weeks. As a result, the Finance Department could not submit the quarterly SF-425 reports
due to the lack of staff.
The CFO will implement internal measures, including
creating a schedule of activities with due dates, progress reports, and staff meetings, to monitor
and ensure the financial close and reporting process has been completed within the required
timeframes and are accurate. Corrective action steps will be identified and implemented as
needed. The grant/contract staff will maintain a log of when financial and other grant reports are
due. The CFO will review the log and track report submissions to ensure timely completion and
submission. To ensure timely completion, the staff will initiate activities to complete required
reports and financial close at least 60 days before the deadline. The CFO will be responsible for
ensuring the reporting deadlines have been met.