Section III: Federal Awards Findings and Questioned Costs Federal Agency: U.S. Department of Health and Human Services Pass-through Agency: State of Connecticut, Department of Mental Health and Addiction Services (COVID-19) Commonwealth of Pennsylvania, Department of Drug and Alcohol Programs State of Oklahoma, Department of Mental health and Substance Abuse Services Program Name (Assistance listing #): Block Grants for Prevention and Treatment of Substance Abuse (93.959) Finding 2022-001: Allowable Costs/Cost Principles - Time and Effort Reporting (Material Weakness) Criteria: The distribution of the salaries and wages to awards must be supported by personnel activity reports or timesheets. Personnel activity reports or timesheets reflecting the distribution of activity of each employee must be maintained for all staff members whose compensation is charged, in whole or in part, to government funded contracts. The reports must reflect an after-the-fact determination of the actual activity of each employee. Each report must account for total activity for which employees are compensated and which is required in fulfillment of their obligations. The report must be signed by the individual employee, or by a responsible supervisory official having knowledge of the activities performed by the employee, that the distribution of activity represents a reasonable estimate of the actual work performed by the employee during the periods covered by the reports. The reports must be prepared at least monthly and must coincide with one or more pay periods. Statement of Condition: For all selected samples, there were no personnel activity reports or timesheets to evidence the allocation of time to government contracts. Cause: Procedures and internal controls associated with actual time and effort charged to government contracts were not in place. Effect: Management did not have sufficient documentation for the allocation of time to government contracts. Questioned Costs: $146,290 Identification of Repeat Finding: NoRecommendation: We recommend that management implement policies, controls and procedures to ensure that all time and effort allocations to federal programs are appropriately documented to comply with applicable cost principles. Views of Responsible Officials: Management is in agreement with the finding. Management has implemented additional policies, procedures and controls to document the allocation of time and effort.
Finding 2022-002: Allowable Costs/Cost Principles - Federally Approved Indirect Cost Rate (Material Weakness) Criteria: Organizations must obtain a federally approved indirect cost rate if they elect not to use the de minimis 10% indirect cost rate. The indirect cost rate must be based on analysis performed over actual indirect costs incurred compared to direct costs incurred and charged to the federal program. Statement of Condition: Shatterproof elected not to utilized the de minimis 10% indirect cost rate. Shatterproof did not obtain federal approval of the indirect cost rate that was charged to the government contracts. Cause: Documentation of the calculation of the indirect cost rate was not maintained and federal approval of the indirect cost rate charged to the government contracts was not obtained. Effect: Management did not have sufficient documentation for the indirect cost rates charged to the government contracts. Questioned Costs: $47,530 Identification of Repeat Finding: No Recommendation: We recommend that management implement policies, controls and procedures to ensure the indirect cost rate that is charged to government contracts is calculated in accordance with the requirements of the Uniform Guidance, or utilize the 10% de minimis indirect cost rate that is allowable by the Uniform Guidance. View of Responsible Officials: Management is in agreement with the finding. Management is in the process of implementing additional policies, procedures and controls to ensure indirect costs do not exceed the 10% de minimis cost rate.
Finding 2022-003: Cash Management - Cash Requisitions (Material Weakness) Criteria: Funding requests for cost reimbursement contracts must be based on actual costs incurred prior to reimbursement request. For funding requests made in advance of related expenditures, requests must be in amounts that minimize the time between cash receipt and when the funds are spent. Review of funding requests must be performed by an employee with knowledge of the government contract and of the funding needs of the federal program. Statement of Condition: For all selected samples of funding requests for cost reimbursement contracts, there was no evidence of review and approval of the funding requests submitted. Cause: Procedures and internal controls associated with the preparation of funding requests were not adequately documented. Effect: Management did not have sufficient documentation for the funding requests submitted for government contracts. Questioned Costs: None Identification of Repeat Finding: No Recommendation: We recommend that management implement policies, controls and procedures to evidence review and approval of all funding requests from government contracts to comply with applicable cash management requirements. View of Responsible Officials: Management is in agreement with the finding. Management is in the process of implementing additional policies, procedures and controls over the preparation, review and approval of funding requests submitted for government contracts.
Finding 2022-004: Cash Disbursements (Significant Deficiency) Criteria: Expenses that are charged and allocated to government contracts must be supported by invoices or other documentation evidencing the existence of the expenditure. The expenses must also be recorded in accordance with accounting principles generally accepted in the United States of America. Expense reimbursements must include evidence of review and approval by a responsible supervisory official having knowledge of the purpose of the expenditures. Statement of Condition: For 22 of our 60 samples, review and approval by a supervisory official for expense reimbursements was not performed. In addition, for three of our 60 samples, expenditures that were charged to the government contract were not recorded in the correct period. For four of our 60 samples, supporting documentation, such as an invoice, was not provided. Cause: Procedures and internal controls associated with the review and approval of expenditures, including review of supporting documentation and review of the allocation of expenditures to the appropriate period, were not adequately documented or effectively operating. Effect: Management did not have sufficient documentation for expenditures allocated to government contracts. Questioned Costs: None Identification of Repeat Finding: No Recommendation: We recommend that management enhance its policies, controls and procedures to ensure that there is appropriate segregation of duties over the review and approval of expenditures charged to federal programs. We recommend that management enhance its policies, controls and procedures to ensure that expenditures are recorded in the correct period and the existence of those expenditures are supported by appropriate documentation, such as an invoice. View of Responsible Officials: Management is in agreement with the finding. Management will enhance the policies, procedures and controls in place over the cash disbursement process to ensure appropriate segregation of duties over approvals are in place and expenses are recorded in the correct period with supporting documentation.
Section III: Federal Awards Findings and Questioned Costs Federal Agency: U.S. Department of Health and Human Services Pass-through Agency: State of Connecticut, Department of Mental Health and Addiction Services (COVID-19) Commonwealth of Pennsylvania, Department of Drug and Alcohol Programs State of Oklahoma, Department of Mental health and Substance Abuse Services Program Name (Assistance listing #): Block Grants for Prevention and Treatment of Substance Abuse (93.959) Finding 2022-001: Allowable Costs/Cost Principles - Time and Effort Reporting (Material Weakness) Criteria: The distribution of the salaries and wages to awards must be supported by personnel activity reports or timesheets. Personnel activity reports or timesheets reflecting the distribution of activity of each employee must be maintained for all staff members whose compensation is charged, in whole or in part, to government funded contracts. The reports must reflect an after-the-fact determination of the actual activity of each employee. Each report must account for total activity for which employees are compensated and which is required in fulfillment of their obligations. The report must be signed by the individual employee, or by a responsible supervisory official having knowledge of the activities performed by the employee, that the distribution of activity represents a reasonable estimate of the actual work performed by the employee during the periods covered by the reports. The reports must be prepared at least monthly and must coincide with one or more pay periods. Statement of Condition: For all selected samples, there were no personnel activity reports or timesheets to evidence the allocation of time to government contracts. Cause: Procedures and internal controls associated with actual time and effort charged to government contracts were not in place. Effect: Management did not have sufficient documentation for the allocation of time to government contracts. Questioned Costs: $146,290 Identification of Repeat Finding: NoRecommendation: We recommend that management implement policies, controls and procedures to ensure that all time and effort allocations to federal programs are appropriately documented to comply with applicable cost principles. Views of Responsible Officials: Management is in agreement with the finding. Management has implemented additional policies, procedures and controls to document the allocation of time and effort.
Finding 2022-002: Allowable Costs/Cost Principles - Federally Approved Indirect Cost Rate (Material Weakness) Criteria: Organizations must obtain a federally approved indirect cost rate if they elect not to use the de minimis 10% indirect cost rate. The indirect cost rate must be based on analysis performed over actual indirect costs incurred compared to direct costs incurred and charged to the federal program. Statement of Condition: Shatterproof elected not to utilized the de minimis 10% indirect cost rate. Shatterproof did not obtain federal approval of the indirect cost rate that was charged to the government contracts. Cause: Documentation of the calculation of the indirect cost rate was not maintained and federal approval of the indirect cost rate charged to the government contracts was not obtained. Effect: Management did not have sufficient documentation for the indirect cost rates charged to the government contracts. Questioned Costs: $47,530 Identification of Repeat Finding: No Recommendation: We recommend that management implement policies, controls and procedures to ensure the indirect cost rate that is charged to government contracts is calculated in accordance with the requirements of the Uniform Guidance, or utilize the 10% de minimis indirect cost rate that is allowable by the Uniform Guidance. View of Responsible Officials: Management is in agreement with the finding. Management is in the process of implementing additional policies, procedures and controls to ensure indirect costs do not exceed the 10% de minimis cost rate.
Finding 2022-003: Cash Management - Cash Requisitions (Material Weakness) Criteria: Funding requests for cost reimbursement contracts must be based on actual costs incurred prior to reimbursement request. For funding requests made in advance of related expenditures, requests must be in amounts that minimize the time between cash receipt and when the funds are spent. Review of funding requests must be performed by an employee with knowledge of the government contract and of the funding needs of the federal program. Statement of Condition: For all selected samples of funding requests for cost reimbursement contracts, there was no evidence of review and approval of the funding requests submitted. Cause: Procedures and internal controls associated with the preparation of funding requests were not adequately documented. Effect: Management did not have sufficient documentation for the funding requests submitted for government contracts. Questioned Costs: None Identification of Repeat Finding: No Recommendation: We recommend that management implement policies, controls and procedures to evidence review and approval of all funding requests from government contracts to comply with applicable cash management requirements. View of Responsible Officials: Management is in agreement with the finding. Management is in the process of implementing additional policies, procedures and controls over the preparation, review and approval of funding requests submitted for government contracts.
Finding 2022-004: Cash Disbursements (Significant Deficiency) Criteria: Expenses that are charged and allocated to government contracts must be supported by invoices or other documentation evidencing the existence of the expenditure. The expenses must also be recorded in accordance with accounting principles generally accepted in the United States of America. Expense reimbursements must include evidence of review and approval by a responsible supervisory official having knowledge of the purpose of the expenditures. Statement of Condition: For 22 of our 60 samples, review and approval by a supervisory official for expense reimbursements was not performed. In addition, for three of our 60 samples, expenditures that were charged to the government contract were not recorded in the correct period. For four of our 60 samples, supporting documentation, such as an invoice, was not provided. Cause: Procedures and internal controls associated with the review and approval of expenditures, including review of supporting documentation and review of the allocation of expenditures to the appropriate period, were not adequately documented or effectively operating. Effect: Management did not have sufficient documentation for expenditures allocated to government contracts. Questioned Costs: None Identification of Repeat Finding: No Recommendation: We recommend that management enhance its policies, controls and procedures to ensure that there is appropriate segregation of duties over the review and approval of expenditures charged to federal programs. We recommend that management enhance its policies, controls and procedures to ensure that expenditures are recorded in the correct period and the existence of those expenditures are supported by appropriate documentation, such as an invoice. View of Responsible Officials: Management is in agreement with the finding. Management will enhance the policies, procedures and controls in place over the cash disbursement process to ensure appropriate segregation of duties over approvals are in place and expenses are recorded in the correct period with supporting documentation.