Type of Finding: Material Weakness in Internal Control over Compliance
Federal Agency: U.S. Department of Health and Human Services
Federal Program Name: Substance Abuse and Mental Health Services Projects of Regional and National Significance
Assistance Listing Number: 93.243
Federal Award Identification Number and Year: H79TI081935 – 2022, H79TI080298 – 2022, H79TI085517 – 2022
Pass-Through Agency: Pierce County
Pass-Through Number(s): SC-107323, SC-105454, SC-110121
Award Period: May 31, 2022 through May 30, 2023, September 30, 2017 through September 29, 2022, September 30, 2022 through September 29, 2027.
Criteria or specific requirement: 2 CFR 200.320 requires non-federal entities to have and use documented procurement procedures. 2 CFR 200.318(i) states that "the non-Federal entity must maintain record sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price". In addition, 2 CFR 200.320(a)(2)(i) states that "... If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity". 2 CFR 180.300 states that before entering into a covered transaction with another person at the next lower tier, an entity must verify that the person with whom they intend to do business with is not excluded or disqualified. This can be done by “(a) Checking SAM exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person”.
Condition: The Alliance does not have a written procurement, suspension and debarment policy nor procedures in place at the time of the audit in compliance with Uniform Guidance. For procurement, CLA tested all purchases exceeding $3,500 (the minimum micropurchase threshold before it was increased by the FAR to $10,000 for those with an established policy). For the 5 sampled procurement selections, documentation was not retained for the adequate number of price comparisons prior to exercising the procurement, as required by 2 CFR 200.320. For suspension and debarment, CLA tested all payments to vendors exceeding $25,000 as established by Uniform Guidance. Of the 3 tested, there was no documentary evidence that procedures were performed prior to entering into the covered transaction using the allowable methods as described at 2 CFR 180.300.
Questioned costs: Undeterminable.
Context: Procurement: A sample of 5 was made from a population of 16 procurement transactions charged to the major program that exceeded $3,500 (the minimum micropurchase threshold before it was increased by the FAR to $10,000 for those with an established policy), amounting to $48,099. Of the 5 sampled costs, all were found to be out of compliance with the Procurement requirements, as a written procurement policy was not in place and documentation was not retained for the adequate number of price comparisons. Suspension and Debarment: A sample of 3 (entire population) was made from a population of 3 vendors who received payments exceeding $25,000. Of the 3 sampled vendors, there was no documentary evidence that procedures were performed prior to entering into the covered transaction using the allowable methods as described at 2 CFR 180.300.
Cause: Management believes procurement, suspension and debarment standards apply only to the awarding agency, and not to the Alliance.
Effect: Purchases may occur that do not follow the procurement, suspension and debarment standards as required by Uniform Guidance, and contracts to vendors that had been suspended or debarred could be awarded and not detected.
Repeat Finding: No.
Recommendation: We recommended that the Alliance design controls to ensure an adequate review process is in place to review potential contractors to determine they are not suspended or debarred. These procedures should include documenting the date that suspension and debarment verifications are made. In addition, we recommended the Alliance to formally adopt a Procurement, Suspension and Debarment policy in accordance with Uniform Guidance. The Alliance followed this recommendation, pairing prior (non-federally implicated) procurement processes and expenditures.
Views of responsible officials: Management has provided a response to the finding in their Corrective Action Plan.
Type of Finding: Material Weakness in Internal Control over Compliance and Material Noncompliance
Federal Agency: U.S. Department of Health and Human Services
Federal Program Name: Substance Abuse and Mental Health Services Projects of Regional and National Significance
Assistance Listing Number: 93.243
Federal Award Identification Number and Year: H79TI081935 – 2022, H79TI080298 – 2022, H79TI085517 – 2022
Pass-Through Agency: Pierce County
Pass-Through Number(s): SC-107323, SC-105454, SC-110121
Award Period: May 31, 2019 through May 30, 2024, September 30, 2017 through September 29, 2022, September 30, 2022 through September 30, 2027
Criteria or specific requirement: 2 CFR 200.430(i)(1)(viii) states that “budget estimates (i.e., estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes, provided that: (A) The system for establishing the estimates produces reasonable approximations of the activity actually performed; (B) Significant changes in the corresponding work activity (as defined by the non-Federal entity's written policies) are identified and entered into the records in a timely manner. Short term (such as one or two months) fluctuation between workload categories need not be considered as long as the distribution of salaries and wages is reasonable over the longer term; and (C) The non-Federal entity's system of internal controls includes processes to review after-the-fact interim changes made to a Federal award based on budget estimates. All necessary adjustments must be made such that the final amount charged to the Federal award is accurate, allowable, and properly allocated.”
Condition: Grant hours are not consistently tracked on the employee monthly timesheet. Wages charged to the program are based on budgeted estimates. Per 2 CFR 200.430(i)(1)(viii), this is not allowed without additional steps to ensure accuracy, allowability and proper allocation. Insufficient evidence was presented to support a reasonable reflection of employee federal and non-federal activity. The alliance does not have a written policy nor system of internal controls to review and true-up grant wages to actual.
Questioned costs: $447,634
Context: A sample of 40 was made from a population of 504 transactions charged to the major program for salaries and benefit expenses. Of the 40 sampled costs, all were found to be out of compliance with the provisions for 2 CFR 200.430 Compensation - personal services of Uniform Guidance. Sampled wages totaled $137,021.54. Total salaries and wages totaled $971,744 of the $1,599,883 tracked to the major program. Extrapolating the error to the actual costs reported on the SEFA results in a likely questioned cost amount of $447,634.
Cause: Management was aware that estimated budgeted costs alone are not sufficient to support personnel costs charged to Federal awards.
Effect: Charging grant wages based on estimates rather than actual hours worked on the program may raise compliance concerns. Estimating grant wages without adequate support for time and effort documentation may result in noncompliance with grant regulations. This can also lead to overcharging or undercharging the federal grant, which may result in penalties or repayment obligations.
Repeat Finding: No.
Recommendation: We recommend that the Alliance incorporate a system of internal controls that clearly documents the time and effort that each individual employee spends on each grant per month. This can be done by adjusting the format of the monthly timesheet to include a column that specifies how many hours per day were spent on which federal and nonfederal activities. PCA can further enhance clarity, accountability, and transparency by moving from a "day" format to an "hour" format on their timesheets.
Views of responsible officials: Management has provide a response to the finding in their Corrective Action Plan.
Type of Finding: Material Weakness in Internal Control over Compliance
Federal Agency: U.S. Department of Health and Human Services
Federal Program Name: Substance Abuse and Mental Health Services Projects of Regional and National Significance
Assistance Listing Number: 93.243
Federal Award Identification Number and Year: H79TI081935 – 2022, H79TI080298 – 2022, H79TI085517 – 2022
Pass-Through Agency: Pierce County
Pass-Through Number(s): SC-107323, SC-105454, SC-110121
Award Period: May 31, 2022 through May 30, 2023, September 30, 2017 through September 29, 2022, September 30, 2022 through September 29, 2027.
Criteria or specific requirement: 2 CFR 200.320 requires non-federal entities to have and use documented procurement procedures. 2 CFR 200.318(i) states that "the non-Federal entity must maintain record sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price". In addition, 2 CFR 200.320(a)(2)(i) states that "... If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity". 2 CFR 180.300 states that before entering into a covered transaction with another person at the next lower tier, an entity must verify that the person with whom they intend to do business with is not excluded or disqualified. This can be done by “(a) Checking SAM exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person”.
Condition: The Alliance does not have a written procurement, suspension and debarment policy nor procedures in place at the time of the audit in compliance with Uniform Guidance. For procurement, CLA tested all purchases exceeding $3,500 (the minimum micropurchase threshold before it was increased by the FAR to $10,000 for those with an established policy). For the 5 sampled procurement selections, documentation was not retained for the adequate number of price comparisons prior to exercising the procurement, as required by 2 CFR 200.320. For suspension and debarment, CLA tested all payments to vendors exceeding $25,000 as established by Uniform Guidance. Of the 3 tested, there was no documentary evidence that procedures were performed prior to entering into the covered transaction using the allowable methods as described at 2 CFR 180.300.
Questioned costs: Undeterminable.
Context: Procurement: A sample of 5 was made from a population of 16 procurement transactions charged to the major program that exceeded $3,500 (the minimum micropurchase threshold before it was increased by the FAR to $10,000 for those with an established policy), amounting to $48,099. Of the 5 sampled costs, all were found to be out of compliance with the Procurement requirements, as a written procurement policy was not in place and documentation was not retained for the adequate number of price comparisons. Suspension and Debarment: A sample of 3 (entire population) was made from a population of 3 vendors who received payments exceeding $25,000. Of the 3 sampled vendors, there was no documentary evidence that procedures were performed prior to entering into the covered transaction using the allowable methods as described at 2 CFR 180.300.
Cause: Management believes procurement, suspension and debarment standards apply only to the awarding agency, and not to the Alliance.
Effect: Purchases may occur that do not follow the procurement, suspension and debarment standards as required by Uniform Guidance, and contracts to vendors that had been suspended or debarred could be awarded and not detected.
Repeat Finding: No.
Recommendation: We recommended that the Alliance design controls to ensure an adequate review process is in place to review potential contractors to determine they are not suspended or debarred. These procedures should include documenting the date that suspension and debarment verifications are made. In addition, we recommended the Alliance to formally adopt a Procurement, Suspension and Debarment policy in accordance with Uniform Guidance. The Alliance followed this recommendation, pairing prior (non-federally implicated) procurement processes and expenditures.
Views of responsible officials: Management has provided a response to the finding in their Corrective Action Plan.
Type of Finding: Material Weakness in Internal Control over Compliance and Material Noncompliance
Federal Agency: U.S. Department of Health and Human Services
Federal Program Name: Substance Abuse and Mental Health Services Projects of Regional and National Significance
Assistance Listing Number: 93.243
Federal Award Identification Number and Year: H79TI081935 – 2022, H79TI080298 – 2022, H79TI085517 – 2022
Pass-Through Agency: Pierce County
Pass-Through Number(s): SC-107323, SC-105454, SC-110121
Award Period: May 31, 2019 through May 30, 2024, September 30, 2017 through September 29, 2022, September 30, 2022 through September 30, 2027
Criteria or specific requirement: 2 CFR 200.430(i)(1)(viii) states that “budget estimates (i.e., estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes, provided that: (A) The system for establishing the estimates produces reasonable approximations of the activity actually performed; (B) Significant changes in the corresponding work activity (as defined by the non-Federal entity's written policies) are identified and entered into the records in a timely manner. Short term (such as one or two months) fluctuation between workload categories need not be considered as long as the distribution of salaries and wages is reasonable over the longer term; and (C) The non-Federal entity's system of internal controls includes processes to review after-the-fact interim changes made to a Federal award based on budget estimates. All necessary adjustments must be made such that the final amount charged to the Federal award is accurate, allowable, and properly allocated.”
Condition: Grant hours are not consistently tracked on the employee monthly timesheet. Wages charged to the program are based on budgeted estimates. Per 2 CFR 200.430(i)(1)(viii), this is not allowed without additional steps to ensure accuracy, allowability and proper allocation. Insufficient evidence was presented to support a reasonable reflection of employee federal and non-federal activity. The alliance does not have a written policy nor system of internal controls to review and true-up grant wages to actual.
Questioned costs: $447,634
Context: A sample of 40 was made from a population of 504 transactions charged to the major program for salaries and benefit expenses. Of the 40 sampled costs, all were found to be out of compliance with the provisions for 2 CFR 200.430 Compensation - personal services of Uniform Guidance. Sampled wages totaled $137,021.54. Total salaries and wages totaled $971,744 of the $1,599,883 tracked to the major program. Extrapolating the error to the actual costs reported on the SEFA results in a likely questioned cost amount of $447,634.
Cause: Management was aware that estimated budgeted costs alone are not sufficient to support personnel costs charged to Federal awards.
Effect: Charging grant wages based on estimates rather than actual hours worked on the program may raise compliance concerns. Estimating grant wages without adequate support for time and effort documentation may result in noncompliance with grant regulations. This can also lead to overcharging or undercharging the federal grant, which may result in penalties or repayment obligations.
Repeat Finding: No.
Recommendation: We recommend that the Alliance incorporate a system of internal controls that clearly documents the time and effort that each individual employee spends on each grant per month. This can be done by adjusting the format of the monthly timesheet to include a column that specifies how many hours per day were spent on which federal and nonfederal activities. PCA can further enhance clarity, accountability, and transparency by moving from a "day" format to an "hour" format on their timesheets.
Views of responsible officials: Management has provide a response to the finding in their Corrective Action Plan.
Type of Finding: Material Weakness in Internal Control over Compliance
Federal Agency: U.S. Department of Health and Human Services
Federal Program Name: Substance Abuse and Mental Health Services Projects of Regional and National Significance
Assistance Listing Number: 93.243
Federal Award Identification Number and Year: H79TI081935 – 2022, H79TI080298 – 2022, H79TI085517 – 2022
Pass-Through Agency: Pierce County
Pass-Through Number(s): SC-107323, SC-105454, SC-110121
Award Period: May 31, 2022 through May 30, 2023, September 30, 2017 through September 29, 2022, September 30, 2022 through September 29, 2027.
Criteria or specific requirement: 2 CFR 200.320 requires non-federal entities to have and use documented procurement procedures. 2 CFR 200.318(i) states that "the non-Federal entity must maintain record sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price". In addition, 2 CFR 200.320(a)(2)(i) states that "... If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity". 2 CFR 180.300 states that before entering into a covered transaction with another person at the next lower tier, an entity must verify that the person with whom they intend to do business with is not excluded or disqualified. This can be done by “(a) Checking SAM exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person”.
Condition: The Alliance does not have a written procurement, suspension and debarment policy nor procedures in place at the time of the audit in compliance with Uniform Guidance. For procurement, CLA tested all purchases exceeding $3,500 (the minimum micropurchase threshold before it was increased by the FAR to $10,000 for those with an established policy). For the 5 sampled procurement selections, documentation was not retained for the adequate number of price comparisons prior to exercising the procurement, as required by 2 CFR 200.320. For suspension and debarment, CLA tested all payments to vendors exceeding $25,000 as established by Uniform Guidance. Of the 3 tested, there was no documentary evidence that procedures were performed prior to entering into the covered transaction using the allowable methods as described at 2 CFR 180.300.
Questioned costs: Undeterminable.
Context: Procurement: A sample of 5 was made from a population of 16 procurement transactions charged to the major program that exceeded $3,500 (the minimum micropurchase threshold before it was increased by the FAR to $10,000 for those with an established policy), amounting to $48,099. Of the 5 sampled costs, all were found to be out of compliance with the Procurement requirements, as a written procurement policy was not in place and documentation was not retained for the adequate number of price comparisons. Suspension and Debarment: A sample of 3 (entire population) was made from a population of 3 vendors who received payments exceeding $25,000. Of the 3 sampled vendors, there was no documentary evidence that procedures were performed prior to entering into the covered transaction using the allowable methods as described at 2 CFR 180.300.
Cause: Management believes procurement, suspension and debarment standards apply only to the awarding agency, and not to the Alliance.
Effect: Purchases may occur that do not follow the procurement, suspension and debarment standards as required by Uniform Guidance, and contracts to vendors that had been suspended or debarred could be awarded and not detected.
Repeat Finding: No.
Recommendation: We recommended that the Alliance design controls to ensure an adequate review process is in place to review potential contractors to determine they are not suspended or debarred. These procedures should include documenting the date that suspension and debarment verifications are made. In addition, we recommended the Alliance to formally adopt a Procurement, Suspension and Debarment policy in accordance with Uniform Guidance. The Alliance followed this recommendation, pairing prior (non-federally implicated) procurement processes and expenditures.
Views of responsible officials: Management has provided a response to the finding in their Corrective Action Plan.
Type of Finding: Material Weakness in Internal Control over Compliance and Material Noncompliance
Federal Agency: U.S. Department of Health and Human Services
Federal Program Name: Substance Abuse and Mental Health Services Projects of Regional and National Significance
Assistance Listing Number: 93.243
Federal Award Identification Number and Year: H79TI081935 – 2022, H79TI080298 – 2022, H79TI085517 – 2022
Pass-Through Agency: Pierce County
Pass-Through Number(s): SC-107323, SC-105454, SC-110121
Award Period: May 31, 2019 through May 30, 2024, September 30, 2017 through September 29, 2022, September 30, 2022 through September 30, 2027
Criteria or specific requirement: 2 CFR 200.430(i)(1)(viii) states that “budget estimates (i.e., estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes, provided that: (A) The system for establishing the estimates produces reasonable approximations of the activity actually performed; (B) Significant changes in the corresponding work activity (as defined by the non-Federal entity's written policies) are identified and entered into the records in a timely manner. Short term (such as one or two months) fluctuation between workload categories need not be considered as long as the distribution of salaries and wages is reasonable over the longer term; and (C) The non-Federal entity's system of internal controls includes processes to review after-the-fact interim changes made to a Federal award based on budget estimates. All necessary adjustments must be made such that the final amount charged to the Federal award is accurate, allowable, and properly allocated.”
Condition: Grant hours are not consistently tracked on the employee monthly timesheet. Wages charged to the program are based on budgeted estimates. Per 2 CFR 200.430(i)(1)(viii), this is not allowed without additional steps to ensure accuracy, allowability and proper allocation. Insufficient evidence was presented to support a reasonable reflection of employee federal and non-federal activity. The alliance does not have a written policy nor system of internal controls to review and true-up grant wages to actual.
Questioned costs: $447,634
Context: A sample of 40 was made from a population of 504 transactions charged to the major program for salaries and benefit expenses. Of the 40 sampled costs, all were found to be out of compliance with the provisions for 2 CFR 200.430 Compensation - personal services of Uniform Guidance. Sampled wages totaled $137,021.54. Total salaries and wages totaled $971,744 of the $1,599,883 tracked to the major program. Extrapolating the error to the actual costs reported on the SEFA results in a likely questioned cost amount of $447,634.
Cause: Management was aware that estimated budgeted costs alone are not sufficient to support personnel costs charged to Federal awards.
Effect: Charging grant wages based on estimates rather than actual hours worked on the program may raise compliance concerns. Estimating grant wages without adequate support for time and effort documentation may result in noncompliance with grant regulations. This can also lead to overcharging or undercharging the federal grant, which may result in penalties or repayment obligations.
Repeat Finding: No.
Recommendation: We recommend that the Alliance incorporate a system of internal controls that clearly documents the time and effort that each individual employee spends on each grant per month. This can be done by adjusting the format of the monthly timesheet to include a column that specifies how many hours per day were spent on which federal and nonfederal activities. PCA can further enhance clarity, accountability, and transparency by moving from a "day" format to an "hour" format on their timesheets.
Views of responsible officials: Management has provide a response to the finding in their Corrective Action Plan.
Type of Finding: Material Weakness in Internal Control over Compliance
Federal Agency: U.S. Department of Health and Human Services
Federal Program Name: Substance Abuse and Mental Health Services Projects of Regional and National Significance
Assistance Listing Number: 93.243
Federal Award Identification Number and Year: H79TI081935 – 2022, H79TI080298 – 2022, H79TI085517 – 2022
Pass-Through Agency: Pierce County
Pass-Through Number(s): SC-107323, SC-105454, SC-110121
Award Period: May 31, 2022 through May 30, 2023, September 30, 2017 through September 29, 2022, September 30, 2022 through September 29, 2027.
Criteria or specific requirement: 2 CFR 200.320 requires non-federal entities to have and use documented procurement procedures. 2 CFR 200.318(i) states that "the non-Federal entity must maintain record sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price". In addition, 2 CFR 200.320(a)(2)(i) states that "... If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity". 2 CFR 180.300 states that before entering into a covered transaction with another person at the next lower tier, an entity must verify that the person with whom they intend to do business with is not excluded or disqualified. This can be done by “(a) Checking SAM exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person”.
Condition: The Alliance does not have a written procurement, suspension and debarment policy nor procedures in place at the time of the audit in compliance with Uniform Guidance. For procurement, CLA tested all purchases exceeding $3,500 (the minimum micropurchase threshold before it was increased by the FAR to $10,000 for those with an established policy). For the 5 sampled procurement selections, documentation was not retained for the adequate number of price comparisons prior to exercising the procurement, as required by 2 CFR 200.320. For suspension and debarment, CLA tested all payments to vendors exceeding $25,000 as established by Uniform Guidance. Of the 3 tested, there was no documentary evidence that procedures were performed prior to entering into the covered transaction using the allowable methods as described at 2 CFR 180.300.
Questioned costs: Undeterminable.
Context: Procurement: A sample of 5 was made from a population of 16 procurement transactions charged to the major program that exceeded $3,500 (the minimum micropurchase threshold before it was increased by the FAR to $10,000 for those with an established policy), amounting to $48,099. Of the 5 sampled costs, all were found to be out of compliance with the Procurement requirements, as a written procurement policy was not in place and documentation was not retained for the adequate number of price comparisons. Suspension and Debarment: A sample of 3 (entire population) was made from a population of 3 vendors who received payments exceeding $25,000. Of the 3 sampled vendors, there was no documentary evidence that procedures were performed prior to entering into the covered transaction using the allowable methods as described at 2 CFR 180.300.
Cause: Management believes procurement, suspension and debarment standards apply only to the awarding agency, and not to the Alliance.
Effect: Purchases may occur that do not follow the procurement, suspension and debarment standards as required by Uniform Guidance, and contracts to vendors that had been suspended or debarred could be awarded and not detected.
Repeat Finding: No.
Recommendation: We recommended that the Alliance design controls to ensure an adequate review process is in place to review potential contractors to determine they are not suspended or debarred. These procedures should include documenting the date that suspension and debarment verifications are made. In addition, we recommended the Alliance to formally adopt a Procurement, Suspension and Debarment policy in accordance with Uniform Guidance. The Alliance followed this recommendation, pairing prior (non-federally implicated) procurement processes and expenditures.
Views of responsible officials: Management has provided a response to the finding in their Corrective Action Plan.
Type of Finding: Material Weakness in Internal Control over Compliance and Material Noncompliance
Federal Agency: U.S. Department of Health and Human Services
Federal Program Name: Substance Abuse and Mental Health Services Projects of Regional and National Significance
Assistance Listing Number: 93.243
Federal Award Identification Number and Year: H79TI081935 – 2022, H79TI080298 – 2022, H79TI085517 – 2022
Pass-Through Agency: Pierce County
Pass-Through Number(s): SC-107323, SC-105454, SC-110121
Award Period: May 31, 2019 through May 30, 2024, September 30, 2017 through September 29, 2022, September 30, 2022 through September 30, 2027
Criteria or specific requirement: 2 CFR 200.430(i)(1)(viii) states that “budget estimates (i.e., estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes, provided that: (A) The system for establishing the estimates produces reasonable approximations of the activity actually performed; (B) Significant changes in the corresponding work activity (as defined by the non-Federal entity's written policies) are identified and entered into the records in a timely manner. Short term (such as one or two months) fluctuation between workload categories need not be considered as long as the distribution of salaries and wages is reasonable over the longer term; and (C) The non-Federal entity's system of internal controls includes processes to review after-the-fact interim changes made to a Federal award based on budget estimates. All necessary adjustments must be made such that the final amount charged to the Federal award is accurate, allowable, and properly allocated.”
Condition: Grant hours are not consistently tracked on the employee monthly timesheet. Wages charged to the program are based on budgeted estimates. Per 2 CFR 200.430(i)(1)(viii), this is not allowed without additional steps to ensure accuracy, allowability and proper allocation. Insufficient evidence was presented to support a reasonable reflection of employee federal and non-federal activity. The alliance does not have a written policy nor system of internal controls to review and true-up grant wages to actual.
Questioned costs: $447,634
Context: A sample of 40 was made from a population of 504 transactions charged to the major program for salaries and benefit expenses. Of the 40 sampled costs, all were found to be out of compliance with the provisions for 2 CFR 200.430 Compensation - personal services of Uniform Guidance. Sampled wages totaled $137,021.54. Total salaries and wages totaled $971,744 of the $1,599,883 tracked to the major program. Extrapolating the error to the actual costs reported on the SEFA results in a likely questioned cost amount of $447,634.
Cause: Management was aware that estimated budgeted costs alone are not sufficient to support personnel costs charged to Federal awards.
Effect: Charging grant wages based on estimates rather than actual hours worked on the program may raise compliance concerns. Estimating grant wages without adequate support for time and effort documentation may result in noncompliance with grant regulations. This can also lead to overcharging or undercharging the federal grant, which may result in penalties or repayment obligations.
Repeat Finding: No.
Recommendation: We recommend that the Alliance incorporate a system of internal controls that clearly documents the time and effort that each individual employee spends on each grant per month. This can be done by adjusting the format of the monthly timesheet to include a column that specifies how many hours per day were spent on which federal and nonfederal activities. PCA can further enhance clarity, accountability, and transparency by moving from a "day" format to an "hour" format on their timesheets.
Views of responsible officials: Management has provide a response to the finding in their Corrective Action Plan.
Type of Finding: Material Weakness in Internal Control over Compliance
Federal Agency: U.S. Department of Health and Human Services
Federal Program Name: Substance Abuse and Mental Health Services Projects of Regional and National Significance
Assistance Listing Number: 93.243
Federal Award Identification Number and Year: H79TI081935 – 2022, H79TI080298 – 2022, H79TI085517 – 2022
Pass-Through Agency: Pierce County
Pass-Through Number(s): SC-107323, SC-105454, SC-110121
Award Period: May 31, 2022 through May 30, 2023, September 30, 2017 through September 29, 2022, September 30, 2022 through September 29, 2027.
Criteria or specific requirement: 2 CFR 200.320 requires non-federal entities to have and use documented procurement procedures. 2 CFR 200.318(i) states that "the non-Federal entity must maintain record sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price". In addition, 2 CFR 200.320(a)(2)(i) states that "... If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity". 2 CFR 180.300 states that before entering into a covered transaction with another person at the next lower tier, an entity must verify that the person with whom they intend to do business with is not excluded or disqualified. This can be done by “(a) Checking SAM exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person”.
Condition: The Alliance does not have a written procurement, suspension and debarment policy nor procedures in place at the time of the audit in compliance with Uniform Guidance. For procurement, CLA tested all purchases exceeding $3,500 (the minimum micropurchase threshold before it was increased by the FAR to $10,000 for those with an established policy). For the 5 sampled procurement selections, documentation was not retained for the adequate number of price comparisons prior to exercising the procurement, as required by 2 CFR 200.320. For suspension and debarment, CLA tested all payments to vendors exceeding $25,000 as established by Uniform Guidance. Of the 3 tested, there was no documentary evidence that procedures were performed prior to entering into the covered transaction using the allowable methods as described at 2 CFR 180.300.
Questioned costs: Undeterminable.
Context: Procurement: A sample of 5 was made from a population of 16 procurement transactions charged to the major program that exceeded $3,500 (the minimum micropurchase threshold before it was increased by the FAR to $10,000 for those with an established policy), amounting to $48,099. Of the 5 sampled costs, all were found to be out of compliance with the Procurement requirements, as a written procurement policy was not in place and documentation was not retained for the adequate number of price comparisons. Suspension and Debarment: A sample of 3 (entire population) was made from a population of 3 vendors who received payments exceeding $25,000. Of the 3 sampled vendors, there was no documentary evidence that procedures were performed prior to entering into the covered transaction using the allowable methods as described at 2 CFR 180.300.
Cause: Management believes procurement, suspension and debarment standards apply only to the awarding agency, and not to the Alliance.
Effect: Purchases may occur that do not follow the procurement, suspension and debarment standards as required by Uniform Guidance, and contracts to vendors that had been suspended or debarred could be awarded and not detected.
Repeat Finding: No.
Recommendation: We recommended that the Alliance design controls to ensure an adequate review process is in place to review potential contractors to determine they are not suspended or debarred. These procedures should include documenting the date that suspension and debarment verifications are made. In addition, we recommended the Alliance to formally adopt a Procurement, Suspension and Debarment policy in accordance with Uniform Guidance. The Alliance followed this recommendation, pairing prior (non-federally implicated) procurement processes and expenditures.
Views of responsible officials: Management has provided a response to the finding in their Corrective Action Plan.
Type of Finding: Material Weakness in Internal Control over Compliance and Material Noncompliance
Federal Agency: U.S. Department of Health and Human Services
Federal Program Name: Substance Abuse and Mental Health Services Projects of Regional and National Significance
Assistance Listing Number: 93.243
Federal Award Identification Number and Year: H79TI081935 – 2022, H79TI080298 – 2022, H79TI085517 – 2022
Pass-Through Agency: Pierce County
Pass-Through Number(s): SC-107323, SC-105454, SC-110121
Award Period: May 31, 2019 through May 30, 2024, September 30, 2017 through September 29, 2022, September 30, 2022 through September 30, 2027
Criteria or specific requirement: 2 CFR 200.430(i)(1)(viii) states that “budget estimates (i.e., estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes, provided that: (A) The system for establishing the estimates produces reasonable approximations of the activity actually performed; (B) Significant changes in the corresponding work activity (as defined by the non-Federal entity's written policies) are identified and entered into the records in a timely manner. Short term (such as one or two months) fluctuation between workload categories need not be considered as long as the distribution of salaries and wages is reasonable over the longer term; and (C) The non-Federal entity's system of internal controls includes processes to review after-the-fact interim changes made to a Federal award based on budget estimates. All necessary adjustments must be made such that the final amount charged to the Federal award is accurate, allowable, and properly allocated.”
Condition: Grant hours are not consistently tracked on the employee monthly timesheet. Wages charged to the program are based on budgeted estimates. Per 2 CFR 200.430(i)(1)(viii), this is not allowed without additional steps to ensure accuracy, allowability and proper allocation. Insufficient evidence was presented to support a reasonable reflection of employee federal and non-federal activity. The alliance does not have a written policy nor system of internal controls to review and true-up grant wages to actual.
Questioned costs: $447,634
Context: A sample of 40 was made from a population of 504 transactions charged to the major program for salaries and benefit expenses. Of the 40 sampled costs, all were found to be out of compliance with the provisions for 2 CFR 200.430 Compensation - personal services of Uniform Guidance. Sampled wages totaled $137,021.54. Total salaries and wages totaled $971,744 of the $1,599,883 tracked to the major program. Extrapolating the error to the actual costs reported on the SEFA results in a likely questioned cost amount of $447,634.
Cause: Management was aware that estimated budgeted costs alone are not sufficient to support personnel costs charged to Federal awards.
Effect: Charging grant wages based on estimates rather than actual hours worked on the program may raise compliance concerns. Estimating grant wages without adequate support for time and effort documentation may result in noncompliance with grant regulations. This can also lead to overcharging or undercharging the federal grant, which may result in penalties or repayment obligations.
Repeat Finding: No.
Recommendation: We recommend that the Alliance incorporate a system of internal controls that clearly documents the time and effort that each individual employee spends on each grant per month. This can be done by adjusting the format of the monthly timesheet to include a column that specifies how many hours per day were spent on which federal and nonfederal activities. PCA can further enhance clarity, accountability, and transparency by moving from a "day" format to an "hour" format on their timesheets.
Views of responsible officials: Management has provide a response to the finding in their Corrective Action Plan.
Type of Finding: Material Weakness in Internal Control over Compliance
Federal Agency: U.S. Department of Health and Human Services
Federal Program Name: Substance Abuse and Mental Health Services Projects of Regional and National Significance
Assistance Listing Number: 93.243
Federal Award Identification Number and Year: H79TI081935 – 2022, H79TI080298 – 2022, H79TI085517 – 2022
Pass-Through Agency: Pierce County
Pass-Through Number(s): SC-107323, SC-105454, SC-110121
Award Period: May 31, 2022 through May 30, 2023, September 30, 2017 through September 29, 2022, September 30, 2022 through September 29, 2027.
Criteria or specific requirement: 2 CFR 200.320 requires non-federal entities to have and use documented procurement procedures. 2 CFR 200.318(i) states that "the non-Federal entity must maintain record sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price". In addition, 2 CFR 200.320(a)(2)(i) states that "... If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity". 2 CFR 180.300 states that before entering into a covered transaction with another person at the next lower tier, an entity must verify that the person with whom they intend to do business with is not excluded or disqualified. This can be done by “(a) Checking SAM exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person”.
Condition: The Alliance does not have a written procurement, suspension and debarment policy nor procedures in place at the time of the audit in compliance with Uniform Guidance. For procurement, CLA tested all purchases exceeding $3,500 (the minimum micropurchase threshold before it was increased by the FAR to $10,000 for those with an established policy). For the 5 sampled procurement selections, documentation was not retained for the adequate number of price comparisons prior to exercising the procurement, as required by 2 CFR 200.320. For suspension and debarment, CLA tested all payments to vendors exceeding $25,000 as established by Uniform Guidance. Of the 3 tested, there was no documentary evidence that procedures were performed prior to entering into the covered transaction using the allowable methods as described at 2 CFR 180.300.
Questioned costs: Undeterminable.
Context: Procurement: A sample of 5 was made from a population of 16 procurement transactions charged to the major program that exceeded $3,500 (the minimum micropurchase threshold before it was increased by the FAR to $10,000 for those with an established policy), amounting to $48,099. Of the 5 sampled costs, all were found to be out of compliance with the Procurement requirements, as a written procurement policy was not in place and documentation was not retained for the adequate number of price comparisons. Suspension and Debarment: A sample of 3 (entire population) was made from a population of 3 vendors who received payments exceeding $25,000. Of the 3 sampled vendors, there was no documentary evidence that procedures were performed prior to entering into the covered transaction using the allowable methods as described at 2 CFR 180.300.
Cause: Management believes procurement, suspension and debarment standards apply only to the awarding agency, and not to the Alliance.
Effect: Purchases may occur that do not follow the procurement, suspension and debarment standards as required by Uniform Guidance, and contracts to vendors that had been suspended or debarred could be awarded and not detected.
Repeat Finding: No.
Recommendation: We recommended that the Alliance design controls to ensure an adequate review process is in place to review potential contractors to determine they are not suspended or debarred. These procedures should include documenting the date that suspension and debarment verifications are made. In addition, we recommended the Alliance to formally adopt a Procurement, Suspension and Debarment policy in accordance with Uniform Guidance. The Alliance followed this recommendation, pairing prior (non-federally implicated) procurement processes and expenditures.
Views of responsible officials: Management has provided a response to the finding in their Corrective Action Plan.
Type of Finding: Material Weakness in Internal Control over Compliance and Material Noncompliance
Federal Agency: U.S. Department of Health and Human Services
Federal Program Name: Substance Abuse and Mental Health Services Projects of Regional and National Significance
Assistance Listing Number: 93.243
Federal Award Identification Number and Year: H79TI081935 – 2022, H79TI080298 – 2022, H79TI085517 – 2022
Pass-Through Agency: Pierce County
Pass-Through Number(s): SC-107323, SC-105454, SC-110121
Award Period: May 31, 2019 through May 30, 2024, September 30, 2017 through September 29, 2022, September 30, 2022 through September 30, 2027
Criteria or specific requirement: 2 CFR 200.430(i)(1)(viii) states that “budget estimates (i.e., estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes, provided that: (A) The system for establishing the estimates produces reasonable approximations of the activity actually performed; (B) Significant changes in the corresponding work activity (as defined by the non-Federal entity's written policies) are identified and entered into the records in a timely manner. Short term (such as one or two months) fluctuation between workload categories need not be considered as long as the distribution of salaries and wages is reasonable over the longer term; and (C) The non-Federal entity's system of internal controls includes processes to review after-the-fact interim changes made to a Federal award based on budget estimates. All necessary adjustments must be made such that the final amount charged to the Federal award is accurate, allowable, and properly allocated.”
Condition: Grant hours are not consistently tracked on the employee monthly timesheet. Wages charged to the program are based on budgeted estimates. Per 2 CFR 200.430(i)(1)(viii), this is not allowed without additional steps to ensure accuracy, allowability and proper allocation. Insufficient evidence was presented to support a reasonable reflection of employee federal and non-federal activity. The alliance does not have a written policy nor system of internal controls to review and true-up grant wages to actual.
Questioned costs: $447,634
Context: A sample of 40 was made from a population of 504 transactions charged to the major program for salaries and benefit expenses. Of the 40 sampled costs, all were found to be out of compliance with the provisions for 2 CFR 200.430 Compensation - personal services of Uniform Guidance. Sampled wages totaled $137,021.54. Total salaries and wages totaled $971,744 of the $1,599,883 tracked to the major program. Extrapolating the error to the actual costs reported on the SEFA results in a likely questioned cost amount of $447,634.
Cause: Management was aware that estimated budgeted costs alone are not sufficient to support personnel costs charged to Federal awards.
Effect: Charging grant wages based on estimates rather than actual hours worked on the program may raise compliance concerns. Estimating grant wages without adequate support for time and effort documentation may result in noncompliance with grant regulations. This can also lead to overcharging or undercharging the federal grant, which may result in penalties or repayment obligations.
Repeat Finding: No.
Recommendation: We recommend that the Alliance incorporate a system of internal controls that clearly documents the time and effort that each individual employee spends on each grant per month. This can be done by adjusting the format of the monthly timesheet to include a column that specifies how many hours per day were spent on which federal and nonfederal activities. PCA can further enhance clarity, accountability, and transparency by moving from a "day" format to an "hour" format on their timesheets.
Views of responsible officials: Management has provide a response to the finding in their Corrective Action Plan.