Improve Financial Close Process.
Federal Program Information: Substance Abuse and Mental Health Services Projects of
Regional and National Significance (Assistance Listing - 93.243)
Condition and Criteria: During the course of the audit, we proposed approximately 18 audit
adjusting journal entries to properly state the financial statements. Eight of these entries were
to restate beginning net assets to record transactions in the proper period. Many of the
adjustments related to proper revenue recognition and related accounts receivables and the
reversal of accounts receivable and payables that related to prior years.
Prior year audit finding: N/A.
Cause and Effect: The lack in internal control over financial reporting exists in the financial
statement close process for preparing the Center’s year-end financial statements. This could
result in management making operational and financial decisions based on inaccurate financial
information. Additionally, the inaccurate financial information could result in inaccurate
reporting to federal and state funding agencies on grants and awards. Context: This represents a systemic problem.
Questioned Costs: None. Recommendation: To improve the financial statement close process, we recommend that the
Center establish more efficient and effective policies to provide timely and accurate completion
of financial reporting, as well as timely review and approval of all statement of financial
position reconciliations and account balances.
Management’s Response:
Management uses interim accounting and financial management reports that are designed to
assist the board and officers to manage the Center’s grants effectively, efficiently, and aligned
with financial and non-financial grant compliance.
Management and the board realize that certain adjustments to the interim financial statements
used to manage grant compliance and performance are not prepared on an as-if-audited basis.
We will consider the implementation of a more rigorous monthly close to more accurately
reflect period-end balances and the capturing of any potential reconciling items that could later
be needed to substantiate expenditures as of a particular date.
Reporting: Inaccurate Financial Reporting.
Federal Program Information: Substance Abuse and Mental Health Services Projects of
Regional and National Significance (Federal Assistance Listing - 93.243)
Condition and Criteria: The Center is required to maintain internal controls over expenditures
in order to ensure that only federal expenditures are reported to the oversight agency. During
audit procedures, we noted two instances where the cumulative expenditures reported on Form
SF-425 did not agree to cumulative expenditures per the accounting records.
Prior Year Audit Finding: N/A.
Cause and Effect: The Center received a refund for subcontractor expenses that was
inadvertently recorded as other grant revenue rather than reducing the related expenditures,
resulting in over reporting of expenditures. Additionally, it was noted the Center submits draw
down requests prior to the end of the grant period for expenses incurred at that point in time.
This increases the opportunity for actual expenditures to differ from draw down amounts.
These two factors contribute to increased risk of actual federal expenditures not being
accurately reported to the oversight agency.
Context: Annual SF-425 reports were tested for the three HHS awards. The test found the
incorrect expenditures were reported to the agency for two awards, one which expenditures
were underreported and another which expenditures were overreported. This represents a
systemic problem.
Questioned Costs: None.
Recommendation: We recommend the Center implement procedures to generate program
reports from the accounting records at the time of the report preparation and document any
reconciling items to ensure federal expenditures reported to the oversight agency are complete
and accurate. These reports should be maintained as supporting documentation for the report
submission to substantiate the specific amounts of funds drawn down on a specific date. Any
subsequent adjustments to cash or expenditures can be taken into consideration in subsequent
draw down requests and reflected in a modified SF-425 report submission. We also
recommend the Center implement procedures to submit draw down requests for grant funds
after the month has closed. This will ensure all federal expenditures are captured in the annual
reporting.
Management’s Response:
Management understands the importance of maintaining complete and accurate records of
expenditures submitted to the oversight agency. As part of our response indicated at 2023-002,
we will continue to ensure submitted expenditures agree to the accounting records prior to
submission, and retain contemporaneous support for any reconciling items, such that any
differences between expenses reported to a federal agency and expenses recorded in the
accounting records subsequent to report submission can be quickly and easily resolved upon
request.
Improve Financial Close Process.
Federal Program Information: Substance Abuse and Mental Health Services Projects of
Regional and National Significance (Assistance Listing - 93.243)
Condition and Criteria: During the course of the audit, we proposed approximately 18 audit
adjusting journal entries to properly state the financial statements. Eight of these entries were
to restate beginning net assets to record transactions in the proper period. Many of the
adjustments related to proper revenue recognition and related accounts receivables and the
reversal of accounts receivable and payables that related to prior years.
Prior year audit finding: N/A.
Cause and Effect: The lack in internal control over financial reporting exists in the financial
statement close process for preparing the Center’s year-end financial statements. This could
result in management making operational and financial decisions based on inaccurate financial
information. Additionally, the inaccurate financial information could result in inaccurate
reporting to federal and state funding agencies on grants and awards. Context: This represents a systemic problem.
Questioned Costs: None. Recommendation: To improve the financial statement close process, we recommend that the
Center establish more efficient and effective policies to provide timely and accurate completion
of financial reporting, as well as timely review and approval of all statement of financial
position reconciliations and account balances.
Management’s Response:
Management uses interim accounting and financial management reports that are designed to
assist the board and officers to manage the Center’s grants effectively, efficiently, and aligned
with financial and non-financial grant compliance.
Management and the board realize that certain adjustments to the interim financial statements
used to manage grant compliance and performance are not prepared on an as-if-audited basis.
We will consider the implementation of a more rigorous monthly close to more accurately
reflect period-end balances and the capturing of any potential reconciling items that could later
be needed to substantiate expenditures as of a particular date.
Reporting: Inaccurate Financial Reporting.
Federal Program Information: Substance Abuse and Mental Health Services Projects of
Regional and National Significance (Federal Assistance Listing - 93.243)
Condition and Criteria: The Center is required to maintain internal controls over expenditures
in order to ensure that only federal expenditures are reported to the oversight agency. During
audit procedures, we noted two instances where the cumulative expenditures reported on Form
SF-425 did not agree to cumulative expenditures per the accounting records.
Prior Year Audit Finding: N/A.
Cause and Effect: The Center received a refund for subcontractor expenses that was
inadvertently recorded as other grant revenue rather than reducing the related expenditures,
resulting in over reporting of expenditures. Additionally, it was noted the Center submits draw
down requests prior to the end of the grant period for expenses incurred at that point in time.
This increases the opportunity for actual expenditures to differ from draw down amounts.
These two factors contribute to increased risk of actual federal expenditures not being
accurately reported to the oversight agency.
Context: Annual SF-425 reports were tested for the three HHS awards. The test found the
incorrect expenditures were reported to the agency for two awards, one which expenditures
were underreported and another which expenditures were overreported. This represents a
systemic problem.
Questioned Costs: None.
Recommendation: We recommend the Center implement procedures to generate program
reports from the accounting records at the time of the report preparation and document any
reconciling items to ensure federal expenditures reported to the oversight agency are complete
and accurate. These reports should be maintained as supporting documentation for the report
submission to substantiate the specific amounts of funds drawn down on a specific date. Any
subsequent adjustments to cash or expenditures can be taken into consideration in subsequent
draw down requests and reflected in a modified SF-425 report submission. We also
recommend the Center implement procedures to submit draw down requests for grant funds
after the month has closed. This will ensure all federal expenditures are captured in the annual
reporting.
Management’s Response:
Management understands the importance of maintaining complete and accurate records of
expenditures submitted to the oversight agency. As part of our response indicated at 2023-002,
we will continue to ensure submitted expenditures agree to the accounting records prior to
submission, and retain contemporaneous support for any reconciling items, such that any
differences between expenses reported to a federal agency and expenses recorded in the
accounting records subsequent to report submission can be quickly and easily resolved upon
request.
Improve Financial Close Process.
Federal Program Information: Substance Abuse and Mental Health Services Projects of
Regional and National Significance (Assistance Listing - 93.243)
Condition and Criteria: During the course of the audit, we proposed approximately 18 audit
adjusting journal entries to properly state the financial statements. Eight of these entries were
to restate beginning net assets to record transactions in the proper period. Many of the
adjustments related to proper revenue recognition and related accounts receivables and the
reversal of accounts receivable and payables that related to prior years.
Prior year audit finding: N/A.
Cause and Effect: The lack in internal control over financial reporting exists in the financial
statement close process for preparing the Center’s year-end financial statements. This could
result in management making operational and financial decisions based on inaccurate financial
information. Additionally, the inaccurate financial information could result in inaccurate
reporting to federal and state funding agencies on grants and awards. Context: This represents a systemic problem.
Questioned Costs: None. Recommendation: To improve the financial statement close process, we recommend that the
Center establish more efficient and effective policies to provide timely and accurate completion
of financial reporting, as well as timely review and approval of all statement of financial
position reconciliations and account balances.
Management’s Response:
Management uses interim accounting and financial management reports that are designed to
assist the board and officers to manage the Center’s grants effectively, efficiently, and aligned
with financial and non-financial grant compliance.
Management and the board realize that certain adjustments to the interim financial statements
used to manage grant compliance and performance are not prepared on an as-if-audited basis.
We will consider the implementation of a more rigorous monthly close to more accurately
reflect period-end balances and the capturing of any potential reconciling items that could later
be needed to substantiate expenditures as of a particular date.
Reporting: Inaccurate Financial Reporting.
Federal Program Information: Substance Abuse and Mental Health Services Projects of
Regional and National Significance (Federal Assistance Listing - 93.243)
Condition and Criteria: The Center is required to maintain internal controls over expenditures
in order to ensure that only federal expenditures are reported to the oversight agency. During
audit procedures, we noted two instances where the cumulative expenditures reported on Form
SF-425 did not agree to cumulative expenditures per the accounting records.
Prior Year Audit Finding: N/A.
Cause and Effect: The Center received a refund for subcontractor expenses that was
inadvertently recorded as other grant revenue rather than reducing the related expenditures,
resulting in over reporting of expenditures. Additionally, it was noted the Center submits draw
down requests prior to the end of the grant period for expenses incurred at that point in time.
This increases the opportunity for actual expenditures to differ from draw down amounts.
These two factors contribute to increased risk of actual federal expenditures not being
accurately reported to the oversight agency.
Context: Annual SF-425 reports were tested for the three HHS awards. The test found the
incorrect expenditures were reported to the agency for two awards, one which expenditures
were underreported and another which expenditures were overreported. This represents a
systemic problem.
Questioned Costs: None.
Recommendation: We recommend the Center implement procedures to generate program
reports from the accounting records at the time of the report preparation and document any
reconciling items to ensure federal expenditures reported to the oversight agency are complete
and accurate. These reports should be maintained as supporting documentation for the report
submission to substantiate the specific amounts of funds drawn down on a specific date. Any
subsequent adjustments to cash or expenditures can be taken into consideration in subsequent
draw down requests and reflected in a modified SF-425 report submission. We also
recommend the Center implement procedures to submit draw down requests for grant funds
after the month has closed. This will ensure all federal expenditures are captured in the annual
reporting.
Management’s Response:
Management understands the importance of maintaining complete and accurate records of
expenditures submitted to the oversight agency. As part of our response indicated at 2023-002,
we will continue to ensure submitted expenditures agree to the accounting records prior to
submission, and retain contemporaneous support for any reconciling items, such that any
differences between expenses reported to a federal agency and expenses recorded in the
accounting records subsequent to report submission can be quickly and easily resolved upon
request.
Improve Financial Close Process.
Federal Program Information: Substance Abuse and Mental Health Services Projects of
Regional and National Significance (Assistance Listing - 93.243)
Condition and Criteria: During the course of the audit, we proposed approximately 18 audit
adjusting journal entries to properly state the financial statements. Eight of these entries were
to restate beginning net assets to record transactions in the proper period. Many of the
adjustments related to proper revenue recognition and related accounts receivables and the
reversal of accounts receivable and payables that related to prior years.
Prior year audit finding: N/A.
Cause and Effect: The lack in internal control over financial reporting exists in the financial
statement close process for preparing the Center’s year-end financial statements. This could
result in management making operational and financial decisions based on inaccurate financial
information. Additionally, the inaccurate financial information could result in inaccurate
reporting to federal and state funding agencies on grants and awards. Context: This represents a systemic problem.
Questioned Costs: None. Recommendation: To improve the financial statement close process, we recommend that the
Center establish more efficient and effective policies to provide timely and accurate completion
of financial reporting, as well as timely review and approval of all statement of financial
position reconciliations and account balances.
Management’s Response:
Management uses interim accounting and financial management reports that are designed to
assist the board and officers to manage the Center’s grants effectively, efficiently, and aligned
with financial and non-financial grant compliance.
Management and the board realize that certain adjustments to the interim financial statements
used to manage grant compliance and performance are not prepared on an as-if-audited basis.
We will consider the implementation of a more rigorous monthly close to more accurately
reflect period-end balances and the capturing of any potential reconciling items that could later
be needed to substantiate expenditures as of a particular date.
Reporting: Inaccurate Financial Reporting.
Federal Program Information: Substance Abuse and Mental Health Services Projects of
Regional and National Significance (Federal Assistance Listing - 93.243)
Condition and Criteria: The Center is required to maintain internal controls over expenditures
in order to ensure that only federal expenditures are reported to the oversight agency. During
audit procedures, we noted two instances where the cumulative expenditures reported on Form
SF-425 did not agree to cumulative expenditures per the accounting records.
Prior Year Audit Finding: N/A.
Cause and Effect: The Center received a refund for subcontractor expenses that was
inadvertently recorded as other grant revenue rather than reducing the related expenditures,
resulting in over reporting of expenditures. Additionally, it was noted the Center submits draw
down requests prior to the end of the grant period for expenses incurred at that point in time.
This increases the opportunity for actual expenditures to differ from draw down amounts.
These two factors contribute to increased risk of actual federal expenditures not being
accurately reported to the oversight agency.
Context: Annual SF-425 reports were tested for the three HHS awards. The test found the
incorrect expenditures were reported to the agency for two awards, one which expenditures
were underreported and another which expenditures were overreported. This represents a
systemic problem.
Questioned Costs: None.
Recommendation: We recommend the Center implement procedures to generate program
reports from the accounting records at the time of the report preparation and document any
reconciling items to ensure federal expenditures reported to the oversight agency are complete
and accurate. These reports should be maintained as supporting documentation for the report
submission to substantiate the specific amounts of funds drawn down on a specific date. Any
subsequent adjustments to cash or expenditures can be taken into consideration in subsequent
draw down requests and reflected in a modified SF-425 report submission. We also
recommend the Center implement procedures to submit draw down requests for grant funds
after the month has closed. This will ensure all federal expenditures are captured in the annual
reporting.
Management’s Response:
Management understands the importance of maintaining complete and accurate records of
expenditures submitted to the oversight agency. As part of our response indicated at 2023-002,
we will continue to ensure submitted expenditures agree to the accounting records prior to
submission, and retain contemporaneous support for any reconciling items, such that any
differences between expenses reported to a federal agency and expenses recorded in the
accounting records subsequent to report submission can be quickly and easily resolved upon
request.
Improve Financial Close Process.
Federal Program Information: Substance Abuse and Mental Health Services Projects of
Regional and National Significance (Assistance Listing - 93.243)
Condition and Criteria: During the course of the audit, we proposed approximately 18 audit
adjusting journal entries to properly state the financial statements. Eight of these entries were
to restate beginning net assets to record transactions in the proper period. Many of the
adjustments related to proper revenue recognition and related accounts receivables and the
reversal of accounts receivable and payables that related to prior years.
Prior year audit finding: N/A.
Cause and Effect: The lack in internal control over financial reporting exists in the financial
statement close process for preparing the Center’s year-end financial statements. This could
result in management making operational and financial decisions based on inaccurate financial
information. Additionally, the inaccurate financial information could result in inaccurate
reporting to federal and state funding agencies on grants and awards. Context: This represents a systemic problem.
Questioned Costs: None. Recommendation: To improve the financial statement close process, we recommend that the
Center establish more efficient and effective policies to provide timely and accurate completion
of financial reporting, as well as timely review and approval of all statement of financial
position reconciliations and account balances.
Management’s Response:
Management uses interim accounting and financial management reports that are designed to
assist the board and officers to manage the Center’s grants effectively, efficiently, and aligned
with financial and non-financial grant compliance.
Management and the board realize that certain adjustments to the interim financial statements
used to manage grant compliance and performance are not prepared on an as-if-audited basis.
We will consider the implementation of a more rigorous monthly close to more accurately
reflect period-end balances and the capturing of any potential reconciling items that could later
be needed to substantiate expenditures as of a particular date.
Reporting: Inaccurate Financial Reporting.
Federal Program Information: Substance Abuse and Mental Health Services Projects of
Regional and National Significance (Federal Assistance Listing - 93.243)
Condition and Criteria: The Center is required to maintain internal controls over expenditures
in order to ensure that only federal expenditures are reported to the oversight agency. During
audit procedures, we noted two instances where the cumulative expenditures reported on Form
SF-425 did not agree to cumulative expenditures per the accounting records.
Prior Year Audit Finding: N/A.
Cause and Effect: The Center received a refund for subcontractor expenses that was
inadvertently recorded as other grant revenue rather than reducing the related expenditures,
resulting in over reporting of expenditures. Additionally, it was noted the Center submits draw
down requests prior to the end of the grant period for expenses incurred at that point in time.
This increases the opportunity for actual expenditures to differ from draw down amounts.
These two factors contribute to increased risk of actual federal expenditures not being
accurately reported to the oversight agency.
Context: Annual SF-425 reports were tested for the three HHS awards. The test found the
incorrect expenditures were reported to the agency for two awards, one which expenditures
were underreported and another which expenditures were overreported. This represents a
systemic problem.
Questioned Costs: None.
Recommendation: We recommend the Center implement procedures to generate program
reports from the accounting records at the time of the report preparation and document any
reconciling items to ensure federal expenditures reported to the oversight agency are complete
and accurate. These reports should be maintained as supporting documentation for the report
submission to substantiate the specific amounts of funds drawn down on a specific date. Any
subsequent adjustments to cash or expenditures can be taken into consideration in subsequent
draw down requests and reflected in a modified SF-425 report submission. We also
recommend the Center implement procedures to submit draw down requests for grant funds
after the month has closed. This will ensure all federal expenditures are captured in the annual
reporting.
Management’s Response:
Management understands the importance of maintaining complete and accurate records of
expenditures submitted to the oversight agency. As part of our response indicated at 2023-002,
we will continue to ensure submitted expenditures agree to the accounting records prior to
submission, and retain contemporaneous support for any reconciling items, such that any
differences between expenses reported to a federal agency and expenses recorded in the
accounting records subsequent to report submission can be quickly and easily resolved upon
request.
Improve Financial Close Process.
Federal Program Information: Substance Abuse and Mental Health Services Projects of
Regional and National Significance (Assistance Listing - 93.243)
Condition and Criteria: During the course of the audit, we proposed approximately 18 audit
adjusting journal entries to properly state the financial statements. Eight of these entries were
to restate beginning net assets to record transactions in the proper period. Many of the
adjustments related to proper revenue recognition and related accounts receivables and the
reversal of accounts receivable and payables that related to prior years.
Prior year audit finding: N/A.
Cause and Effect: The lack in internal control over financial reporting exists in the financial
statement close process for preparing the Center’s year-end financial statements. This could
result in management making operational and financial decisions based on inaccurate financial
information. Additionally, the inaccurate financial information could result in inaccurate
reporting to federal and state funding agencies on grants and awards. Context: This represents a systemic problem.
Questioned Costs: None. Recommendation: To improve the financial statement close process, we recommend that the
Center establish more efficient and effective policies to provide timely and accurate completion
of financial reporting, as well as timely review and approval of all statement of financial
position reconciliations and account balances.
Management’s Response:
Management uses interim accounting and financial management reports that are designed to
assist the board and officers to manage the Center’s grants effectively, efficiently, and aligned
with financial and non-financial grant compliance.
Management and the board realize that certain adjustments to the interim financial statements
used to manage grant compliance and performance are not prepared on an as-if-audited basis.
We will consider the implementation of a more rigorous monthly close to more accurately
reflect period-end balances and the capturing of any potential reconciling items that could later
be needed to substantiate expenditures as of a particular date.
Reporting: Inaccurate Financial Reporting.
Federal Program Information: Substance Abuse and Mental Health Services Projects of
Regional and National Significance (Federal Assistance Listing - 93.243)
Condition and Criteria: The Center is required to maintain internal controls over expenditures
in order to ensure that only federal expenditures are reported to the oversight agency. During
audit procedures, we noted two instances where the cumulative expenditures reported on Form
SF-425 did not agree to cumulative expenditures per the accounting records.
Prior Year Audit Finding: N/A.
Cause and Effect: The Center received a refund for subcontractor expenses that was
inadvertently recorded as other grant revenue rather than reducing the related expenditures,
resulting in over reporting of expenditures. Additionally, it was noted the Center submits draw
down requests prior to the end of the grant period for expenses incurred at that point in time.
This increases the opportunity for actual expenditures to differ from draw down amounts.
These two factors contribute to increased risk of actual federal expenditures not being
accurately reported to the oversight agency.
Context: Annual SF-425 reports were tested for the three HHS awards. The test found the
incorrect expenditures were reported to the agency for two awards, one which expenditures
were underreported and another which expenditures were overreported. This represents a
systemic problem.
Questioned Costs: None.
Recommendation: We recommend the Center implement procedures to generate program
reports from the accounting records at the time of the report preparation and document any
reconciling items to ensure federal expenditures reported to the oversight agency are complete
and accurate. These reports should be maintained as supporting documentation for the report
submission to substantiate the specific amounts of funds drawn down on a specific date. Any
subsequent adjustments to cash or expenditures can be taken into consideration in subsequent
draw down requests and reflected in a modified SF-425 report submission. We also
recommend the Center implement procedures to submit draw down requests for grant funds
after the month has closed. This will ensure all federal expenditures are captured in the annual
reporting.
Management’s Response:
Management understands the importance of maintaining complete and accurate records of
expenditures submitted to the oversight agency. As part of our response indicated at 2023-002,
we will continue to ensure submitted expenditures agree to the accounting records prior to
submission, and retain contemporaneous support for any reconciling items, such that any
differences between expenses reported to a federal agency and expenses recorded in the
accounting records subsequent to report submission can be quickly and easily resolved upon
request.