2022-002 Department of Health and Human Services, Passed Through Substance Abuse andMental Health Services Administration,Section 223 Demonstration Programs to Improve Community Mental Health ServicesListing 93.829, H79SM085287, 8/31/2021 ? 8/30/2022Procurement, Suspension and DebarmentMaterial Weakness in Internal Control over ComplianceCriteria: 2 CFR 200.303(a) establishes that the auditee must establish and maintain effectiveinternal control over the federal award the provides assurance that the entity ismanaging the federal award in compliance with federal statutes, regulations andconditions of the federal award. 2 CFR 200.318(c)(1) provides that the auditee mustmaintain written standards of conduct covering conflicts of interest and governing theactions of its employees engaged in the selection, award, and administration ofcontracts. 2 CFR 200.319(c) establishes that the auditee must have written proceduresfor procurement transactions.As outlined in 2 CFR 180, recipients must not utilize any vendor which is suspended ordebarred or is otherwise excluded from the central contractor registry.Condition: Hope?s formally documented policy did not include many of the necessary procurementprovisions. Expenditures under the federal grants did not have a consistent control inplace to check applicable vendors for potential suspension and/or debarment for coveredtransactions. Current controls are not documented to provide for a proper audit trail.Cause: Hope does not have a consistent procurement process in place including all federalrequirements or to check vendors under covered transactions ($25,000 or more) inaccordance with federal regulations.Effect: Hope could be out of compliance with federal requirements when entering intoprocurement contracts as well as not meeting suspension and debarment requirementsby potentially contracting with a suspended or debarred vendor.Questioned costs: None reported.Context: Procurement requirements were applicable to 2 transactions, both of which wereselected for testing and were in excess of the micro-purchase threshold but were not inexcess of $250,000. Suspension and Debarment requirements were applicable to bothtransactions tested.Repeat FindingFrom Prior Year: No Recommendation: The policy should be updated to include all federal requirements for procurement.Further, control procedures should be implemented to ensure that all vendors undercovered transactions are checked against the federal website for vendors that could besuspended or debarred prior to transacting with such vendors, or another process asallowed by the federal regulations discussed above. We also suggest that managementretain documentation to support that the control process was followed.Views ofResponsible Officials: We agree with the finding.
2022-003 Department of Health and Human Services, Passed Through Substance Abuse andMental Health Services Administration,Section 223 Demonstration Programs to Improve Community Mental Health ServicesListing 93.829, H79SM085287, 8/31/2021 ? 8/30/2022Allowable Activities or Unallowed, Allowable Costs/Cost Principles and Cash ManagementMaterial Weakness in Internal Control over Compliance and Material NoncomplianceCriteria: Per Uniform Guidance (2 CFR Section 200.403) as it relates to federal grants:Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards:a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles;b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items;c) Be consistent with policies and procedures that apply uniformly to both federally financed and other activities of the non-Federal entity;d) Be accorded consistent treatment. A cost may not be assigned to a Federal award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to the Federal award as an indirect cost;e) Be determined in accordance with generally accepted accounting principles (GAAP), except, for state and local governments and Indian tribes only, as otherwise provided for in this part;f) Not be included as a cost or used to meet cost sharing or matching requirements of any other federally-financed program in either the current or a prior period;g) Be adequately documented;h) Cost must be incurred during the approved budget period. Per the grant policy manual for Department of Health and Human Services: Non-federal entities must minimize the time elapsing between any advance payment under this award and the disbursement of the funds for direct program costs.2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award.Condition: Hope could not readily provide the appropriate documentation for grant expenditures to support the drawdown from grant funding. Additionally, one of the items submitted for reimbursement under the grant, was not an allowable activity or cost in fiscal year 2022 as it was not in accordance with accounting treatment under GAAP.Hope did not adequately minimize the time between draw down of program funds and disbursement.Cause: The process used to ensure that grant expenditures are allowable and reconciled was not clearly communicated to appropriate parties. As a result, certain expenditures were inappropriately claimed in the wrong fiscal year. These expenditures were not made in a reasonable time in relation to receipt of program reimbursements.Effect: Hope is at risk for noncompliance with allowable activities and allowable costs, as well as cash management requirements.Questioned costs: $54,158 was claimed for reimbursement in the current year that did not relate to the fiscal year. Further, grant receipts of $54,158 were received in June 2022 but not disbursed until April 2023.Context: A nonstatistical sampling of 40 out of 702 total transactions were selected for testing, which accounted for $134,724 of $1,021,571 total program expenditures.Repeat FindingFrom Prior Year: NoRecommendation: Controls should be put in place to ensure that direct expenditures of program funds are reviewed and approved by program management and are consistent with the grant reimbursements for those expenditures. Such reconciliations can be done monthly, quarterly, or annually, at Hope?s discretion. Controls should also ensure that program expenditures are made prior to requesting reimbursement of funds and are allowable in accordance with the federal program requirements.Views ofResponsible Officials: We agree with the finding.
2022-003 Department of Health and Human Services, Passed Through Substance Abuse andMental Health Services Administration,Section 223 Demonstration Programs to Improve Community Mental Health ServicesListing 93.829, H79SM085287, 8/31/2021 ? 8/30/2022Allowable Activities or Unallowed, Allowable Costs/Cost Principles and Cash ManagementMaterial Weakness in Internal Control over Compliance and Material NoncomplianceCriteria: Per Uniform Guidance (2 CFR Section 200.403) as it relates to federal grants:Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards:a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles;b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items;c) Be consistent with policies and procedures that apply uniformly to both federally financed and other activities of the non-Federal entity;d) Be accorded consistent treatment. A cost may not be assigned to a Federal award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to the Federal award as an indirect cost;e) Be determined in accordance with generally accepted accounting principles (GAAP), except, for state and local governments and Indian tribes only, as otherwise provided for in this part;f) Not be included as a cost or used to meet cost sharing or matching requirements of any other federally-financed program in either the current or a prior period;g) Be adequately documented;h) Cost must be incurred during the approved budget period. Per the grant policy manual for Department of Health and Human Services: Non-federal entities must minimize the time elapsing between any advance payment under this award and the disbursement of the funds for direct program costs.2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award.Condition: Hope could not readily provide the appropriate documentation for grant expenditures to support the drawdown from grant funding. Additionally, one of the items submitted for reimbursement under the grant, was not an allowable activity or cost in fiscal year 2022 as it was not in accordance with accounting treatment under GAAP.Hope did not adequately minimize the time between draw down of program funds and disbursement.Cause: The process used to ensure that grant expenditures are allowable and reconciled was not clearly communicated to appropriate parties. As a result, certain expenditures were inappropriately claimed in the wrong fiscal year. These expenditures were not made in a reasonable time in relation to receipt of program reimbursements.Effect: Hope is at risk for noncompliance with allowable activities and allowable costs, as well as cash management requirements.Questioned costs: $54,158 was claimed for reimbursement in the current year that did not relate to the fiscal year. Further, grant receipts of $54,158 were received in June 2022 but not disbursed until April 2023.Context: A nonstatistical sampling of 40 out of 702 total transactions were selected for testing, which accounted for $134,724 of $1,021,571 total program expenditures.Repeat FindingFrom Prior Year: NoRecommendation: Controls should be put in place to ensure that direct expenditures of program funds are reviewed and approved by program management and are consistent with the grant reimbursements for those expenditures. Such reconciliations can be done monthly, quarterly, or annually, at Hope?s discretion. Controls should also ensure that program expenditures are made prior to requesting reimbursement of funds and are allowable in accordance with the federal program requirements.Views ofResponsible Officials: We agree with the finding.
2022-003 Department of Health and Human Services, Passed Through Substance Abuse andMental Health Services Administration,Section 223 Demonstration Programs to Improve Community Mental Health ServicesListing 93.829, H79SM085287, 8/31/2021 ? 8/30/2022Allowable Activities or Unallowed, Allowable Costs/Cost Principles and Cash ManagementMaterial Weakness in Internal Control over Compliance and Material NoncomplianceCriteria: Per Uniform Guidance (2 CFR Section 200.403) as it relates to federal grants:Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards:a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles;b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items;c) Be consistent with policies and procedures that apply uniformly to both federally financed and other activities of the non-Federal entity;d) Be accorded consistent treatment. A cost may not be assigned to a Federal award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to the Federal award as an indirect cost;e) Be determined in accordance with generally accepted accounting principles (GAAP), except, for state and local governments and Indian tribes only, as otherwise provided for in this part;f) Not be included as a cost or used to meet cost sharing or matching requirements of any other federally-financed program in either the current or a prior period;g) Be adequately documented;h) Cost must be incurred during the approved budget period. Per the grant policy manual for Department of Health and Human Services: Non-federal entities must minimize the time elapsing between any advance payment under this award and the disbursement of the funds for direct program costs.2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award.Condition: Hope could not readily provide the appropriate documentation for grant expenditures to support the drawdown from grant funding. Additionally, one of the items submitted for reimbursement under the grant, was not an allowable activity or cost in fiscal year 2022 as it was not in accordance with accounting treatment under GAAP.Hope did not adequately minimize the time between draw down of program funds and disbursement.Cause: The process used to ensure that grant expenditures are allowable and reconciled was not clearly communicated to appropriate parties. As a result, certain expenditures were inappropriately claimed in the wrong fiscal year. These expenditures were not made in a reasonable time in relation to receipt of program reimbursements.Effect: Hope is at risk for noncompliance with allowable activities and allowable costs, as well as cash management requirements.Questioned costs: $54,158 was claimed for reimbursement in the current year that did not relate to the fiscal year. Further, grant receipts of $54,158 were received in June 2022 but not disbursed until April 2023.Context: A nonstatistical sampling of 40 out of 702 total transactions were selected for testing, which accounted for $134,724 of $1,021,571 total program expenditures.Repeat FindingFrom Prior Year: NoRecommendation: Controls should be put in place to ensure that direct expenditures of program funds are reviewed and approved by program management and are consistent with the grant reimbursements for those expenditures. Such reconciliations can be done monthly, quarterly, or annually, at Hope?s discretion. Controls should also ensure that program expenditures are made prior to requesting reimbursement of funds and are allowable in accordance with the federal program requirements.Views ofResponsible Officials: We agree with the finding.
2022-002 Department of Health and Human Services, Passed Through Substance Abuse andMental Health Services Administration,Section 223 Demonstration Programs to Improve Community Mental Health ServicesListing 93.829, H79SM085287, 8/31/2021 ? 8/30/2022Procurement, Suspension and DebarmentMaterial Weakness in Internal Control over ComplianceCriteria: 2 CFR 200.303(a) establishes that the auditee must establish and maintain effectiveinternal control over the federal award the provides assurance that the entity ismanaging the federal award in compliance with federal statutes, regulations andconditions of the federal award. 2 CFR 200.318(c)(1) provides that the auditee mustmaintain written standards of conduct covering conflicts of interest and governing theactions of its employees engaged in the selection, award, and administration ofcontracts. 2 CFR 200.319(c) establishes that the auditee must have written proceduresfor procurement transactions.As outlined in 2 CFR 180, recipients must not utilize any vendor which is suspended ordebarred or is otherwise excluded from the central contractor registry.Condition: Hope?s formally documented policy did not include many of the necessary procurementprovisions. Expenditures under the federal grants did not have a consistent control inplace to check applicable vendors for potential suspension and/or debarment for coveredtransactions. Current controls are not documented to provide for a proper audit trail.Cause: Hope does not have a consistent procurement process in place including all federalrequirements or to check vendors under covered transactions ($25,000 or more) inaccordance with federal regulations.Effect: Hope could be out of compliance with federal requirements when entering intoprocurement contracts as well as not meeting suspension and debarment requirementsby potentially contracting with a suspended or debarred vendor.Questioned costs: None reported.Context: Procurement requirements were applicable to 2 transactions, both of which wereselected for testing and were in excess of the micro-purchase threshold but were not inexcess of $250,000. Suspension and Debarment requirements were applicable to bothtransactions tested.Repeat FindingFrom Prior Year: No Recommendation: The policy should be updated to include all federal requirements for procurement.Further, control procedures should be implemented to ensure that all vendors undercovered transactions are checked against the federal website for vendors that could besuspended or debarred prior to transacting with such vendors, or another process asallowed by the federal regulations discussed above. We also suggest that managementretain documentation to support that the control process was followed.Views ofResponsible Officials: We agree with the finding.
2022-003 Department of Health and Human Services, Passed Through Substance Abuse andMental Health Services Administration,Section 223 Demonstration Programs to Improve Community Mental Health ServicesListing 93.829, H79SM085287, 8/31/2021 ? 8/30/2022Allowable Activities or Unallowed, Allowable Costs/Cost Principles and Cash ManagementMaterial Weakness in Internal Control over Compliance and Material NoncomplianceCriteria: Per Uniform Guidance (2 CFR Section 200.403) as it relates to federal grants:Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards:a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles;b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items;c) Be consistent with policies and procedures that apply uniformly to both federally financed and other activities of the non-Federal entity;d) Be accorded consistent treatment. A cost may not be assigned to a Federal award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to the Federal award as an indirect cost;e) Be determined in accordance with generally accepted accounting principles (GAAP), except, for state and local governments and Indian tribes only, as otherwise provided for in this part;f) Not be included as a cost or used to meet cost sharing or matching requirements of any other federally-financed program in either the current or a prior period;g) Be adequately documented;h) Cost must be incurred during the approved budget period. Per the grant policy manual for Department of Health and Human Services: Non-federal entities must minimize the time elapsing between any advance payment under this award and the disbursement of the funds for direct program costs.2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award.Condition: Hope could not readily provide the appropriate documentation for grant expenditures to support the drawdown from grant funding. Additionally, one of the items submitted for reimbursement under the grant, was not an allowable activity or cost in fiscal year 2022 as it was not in accordance with accounting treatment under GAAP.Hope did not adequately minimize the time between draw down of program funds and disbursement.Cause: The process used to ensure that grant expenditures are allowable and reconciled was not clearly communicated to appropriate parties. As a result, certain expenditures were inappropriately claimed in the wrong fiscal year. These expenditures were not made in a reasonable time in relation to receipt of program reimbursements.Effect: Hope is at risk for noncompliance with allowable activities and allowable costs, as well as cash management requirements.Questioned costs: $54,158 was claimed for reimbursement in the current year that did not relate to the fiscal year. Further, grant receipts of $54,158 were received in June 2022 but not disbursed until April 2023.Context: A nonstatistical sampling of 40 out of 702 total transactions were selected for testing, which accounted for $134,724 of $1,021,571 total program expenditures.Repeat FindingFrom Prior Year: NoRecommendation: Controls should be put in place to ensure that direct expenditures of program funds are reviewed and approved by program management and are consistent with the grant reimbursements for those expenditures. Such reconciliations can be done monthly, quarterly, or annually, at Hope?s discretion. Controls should also ensure that program expenditures are made prior to requesting reimbursement of funds and are allowable in accordance with the federal program requirements.Views ofResponsible Officials: We agree with the finding.
2022-003 Department of Health and Human Services, Passed Through Substance Abuse andMental Health Services Administration,Section 223 Demonstration Programs to Improve Community Mental Health ServicesListing 93.829, H79SM085287, 8/31/2021 ? 8/30/2022Allowable Activities or Unallowed, Allowable Costs/Cost Principles and Cash ManagementMaterial Weakness in Internal Control over Compliance and Material NoncomplianceCriteria: Per Uniform Guidance (2 CFR Section 200.403) as it relates to federal grants:Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards:a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles;b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items;c) Be consistent with policies and procedures that apply uniformly to both federally financed and other activities of the non-Federal entity;d) Be accorded consistent treatment. A cost may not be assigned to a Federal award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to the Federal award as an indirect cost;e) Be determined in accordance with generally accepted accounting principles (GAAP), except, for state and local governments and Indian tribes only, as otherwise provided for in this part;f) Not be included as a cost or used to meet cost sharing or matching requirements of any other federally-financed program in either the current or a prior period;g) Be adequately documented;h) Cost must be incurred during the approved budget period. Per the grant policy manual for Department of Health and Human Services: Non-federal entities must minimize the time elapsing between any advance payment under this award and the disbursement of the funds for direct program costs.2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award.Condition: Hope could not readily provide the appropriate documentation for grant expenditures to support the drawdown from grant funding. Additionally, one of the items submitted for reimbursement under the grant, was not an allowable activity or cost in fiscal year 2022 as it was not in accordance with accounting treatment under GAAP.Hope did not adequately minimize the time between draw down of program funds and disbursement.Cause: The process used to ensure that grant expenditures are allowable and reconciled was not clearly communicated to appropriate parties. As a result, certain expenditures were inappropriately claimed in the wrong fiscal year. These expenditures were not made in a reasonable time in relation to receipt of program reimbursements.Effect: Hope is at risk for noncompliance with allowable activities and allowable costs, as well as cash management requirements.Questioned costs: $54,158 was claimed for reimbursement in the current year that did not relate to the fiscal year. Further, grant receipts of $54,158 were received in June 2022 but not disbursed until April 2023.Context: A nonstatistical sampling of 40 out of 702 total transactions were selected for testing, which accounted for $134,724 of $1,021,571 total program expenditures.Repeat FindingFrom Prior Year: NoRecommendation: Controls should be put in place to ensure that direct expenditures of program funds are reviewed and approved by program management and are consistent with the grant reimbursements for those expenditures. Such reconciliations can be done monthly, quarterly, or annually, at Hope?s discretion. Controls should also ensure that program expenditures are made prior to requesting reimbursement of funds and are allowable in accordance with the federal program requirements.Views ofResponsible Officials: We agree with the finding.
2022-003 Department of Health and Human Services, Passed Through Substance Abuse andMental Health Services Administration,Section 223 Demonstration Programs to Improve Community Mental Health ServicesListing 93.829, H79SM085287, 8/31/2021 ? 8/30/2022Allowable Activities or Unallowed, Allowable Costs/Cost Principles and Cash ManagementMaterial Weakness in Internal Control over Compliance and Material NoncomplianceCriteria: Per Uniform Guidance (2 CFR Section 200.403) as it relates to federal grants:Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards:a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles;b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items;c) Be consistent with policies and procedures that apply uniformly to both federally financed and other activities of the non-Federal entity;d) Be accorded consistent treatment. A cost may not be assigned to a Federal award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to the Federal award as an indirect cost;e) Be determined in accordance with generally accepted accounting principles (GAAP), except, for state and local governments and Indian tribes only, as otherwise provided for in this part;f) Not be included as a cost or used to meet cost sharing or matching requirements of any other federally-financed program in either the current or a prior period;g) Be adequately documented;h) Cost must be incurred during the approved budget period. Per the grant policy manual for Department of Health and Human Services: Non-federal entities must minimize the time elapsing between any advance payment under this award and the disbursement of the funds for direct program costs.2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award.Condition: Hope could not readily provide the appropriate documentation for grant expenditures to support the drawdown from grant funding. Additionally, one of the items submitted for reimbursement under the grant, was not an allowable activity or cost in fiscal year 2022 as it was not in accordance with accounting treatment under GAAP.Hope did not adequately minimize the time between draw down of program funds and disbursement.Cause: The process used to ensure that grant expenditures are allowable and reconciled was not clearly communicated to appropriate parties. As a result, certain expenditures were inappropriately claimed in the wrong fiscal year. These expenditures were not made in a reasonable time in relation to receipt of program reimbursements.Effect: Hope is at risk for noncompliance with allowable activities and allowable costs, as well as cash management requirements.Questioned costs: $54,158 was claimed for reimbursement in the current year that did not relate to the fiscal year. Further, grant receipts of $54,158 were received in June 2022 but not disbursed until April 2023.Context: A nonstatistical sampling of 40 out of 702 total transactions were selected for testing, which accounted for $134,724 of $1,021,571 total program expenditures.Repeat FindingFrom Prior Year: NoRecommendation: Controls should be put in place to ensure that direct expenditures of program funds are reviewed and approved by program management and are consistent with the grant reimbursements for those expenditures. Such reconciliations can be done monthly, quarterly, or annually, at Hope?s discretion. Controls should also ensure that program expenditures are made prior to requesting reimbursement of funds and are allowable in accordance with the federal program requirements.Views ofResponsible Officials: We agree with the finding.