Finding 2023-001 – B. Allowable Costs
Federal Agency: U.S. Department of Health and Human Services
Passthrough Entity: N/A
Assistance Listing Number and Federal Program: 93.829 Section 223 Demonstration Programs to Improve
Community Mental Health Services
Criteria:
In accordance with 2 CFR part 200.302, the Association is required to maintain financial management systems to trace funds to expenditures to establish that funds have been used according to Federal statutes, regulations, and the terms and conditions of the Federal award. The financial management system must provide for records that identify adequately the source and application of funds for federally funded activities, among other conditions. The reporting of the federal expenditures should be supported by these records. Amounts may not be expended from project funds on an arbitrary basis. Additionally, in accordance with 2 CFR 200.430, charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records, among other things, should support the distribution of the employee’s salary or wages among specific activities if the employee works on a Federal award and non-Federal award. Budget estimates do not qualify as support for charges to Federal awards.
Statement of Condition:
During the course of our audit, supporting detail for expenses allocated and charged to the grant was not available and could not be determined. Salaries and benefits charged to the grant were based on estimates of employees’ expected workload and client needs, and not supported by records that accurately reflected the work performed on the Federal program. Additionally, the de minimis indirect cost rate was not correctly calculated and applied. The indirect cost charged to the grant was based on the indirect cost obligated by the Notice of Award rather than by calculating the indirect cost from the modified total direct cost base.
Statement Cause:
This is the second year the Association received this type of grant funding, coupled with significant growth experienced by the Association, the accounting system and staff were not yet prepared to effectively adhere to the requirements of the grant. Supporting documentation is not available for employees’ actual time spent and charged to the grants.
Statement of Effect:
Without proper accounting of expenditures and support of salaries and wages, grant expenditures can be over or
understated on the drawdown requests. This could result in noncompliance with grant agreements which could lead to adverse conditions with the grantors.
Questioned Costs:
No questioned costs were identified.
Identification of Repeat Findings:
2022-001
Recommendations:
Project codes or classes should be created within the accounting system, if available. This will allow for expenses to be properly segregated by grant or other funding. When expenses are properly segregated, the indirect cost can be properly calculated using the correct direct cost base. The Association should also implement that all employees submit personnel activity reports to provide documentation of their time allocated to the grant.
Views of Responsible Official(s):
The Association is in agreement with the finding and is continuing to expand their knowledge on grant expenditures and compliance as it relates to the new financial management software to aid in tracking grants. See corrective action plan.
Finding 2023-002 Material Weakness – B. Allowable Costs
Federal Agency: U.S. Department of the Treasury
Passthrough Entity: Missouri Behavioral Health Council
Assistance Listing Number and Federal Program: 21.027 Coronavirus State and Local Fiscal Recovery Funds
Criteria:
Per CFR 200.405(a), a good or service must be chargeable or assignable to the Federal award or the cost objective
for that cost to be considered allocable to the Federal award. This standard is met if the cost is incurred specifically for the Federal award or benefits both the Federal award and other work of the non-Federal entity and can be proportioned using reasonable methods. In addition, the cost meets the standard listed above if the cost is necessary to the overall operation of the non-Federal entity and is assignable to the Federal award in accordance with the principles listed above. The approved cost objective stated in the grant agreement is for the construction of the Association’s new Kirksville location.
Statement of Condition:
During the course of our audit, it was discovered that two invoices for engineering services provided by Yager
Architecture, Inc., were for remodeling one of the Hannibal locations and not for the construction of the Kirksville location. These invoices were included in the reimbursement request “KV-4” and the total for the two invoices was $4,902.50. Per the grant agreement, the grant funds were awarded for the construction of the Kirksville building construction.
Statement of Cause:
This is the first year the Association received grant funding from this specific grant, along with the growth the
Association is experiencing, and the Association being awarded two Federal grants in quick succession, the
accounting system and staff were not prepared to effectively adhere to the requirements of the grant. Therefore, unallowable costs were used for reimbursement requests.
Statement of Effect:
Noncompliance with the grant agreement could result in the Association being barred from receiving grant funding from the pass-through entity and/or the awarding agency for future grants, as well as the possibility that the awarding agency will require that some or all of the funding that has been received by the Association be refunded to the passthrough entity.
Questioned Costs:
No questioned costs were identified.
Identification of Repeat Findings:
N/A
Recommendations:
Reimbursement requests and included invoices should be reviewed and signed off on by someone other than the person completing the request. This will ensure that the correct invoices are included in the request that are allowed by the grant agreement and the invoices are in compliance with 2 CFR 200. In addition to this, the Association should create project codes or classes within their accounting system, if able to, for easier grant tracking. These recommendations would increase the accuracy of invoices used for reimbursement.
Views of Responsible Official(s):
The Association had converted to a different accounting system and did not have the expertise involving project codes or classes at this time. Going forward, the Association will use project codes or classes in the accounting system for grant tracking. See corrective action plan.
Finding 2023-003 Significant Deficiency – L. Reporting
Federal Agency: U.S. Department of the Treasury
Passthrough Entity: Missouri Behavioral Health Council
Assistance Listing Number and Federal Program: 21.027 Coronavirus State and Local Fiscal Recovery Funds
Criteria:
Per the grant agreement from the Missouri Behavioral Health Council, the Association is required to submit quarterly status reports on the progress of the Kirksville, Missouri, building construction. According to the grant agreement, the Association is required to submit these quarterly reports within ten days following the end of each quarter.
Statement of Condition:
While reviewing the quarterly status reports and the supporting documentation, it was discovered that the 4th quarter fiscal year 2023 quarterly status report, which is required to be submitted on July 10, 2023, was submitted on September 25, 2023, or 77 days late.
Statement of Cause:
It appears that there was a lack of review for ensuring that all quarterly reports were completed in a timely manner. Therefore, the required personnel were not notified that the report was due, or after the deadline, that the report was not submitted and needed to be filled out and submitted.
Statement of Effect:
Noncompliance with the reporting requirements described within the grant agreement could result in the Association being barred from receiving grant funding from the pass-through entity and/or the awarding agency for future grants. In addition to this, the Association could be required to refund all federal funds received by the pass-through agency.
Questioned Costs:
No questioned costs were identified.
Identification of Repeat Findings:
N/A
Recommendations:
We recommend a review process is put into place to ensure all required reporting is completed and submitted in a timely manner in accordance with the requirements in the grant agreement. These reviews should be communicated to the personnel involved in the grant reporting, so they are aware of the deadlines for the reports.
Views of Responsible Official(s):
The billing and project update process was never strictly enforced by the grantor. Some of this was due to supply
issues and contractor availability during Covid. The process was set up to be turned in quarterly, but the grantor was fairly informal with that due to the fact that all parties participated in monthly meetings and each agency was dealing with their own timeframes regarding remodel and building projects. During the project, there was also a staffing change at the grantor, which resulted in some delayed progress and billing updates/reports, as the grantor assigned another staff member to manage the projects. As you can see, funds were reimbursed to the Association throughout the process and were never withheld. See corrective action plan.
Finding 2023-001 – B. Allowable Costs
Federal Agency: U.S. Department of Health and Human Services
Passthrough Entity: N/A
Assistance Listing Number and Federal Program: 93.829 Section 223 Demonstration Programs to Improve
Community Mental Health Services
Criteria:
In accordance with 2 CFR part 200.302, the Association is required to maintain financial management systems to trace funds to expenditures to establish that funds have been used according to Federal statutes, regulations, and the terms and conditions of the Federal award. The financial management system must provide for records that identify adequately the source and application of funds for federally funded activities, among other conditions. The reporting of the federal expenditures should be supported by these records. Amounts may not be expended from project funds on an arbitrary basis. Additionally, in accordance with 2 CFR 200.430, charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records, among other things, should support the distribution of the employee’s salary or wages among specific activities if the employee works on a Federal award and non-Federal award. Budget estimates do not qualify as support for charges to Federal awards.
Statement of Condition:
During the course of our audit, supporting detail for expenses allocated and charged to the grant was not available and could not be determined. Salaries and benefits charged to the grant were based on estimates of employees’ expected workload and client needs, and not supported by records that accurately reflected the work performed on the Federal program. Additionally, the de minimis indirect cost rate was not correctly calculated and applied. The indirect cost charged to the grant was based on the indirect cost obligated by the Notice of Award rather than by calculating the indirect cost from the modified total direct cost base.
Statement Cause:
This is the second year the Association received this type of grant funding, coupled with significant growth experienced by the Association, the accounting system and staff were not yet prepared to effectively adhere to the requirements of the grant. Supporting documentation is not available for employees’ actual time spent and charged to the grants.
Statement of Effect:
Without proper accounting of expenditures and support of salaries and wages, grant expenditures can be over or
understated on the drawdown requests. This could result in noncompliance with grant agreements which could lead to adverse conditions with the grantors.
Questioned Costs:
No questioned costs were identified.
Identification of Repeat Findings:
2022-001
Recommendations:
Project codes or classes should be created within the accounting system, if available. This will allow for expenses to be properly segregated by grant or other funding. When expenses are properly segregated, the indirect cost can be properly calculated using the correct direct cost base. The Association should also implement that all employees submit personnel activity reports to provide documentation of their time allocated to the grant.
Views of Responsible Official(s):
The Association is in agreement with the finding and is continuing to expand their knowledge on grant expenditures and compliance as it relates to the new financial management software to aid in tracking grants. See corrective action plan.
Finding 2023-002 Material Weakness – B. Allowable Costs
Federal Agency: U.S. Department of the Treasury
Passthrough Entity: Missouri Behavioral Health Council
Assistance Listing Number and Federal Program: 21.027 Coronavirus State and Local Fiscal Recovery Funds
Criteria:
Per CFR 200.405(a), a good or service must be chargeable or assignable to the Federal award or the cost objective
for that cost to be considered allocable to the Federal award. This standard is met if the cost is incurred specifically for the Federal award or benefits both the Federal award and other work of the non-Federal entity and can be proportioned using reasonable methods. In addition, the cost meets the standard listed above if the cost is necessary to the overall operation of the non-Federal entity and is assignable to the Federal award in accordance with the principles listed above. The approved cost objective stated in the grant agreement is for the construction of the Association’s new Kirksville location.
Statement of Condition:
During the course of our audit, it was discovered that two invoices for engineering services provided by Yager
Architecture, Inc., were for remodeling one of the Hannibal locations and not for the construction of the Kirksville location. These invoices were included in the reimbursement request “KV-4” and the total for the two invoices was $4,902.50. Per the grant agreement, the grant funds were awarded for the construction of the Kirksville building construction.
Statement of Cause:
This is the first year the Association received grant funding from this specific grant, along with the growth the
Association is experiencing, and the Association being awarded two Federal grants in quick succession, the
accounting system and staff were not prepared to effectively adhere to the requirements of the grant. Therefore, unallowable costs were used for reimbursement requests.
Statement of Effect:
Noncompliance with the grant agreement could result in the Association being barred from receiving grant funding from the pass-through entity and/or the awarding agency for future grants, as well as the possibility that the awarding agency will require that some or all of the funding that has been received by the Association be refunded to the passthrough entity.
Questioned Costs:
No questioned costs were identified.
Identification of Repeat Findings:
N/A
Recommendations:
Reimbursement requests and included invoices should be reviewed and signed off on by someone other than the person completing the request. This will ensure that the correct invoices are included in the request that are allowed by the grant agreement and the invoices are in compliance with 2 CFR 200. In addition to this, the Association should create project codes or classes within their accounting system, if able to, for easier grant tracking. These recommendations would increase the accuracy of invoices used for reimbursement.
Views of Responsible Official(s):
The Association had converted to a different accounting system and did not have the expertise involving project codes or classes at this time. Going forward, the Association will use project codes or classes in the accounting system for grant tracking. See corrective action plan.
Finding 2023-003 Significant Deficiency – L. Reporting
Federal Agency: U.S. Department of the Treasury
Passthrough Entity: Missouri Behavioral Health Council
Assistance Listing Number and Federal Program: 21.027 Coronavirus State and Local Fiscal Recovery Funds
Criteria:
Per the grant agreement from the Missouri Behavioral Health Council, the Association is required to submit quarterly status reports on the progress of the Kirksville, Missouri, building construction. According to the grant agreement, the Association is required to submit these quarterly reports within ten days following the end of each quarter.
Statement of Condition:
While reviewing the quarterly status reports and the supporting documentation, it was discovered that the 4th quarter fiscal year 2023 quarterly status report, which is required to be submitted on July 10, 2023, was submitted on September 25, 2023, or 77 days late.
Statement of Cause:
It appears that there was a lack of review for ensuring that all quarterly reports were completed in a timely manner. Therefore, the required personnel were not notified that the report was due, or after the deadline, that the report was not submitted and needed to be filled out and submitted.
Statement of Effect:
Noncompliance with the reporting requirements described within the grant agreement could result in the Association being barred from receiving grant funding from the pass-through entity and/or the awarding agency for future grants. In addition to this, the Association could be required to refund all federal funds received by the pass-through agency.
Questioned Costs:
No questioned costs were identified.
Identification of Repeat Findings:
N/A
Recommendations:
We recommend a review process is put into place to ensure all required reporting is completed and submitted in a timely manner in accordance with the requirements in the grant agreement. These reviews should be communicated to the personnel involved in the grant reporting, so they are aware of the deadlines for the reports.
Views of Responsible Official(s):
The billing and project update process was never strictly enforced by the grantor. Some of this was due to supply
issues and contractor availability during Covid. The process was set up to be turned in quarterly, but the grantor was fairly informal with that due to the fact that all parties participated in monthly meetings and each agency was dealing with their own timeframes regarding remodel and building projects. During the project, there was also a staffing change at the grantor, which resulted in some delayed progress and billing updates/reports, as the grantor assigned another staff member to manage the projects. As you can see, funds were reimbursed to the Association throughout the process and were never withheld. See corrective action plan.