of Health and Human Services, Passed Through Substance Abuse and
Mental Health Services Administration,
Section 223 Demonstration Programs to Improve Community Mental Health Services
Listing 93.829, H79SM085287, 8/31/2022 – 8/30/2023
Procurement, Suspension and Debarment
Material Weakness in Internal Control over Compliance
Criteria: 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
conditions of the federal award. 2 CFR 200.318(c)(1) provides that the auditee must
maintain written standards of conduct covering conflicts of interest and governing the
actions of its employees engaged in the selection, award, and administration of
contracts. Federal regulations state that the auditee must have written procedures for
procurement transactions.
As outlined in 2 CFR 180, recipients must not utilize any vendor which is suspended or
debarred or is otherwise excluded from the central contractor registry.
Condition: Hope’s formally documented policy did not include many of the necessary procurement
provisions until it was revised in February 2024. Expenditures under the federal grants
did not have a consistent control in place to check applicable vendors for potential
suspension and/or debarment for covered transactions, and controls were not
documented to provide for a proper audit trail.
Cause: For the year under audit, Hope did not have a consistent procurement process in place
including all federal requirements or to check vendors under covered transactions
($25,000 or more) in accordance with federal regulations.
Effect: Hope could be out of compliance with federal requirements when entering into
procurement contracts as well as not meeting suspension and debarment requirements
by potentially contracting with a suspended or debarred vendor.
Questioned costs: None reported.
Context: Procurement requirements were applicable to 1 vendor, which was selected for testing
and was in excess of the micro-purchase threshold but were not in excess of $250,000.
Suspension and Debarment requirements were applicable to both transactions for this
vendor tested. Subsequent to year-end, Hope’s procurement policy has been updated.
Repeat Finding
From Prior Year: Yes Recommendation: This finding was noted in the prior year where the policy could not be put into place for
the FY2023 audit procedures. We recognize that the policy has been updated and will be
followed going forward.
Views of Responsible
Officials: We agree with the finding.
Department of Health and Human Services, Passed Through Substance Abuse and
Mental Health Services Administration,
Section 223 Demonstration Programs to Improve Community Mental Health Services
Listing 93.829, H79SM085287, 8/31/2022 – 8/30/2023
Allowable Activities or Unallowed, Allowable Costs/Cost Principles, Cash Management,
and Matching, Level of Effort, and Earmarking
Material Weakness in Internal Control over Compliance and Material Noncompliance
Criteria: 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 Part 200, OMB Compliance Supplement, defines Level of Effort as follows:
Level of effort includes requirements for (a) a specified level of service to be provided
from period to period, (b) a specified level of expenditures from non-federal or federal
sources for specified activities to be maintained from period to period, and (c) federal
funds to supplement and not supplant non-federal funding of services.
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 to support the allocations
of compensation applicable to the referenced programs for actual time worked, or to
support the drawdown from grant funding or that the level of effort requirements, as
outlined in the grant contract, was achieved.
Cause: The process used to track employee payroll does not adequately track the allocations of
payroll or time worked to the respective federal grant programs. Or, if such
documentation did exist, it could not be provided as audit evidence. As a result, certain
expenditures were claimed as program expenditures, but could not be substantiated for
purposes of allowable costs or level of effort. Much of the issue can be attributed to
employee turnover.
Effect: Hope is at risk for noncompliance with allowable activities and allowable costs, as well as
cash management and level of effort requirements.
Questioned costs: None reported.
Context: A nonstatistical sampling of 70 out of over 1,500 transactions were selected for testing of
Activities Allowed and Unallowed, and Allowable Costs/Cost Principles. Allocation support
could not be provided for any of the 60 items selected.
Two of 7 drawdowns of grant funds were selected for testing of Cash Management which
where nonstatistical. Support could not be provided for the 2 items selected.
2 of 2 employees were tested with respect to level of effort requirements as outlined in
the program contract, but supporting information could not be provided. Repeat Finding
From Prior Year: Yes
Recommendation: Controls should be put in place to ensure that expenditures of program funds allocated
through payroll expense are reviewed and approved by program management and are
properly allocated based on time and activities worked consistent with the grant
requirements. Additionally, level of effort requirements as made known in grant contracts
should be substantiated by payroll allocation or other records.
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 of Responsible
Officials: We agree with the finding.
Department of Health and Human Services, Passed Through Oklahoma Department of
Mental Health and Substance Abuse Services,
Block Grants for Community Mental Health Services
Listing 93.958, 4529063664/4529063519, 7/1/2022 – 6/30/2023
Allowable Activities or Unallowed and Allowable Costs/Cost Principles
Material Weakness in Internal Control over Compliance and Material Noncompliance
Criteria: 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.
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 to support the allocations
of compensation applicable to the referenced programs for actual time worked, or to
support allowable costs.
Cause: The process used to track employee payroll does not adequately track the allocations of
payroll or time worked to the respective federal grant programs. Or, if such
documentation did exist, it could not be provided as audit evidence. As a result, certain
expenditures were claimed as program expenditures, but could not be substantiated for
purposes of allowable costs. Much of the issue can be attributed to employee turnover.
Effect: Hope is at risk for noncompliance with allowable activities and allowable costs.
Questioned costs: $116,222 in payroll was identified as questionable allowable costs that could not be
substantiated.
Context: A nonstatistical sampling of 40 out of over 4,000 transactions were selected for testing of
Activities Allowed and Unallowed, and Allowable Costs/Cost Principles. Allocation support
could not be provided for any of the 40 items selected.
Repeat Finding
From Prior Year: No
Recommendation: Controls should be put in place to ensure that expenditures of program funds allocated
through payroll expense are reviewed and approved by program management and are
properly allocated based on time and activities worked consistent with the grant
requirements. Such support should be retained.
Views of Responsible
Officials: We agree with the finding.
Department of Health and Human Services, Passed Through Oklahoma Department of
Mental Health and Substance Abuse Services,
Block Grants for Community Mental Health Services
Listing 93.958, 4529063664/4529063519, 7/1/2022 – 6/30/2023
Allowable Activities or Unallowed and Allowable Costs/Cost Principles
Material Weakness in Internal Control over Compliance and Material Noncompliance
Criteria: 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.
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 to support the allocations
of compensation applicable to the referenced programs for actual time worked, or to
support allowable costs.
Cause: The process used to track employee payroll does not adequately track the allocations of
payroll or time worked to the respective federal grant programs. Or, if such
documentation did exist, it could not be provided as audit evidence. As a result, certain
expenditures were claimed as program expenditures, but could not be substantiated for
purposes of allowable costs. Much of the issue can be attributed to employee turnover.
Effect: Hope is at risk for noncompliance with allowable activities and allowable costs.
Questioned costs: $116,222 in payroll was identified as questionable allowable costs that could not be
substantiated.
Context: A nonstatistical sampling of 40 out of over 4,000 transactions were selected for testing of
Activities Allowed and Unallowed, and Allowable Costs/Cost Principles. Allocation support
could not be provided for any of the 40 items selected.
Repeat Finding
From Prior Year: No
Recommendation: Controls should be put in place to ensure that expenditures of program funds allocated
through payroll expense are reviewed and approved by program management and are
properly allocated based on time and activities worked consistent with the grant
requirements. Such support should be retained.
Views of Responsible
Officials: We agree with the finding.
Department of Health and Human Services, Passed Through Oklahoma Department of
Mental Health and Substance Abuse Services,
Block Grants for Community Mental Health Services
Listing 93.958, 4529063664/4529063519, 7/1/2022 – 6/30/2023
Allowable Activities or Unallowed and Allowable Costs/Cost Principles
Material Weakness in Internal Control over Compliance and Material Noncompliance
Criteria: 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.
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 to support the allocations
of compensation applicable to the referenced programs for actual time worked, or to
support allowable costs.
Cause: The process used to track employee payroll does not adequately track the allocations of
payroll or time worked to the respective federal grant programs. Or, if such
documentation did exist, it could not be provided as audit evidence. As a result, certain
expenditures were claimed as program expenditures, but could not be substantiated for
purposes of allowable costs. Much of the issue can be attributed to employee turnover.
Effect: Hope is at risk for noncompliance with allowable activities and allowable costs.
Questioned costs: $116,222 in payroll was identified as questionable allowable costs that could not be
substantiated.
Context: A nonstatistical sampling of 40 out of over 4,000 transactions were selected for testing of
Activities Allowed and Unallowed, and Allowable Costs/Cost Principles. Allocation support
could not be provided for any of the 40 items selected.
Repeat Finding
From Prior Year: No
Recommendation: Controls should be put in place to ensure that expenditures of program funds allocated
through payroll expense are reviewed and approved by program management and are
properly allocated based on time and activities worked consistent with the grant
requirements. Such support should be retained.
Views of Responsible
Officials: We agree with the finding.
of Health and Human Services, Passed Through Substance Abuse and
Mental Health Services Administration,
Section 223 Demonstration Programs to Improve Community Mental Health Services
Listing 93.829, H79SM085287, 8/31/2022 – 8/30/2023
Procurement, Suspension and Debarment
Material Weakness in Internal Control over Compliance
Criteria: 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
conditions of the federal award. 2 CFR 200.318(c)(1) provides that the auditee must
maintain written standards of conduct covering conflicts of interest and governing the
actions of its employees engaged in the selection, award, and administration of
contracts. Federal regulations state that the auditee must have written procedures for
procurement transactions.
As outlined in 2 CFR 180, recipients must not utilize any vendor which is suspended or
debarred or is otherwise excluded from the central contractor registry.
Condition: Hope’s formally documented policy did not include many of the necessary procurement
provisions until it was revised in February 2024. Expenditures under the federal grants
did not have a consistent control in place to check applicable vendors for potential
suspension and/or debarment for covered transactions, and controls were not
documented to provide for a proper audit trail.
Cause: For the year under audit, Hope did not have a consistent procurement process in place
including all federal requirements or to check vendors under covered transactions
($25,000 or more) in accordance with federal regulations.
Effect: Hope could be out of compliance with federal requirements when entering into
procurement contracts as well as not meeting suspension and debarment requirements
by potentially contracting with a suspended or debarred vendor.
Questioned costs: None reported.
Context: Procurement requirements were applicable to 1 vendor, which was selected for testing
and was in excess of the micro-purchase threshold but were not in excess of $250,000.
Suspension and Debarment requirements were applicable to both transactions for this
vendor tested. Subsequent to year-end, Hope’s procurement policy has been updated.
Repeat Finding
From Prior Year: Yes Recommendation: This finding was noted in the prior year where the policy could not be put into place for
the FY2023 audit procedures. We recognize that the policy has been updated and will be
followed going forward.
Views of Responsible
Officials: We agree with the finding.
Department of Health and Human Services, Passed Through Substance Abuse and
Mental Health Services Administration,
Section 223 Demonstration Programs to Improve Community Mental Health Services
Listing 93.829, H79SM085287, 8/31/2022 – 8/30/2023
Allowable Activities or Unallowed, Allowable Costs/Cost Principles, Cash Management,
and Matching, Level of Effort, and Earmarking
Material Weakness in Internal Control over Compliance and Material Noncompliance
Criteria: 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 Part 200, OMB Compliance Supplement, defines Level of Effort as follows:
Level of effort includes requirements for (a) a specified level of service to be provided
from period to period, (b) a specified level of expenditures from non-federal or federal
sources for specified activities to be maintained from period to period, and (c) federal
funds to supplement and not supplant non-federal funding of services.
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 to support the allocations
of compensation applicable to the referenced programs for actual time worked, or to
support the drawdown from grant funding or that the level of effort requirements, as
outlined in the grant contract, was achieved.
Cause: The process used to track employee payroll does not adequately track the allocations of
payroll or time worked to the respective federal grant programs. Or, if such
documentation did exist, it could not be provided as audit evidence. As a result, certain
expenditures were claimed as program expenditures, but could not be substantiated for
purposes of allowable costs or level of effort. Much of the issue can be attributed to
employee turnover.
Effect: Hope is at risk for noncompliance with allowable activities and allowable costs, as well as
cash management and level of effort requirements.
Questioned costs: None reported.
Context: A nonstatistical sampling of 70 out of over 1,500 transactions were selected for testing of
Activities Allowed and Unallowed, and Allowable Costs/Cost Principles. Allocation support
could not be provided for any of the 60 items selected.
Two of 7 drawdowns of grant funds were selected for testing of Cash Management which
where nonstatistical. Support could not be provided for the 2 items selected.
2 of 2 employees were tested with respect to level of effort requirements as outlined in
the program contract, but supporting information could not be provided. Repeat Finding
From Prior Year: Yes
Recommendation: Controls should be put in place to ensure that expenditures of program funds allocated
through payroll expense are reviewed and approved by program management and are
properly allocated based on time and activities worked consistent with the grant
requirements. Additionally, level of effort requirements as made known in grant contracts
should be substantiated by payroll allocation or other records.
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 of Responsible
Officials: We agree with the finding.
Department of Health and Human Services, Passed Through Oklahoma Department of
Mental Health and Substance Abuse Services,
Block Grants for Community Mental Health Services
Listing 93.958, 4529063664/4529063519, 7/1/2022 – 6/30/2023
Allowable Activities or Unallowed and Allowable Costs/Cost Principles
Material Weakness in Internal Control over Compliance and Material Noncompliance
Criteria: 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.
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 to support the allocations
of compensation applicable to the referenced programs for actual time worked, or to
support allowable costs.
Cause: The process used to track employee payroll does not adequately track the allocations of
payroll or time worked to the respective federal grant programs. Or, if such
documentation did exist, it could not be provided as audit evidence. As a result, certain
expenditures were claimed as program expenditures, but could not be substantiated for
purposes of allowable costs. Much of the issue can be attributed to employee turnover.
Effect: Hope is at risk for noncompliance with allowable activities and allowable costs.
Questioned costs: $116,222 in payroll was identified as questionable allowable costs that could not be
substantiated.
Context: A nonstatistical sampling of 40 out of over 4,000 transactions were selected for testing of
Activities Allowed and Unallowed, and Allowable Costs/Cost Principles. Allocation support
could not be provided for any of the 40 items selected.
Repeat Finding
From Prior Year: No
Recommendation: Controls should be put in place to ensure that expenditures of program funds allocated
through payroll expense are reviewed and approved by program management and are
properly allocated based on time and activities worked consistent with the grant
requirements. Such support should be retained.
Views of Responsible
Officials: We agree with the finding.
Department of Health and Human Services, Passed Through Oklahoma Department of
Mental Health and Substance Abuse Services,
Block Grants for Community Mental Health Services
Listing 93.958, 4529063664/4529063519, 7/1/2022 – 6/30/2023
Allowable Activities or Unallowed and Allowable Costs/Cost Principles
Material Weakness in Internal Control over Compliance and Material Noncompliance
Criteria: 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.
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 to support the allocations
of compensation applicable to the referenced programs for actual time worked, or to
support allowable costs.
Cause: The process used to track employee payroll does not adequately track the allocations of
payroll or time worked to the respective federal grant programs. Or, if such
documentation did exist, it could not be provided as audit evidence. As a result, certain
expenditures were claimed as program expenditures, but could not be substantiated for
purposes of allowable costs. Much of the issue can be attributed to employee turnover.
Effect: Hope is at risk for noncompliance with allowable activities and allowable costs.
Questioned costs: $116,222 in payroll was identified as questionable allowable costs that could not be
substantiated.
Context: A nonstatistical sampling of 40 out of over 4,000 transactions were selected for testing of
Activities Allowed and Unallowed, and Allowable Costs/Cost Principles. Allocation support
could not be provided for any of the 40 items selected.
Repeat Finding
From Prior Year: No
Recommendation: Controls should be put in place to ensure that expenditures of program funds allocated
through payroll expense are reviewed and approved by program management and are
properly allocated based on time and activities worked consistent with the grant
requirements. Such support should be retained.
Views of Responsible
Officials: We agree with the finding.
Department of Health and Human Services, Passed Through Oklahoma Department of
Mental Health and Substance Abuse Services,
Block Grants for Community Mental Health Services
Listing 93.958, 4529063664/4529063519, 7/1/2022 – 6/30/2023
Allowable Activities or Unallowed and Allowable Costs/Cost Principles
Material Weakness in Internal Control over Compliance and Material Noncompliance
Criteria: 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.
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 to support the allocations
of compensation applicable to the referenced programs for actual time worked, or to
support allowable costs.
Cause: The process used to track employee payroll does not adequately track the allocations of
payroll or time worked to the respective federal grant programs. Or, if such
documentation did exist, it could not be provided as audit evidence. As a result, certain
expenditures were claimed as program expenditures, but could not be substantiated for
purposes of allowable costs. Much of the issue can be attributed to employee turnover.
Effect: Hope is at risk for noncompliance with allowable activities and allowable costs.
Questioned costs: $116,222 in payroll was identified as questionable allowable costs that could not be
substantiated.
Context: A nonstatistical sampling of 40 out of over 4,000 transactions were selected for testing of
Activities Allowed and Unallowed, and Allowable Costs/Cost Principles. Allocation support
could not be provided for any of the 40 items selected.
Repeat Finding
From Prior Year: No
Recommendation: Controls should be put in place to ensure that expenditures of program funds allocated
through payroll expense are reviewed and approved by program management and are
properly allocated based on time and activities worked consistent with the grant
requirements. Such support should be retained.
Views of Responsible
Officials: We agree with the finding.