Finding 2024-001, Expense Allocations - Financial Management (Assistance Listing 16.575)
Criteria: Per 2 CFR § 200.302(a) (Financial Management), all recipient and subrecipient financial management systems must be sufficient to track expenditures and establish that funds have been used in accordance with federal statutes, regulations, and the terms and conditions of the federal award.
Condition and Context: The Agency’s general ledger for the program included occupancy expenses that were not used for the program. Although these expenses were erroneously recorded in the general ledger under the program, they were correctly excluded from the submitted claims.
Cause: These expenses were incorrectly allocated in the general ledger due to weaknesses in internal controls over expense classification and allocation. The financial management system lacked adequate review mechanisms to ensure expenses were properly assigned to the correct program and reconciled with the submitted claims.
Effect: The misallocation of expenses in the general ledger resulted in financial reports that do not accurately reflect actual program expenditures. This misstatement could impact budgetary decisions, financial reporting accuracy, and overall compliance with federal regulations.
Identification as a Repeat Finding: No.
Questioned Costs: None.
Recommendation: We recommend that the Agency strengthen its policies and procedures for expense allocation by implementing a more structured review and approval process. This should include enhanced internal controls, periodic reconciliations of expenses between the general ledger and submitted claims, and staff training on accurate cost classification. Additionally, management should establish clear documentation procedures to support the proper allocation of expenses in the general ledger and ensure compliance with federal regulations.
Finding 2024-002, Timesheet – Timekeeping (Assistance Listing 16.575 and 93.696)
Criteria: Per 2 CFR § 200.430 requires that the distribution of salary and wages charged to federal awards be based on actual employee activity as reflected in personnel activity reports (timesheets), prepared after-the-fact, and includes the total activity for which employees were compensated.
Condition and Context: The Agency’s current timesheet does not include the allocation of hours worked by program.
Cause: Internal controls over the accurate distribution of hours on the timesheets were not operating effectively or designed properly.
Effect: The timesheets do not support the allocation of time charged to the programs.
Identification as a repeat finding: Yes.
Questioned costs: None.
Recommendation: We recommend that the Agency strengthen its policies and procedures for the
timekeeping and distribution of the employees’ hours in accordance with the requirements of the
federal programs.
Finding 2024-004, Documentation of Case Note Review (Assistance Listing 16.575)
Criteria: Per 2 CFR § 200.303(a) (Internal Controls). All recipient and subrecipient must establish, document, and maintain effective internal control over the Federal award in compliance with Federal statutes, regulations, and terms and conditions of the Federal award.
Condition and Context: The Agency’s maintains client case notes to track the services provided to program participants. These case notes are subject to periodic reviews by a Supervisor. We reviewed 25 samples and noted no documentation the review for any of the samples.
Cause: The Agency’s policies for maintaining case notes do not require a sign-off by the Supervisor.
Effect: The lack of documented supervisory review weakens internal controls over case note management, increasing the risk of errors, incomplete records, or noncompliance with program requirements.
Identification as a Repeat Finding: No.
Questioned Costs: None.
Recommendation: We recommend that the Agency enhance its policies and procedures for case note management by implementing a formal supervisory review process. This should include a documented sign-off by the supervisor to confirm the review has been completed, ensuring compliance with internal control requirements.
Finding 2024-003, Unallowable Expense (Assistance Listing 93.696)
Criteria: Per 2 CFR § 200.403, costs charged to a federal award must be necessary, reasonable, and allocable to the program. Assistance Listing Number 93.696, Certified Community Behavioral Health Clinic, requires that costs allocated to the program meet these criteria to ensure compliance with federal regulations.
Condition and Context: During our testing of the Agency’s expenses charged to the program, we noted one item out of ten items tested that did not relate to the federal program.
Cause: The expense was incorrectly allocated to the program due to misclassification or inadequate review during the allocation process. Internal controls designed to ensure proper expense classification were either insufficient or not effectively implemented, leading to the incorrect charge.
Effect: Although the expense was charged to the federal program, it was not allowable under the program’s cost principles, resulting in noncompliance with federal regulations. If not addressed, this could lead to inaccurate financial reporting and potential disallowance of costs.
Identification as a Repeat Finding: No.
Questioned Costs: None.
Recommendation: We recommend that the Agency enhance its internal controls over expense allocation by implementing a more structured review and approval process. This should include enhanced staff training on cost allowability, periodic reconciliations of expenses to program requirements, and management oversight to ensure compliance with federal regulations. Additionally, the Agency should establish clear documentation procedures to verify and support the appropriateness of charges to the program before expenses are recorded.
Finding 2024-002, Timesheet – Timekeeping (Assistance Listing 16.575 and 93.696)
Criteria: Per 2 CFR § 200.430 requires that the distribution of salary and wages charged to federal awards be based on actual employee activity as reflected in personnel activity reports (timesheets), prepared after-the-fact, and includes the total activity for which employees were compensated.
Condition and Context: The Agency’s current timesheet does not include the allocation of hours worked by program.
Cause: Internal controls over the accurate distribution of hours on the timesheets were not operating effectively or designed properly.
Effect: The timesheets do not support the allocation of time charged to the programs.
Identification as a repeat finding: Yes.
Questioned costs: None.
Recommendation: We recommend that the Agency strengthen its policies and procedures for the
timekeeping and distribution of the employees’ hours in accordance with the requirements of the
federal programs.
Finding 2024-002, Timesheet – Timekeeping (Assistance Listing 16.575 and 93.696)
Criteria: Per 2 CFR § 200.430 requires that the distribution of salary and wages charged to federal awards be based on actual employee activity as reflected in personnel activity reports (timesheets), prepared after-the-fact, and includes the total activity for which employees were compensated.
Condition and Context: The Agency’s current timesheet does not include the allocation of hours worked by program.
Cause: Internal controls over the accurate distribution of hours on the timesheets were not operating effectively or designed properly.
Effect: The timesheets do not support the allocation of time charged to the programs.
Identification as a repeat finding: Yes.
Questioned costs: None.
Recommendation: We recommend that the Agency strengthen its policies and procedures for the
timekeeping and distribution of the employees’ hours in accordance with the requirements of the
federal programs.
Finding 2024-002, Timesheet – Timekeeping (Assistance Listing 16.575 and 93.696)
Criteria: Per 2 CFR § 200.430 requires that the distribution of salary and wages charged to federal awards be based on actual employee activity as reflected in personnel activity reports (timesheets), prepared after-the-fact, and includes the total activity for which employees were compensated.
Condition and Context: The Agency’s current timesheet does not include the allocation of hours worked by program.
Cause: Internal controls over the accurate distribution of hours on the timesheets were not operating effectively or designed properly.
Effect: The timesheets do not support the allocation of time charged to the programs.
Identification as a repeat finding: Yes.
Questioned costs: None.
Recommendation: We recommend that the Agency strengthen its policies and procedures for the
timekeeping and distribution of the employees’ hours in accordance with the requirements of the
federal programs.
Finding 2024-001, Expense Allocations - Financial Management (Assistance Listing 16.575)
Criteria: Per 2 CFR § 200.302(a) (Financial Management), all recipient and subrecipient financial management systems must be sufficient to track expenditures and establish that funds have been used in accordance with federal statutes, regulations, and the terms and conditions of the federal award.
Condition and Context: The Agency’s general ledger for the program included occupancy expenses that were not used for the program. Although these expenses were erroneously recorded in the general ledger under the program, they were correctly excluded from the submitted claims.
Cause: These expenses were incorrectly allocated in the general ledger due to weaknesses in internal controls over expense classification and allocation. The financial management system lacked adequate review mechanisms to ensure expenses were properly assigned to the correct program and reconciled with the submitted claims.
Effect: The misallocation of expenses in the general ledger resulted in financial reports that do not accurately reflect actual program expenditures. This misstatement could impact budgetary decisions, financial reporting accuracy, and overall compliance with federal regulations.
Identification as a Repeat Finding: No.
Questioned Costs: None.
Recommendation: We recommend that the Agency strengthen its policies and procedures for expense allocation by implementing a more structured review and approval process. This should include enhanced internal controls, periodic reconciliations of expenses between the general ledger and submitted claims, and staff training on accurate cost classification. Additionally, management should establish clear documentation procedures to support the proper allocation of expenses in the general ledger and ensure compliance with federal regulations.
Finding 2024-002, Timesheet – Timekeeping (Assistance Listing 16.575 and 93.696)
Criteria: Per 2 CFR § 200.430 requires that the distribution of salary and wages charged to federal awards be based on actual employee activity as reflected in personnel activity reports (timesheets), prepared after-the-fact, and includes the total activity for which employees were compensated.
Condition and Context: The Agency’s current timesheet does not include the allocation of hours worked by program.
Cause: Internal controls over the accurate distribution of hours on the timesheets were not operating effectively or designed properly.
Effect: The timesheets do not support the allocation of time charged to the programs.
Identification as a repeat finding: Yes.
Questioned costs: None.
Recommendation: We recommend that the Agency strengthen its policies and procedures for the
timekeeping and distribution of the employees’ hours in accordance with the requirements of the
federal programs.
Finding 2024-004, Documentation of Case Note Review (Assistance Listing 16.575)
Criteria: Per 2 CFR § 200.303(a) (Internal Controls). All recipient and subrecipient must establish, document, and maintain effective internal control over the Federal award in compliance with Federal statutes, regulations, and terms and conditions of the Federal award.
Condition and Context: The Agency’s maintains client case notes to track the services provided to program participants. These case notes are subject to periodic reviews by a Supervisor. We reviewed 25 samples and noted no documentation the review for any of the samples.
Cause: The Agency’s policies for maintaining case notes do not require a sign-off by the Supervisor.
Effect: The lack of documented supervisory review weakens internal controls over case note management, increasing the risk of errors, incomplete records, or noncompliance with program requirements.
Identification as a Repeat Finding: No.
Questioned Costs: None.
Recommendation: We recommend that the Agency enhance its policies and procedures for case note management by implementing a formal supervisory review process. This should include a documented sign-off by the supervisor to confirm the review has been completed, ensuring compliance with internal control requirements.
Finding 2024-003, Unallowable Expense (Assistance Listing 93.696)
Criteria: Per 2 CFR § 200.403, costs charged to a federal award must be necessary, reasonable, and allocable to the program. Assistance Listing Number 93.696, Certified Community Behavioral Health Clinic, requires that costs allocated to the program meet these criteria to ensure compliance with federal regulations.
Condition and Context: During our testing of the Agency’s expenses charged to the program, we noted one item out of ten items tested that did not relate to the federal program.
Cause: The expense was incorrectly allocated to the program due to misclassification or inadequate review during the allocation process. Internal controls designed to ensure proper expense classification were either insufficient or not effectively implemented, leading to the incorrect charge.
Effect: Although the expense was charged to the federal program, it was not allowable under the program’s cost principles, resulting in noncompliance with federal regulations. If not addressed, this could lead to inaccurate financial reporting and potential disallowance of costs.
Identification as a Repeat Finding: No.
Questioned Costs: None.
Recommendation: We recommend that the Agency enhance its internal controls over expense allocation by implementing a more structured review and approval process. This should include enhanced staff training on cost allowability, periodic reconciliations of expenses to program requirements, and management oversight to ensure compliance with federal regulations. Additionally, the Agency should establish clear documentation procedures to verify and support the appropriateness of charges to the program before expenses are recorded.
Finding 2024-002, Timesheet – Timekeeping (Assistance Listing 16.575 and 93.696)
Criteria: Per 2 CFR § 200.430 requires that the distribution of salary and wages charged to federal awards be based on actual employee activity as reflected in personnel activity reports (timesheets), prepared after-the-fact, and includes the total activity for which employees were compensated.
Condition and Context: The Agency’s current timesheet does not include the allocation of hours worked by program.
Cause: Internal controls over the accurate distribution of hours on the timesheets were not operating effectively or designed properly.
Effect: The timesheets do not support the allocation of time charged to the programs.
Identification as a repeat finding: Yes.
Questioned costs: None.
Recommendation: We recommend that the Agency strengthen its policies and procedures for the
timekeeping and distribution of the employees’ hours in accordance with the requirements of the
federal programs.
Finding 2024-002, Timesheet – Timekeeping (Assistance Listing 16.575 and 93.696)
Criteria: Per 2 CFR § 200.430 requires that the distribution of salary and wages charged to federal awards be based on actual employee activity as reflected in personnel activity reports (timesheets), prepared after-the-fact, and includes the total activity for which employees were compensated.
Condition and Context: The Agency’s current timesheet does not include the allocation of hours worked by program.
Cause: Internal controls over the accurate distribution of hours on the timesheets were not operating effectively or designed properly.
Effect: The timesheets do not support the allocation of time charged to the programs.
Identification as a repeat finding: Yes.
Questioned costs: None.
Recommendation: We recommend that the Agency strengthen its policies and procedures for the
timekeeping and distribution of the employees’ hours in accordance with the requirements of the
federal programs.
Finding 2024-002, Timesheet – Timekeeping (Assistance Listing 16.575 and 93.696)
Criteria: Per 2 CFR § 200.430 requires that the distribution of salary and wages charged to federal awards be based on actual employee activity as reflected in personnel activity reports (timesheets), prepared after-the-fact, and includes the total activity for which employees were compensated.
Condition and Context: The Agency’s current timesheet does not include the allocation of hours worked by program.
Cause: Internal controls over the accurate distribution of hours on the timesheets were not operating effectively or designed properly.
Effect: The timesheets do not support the allocation of time charged to the programs.
Identification as a repeat finding: Yes.
Questioned costs: None.
Recommendation: We recommend that the Agency strengthen its policies and procedures for the
timekeeping and distribution of the employees’ hours in accordance with the requirements of the
federal programs.