Audit 370132

Finding No: 2024-001 Activities Allowed or Unallowed/Allowable Costs Federal Agency: U.S. Department of Health and Human Services Assistance Listing Number: 93.778 Program: Medicaid Assistance Program/Medicaid Cluster Award Years: January 1, 2024 – December 31, 2024 (a) Criteria or Requirement Per 2 CFR 200.303, a non-Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Additionally, the specific requirements for activities allowed or unallowed are unique to each federal program and are found in the federal statutes, regulations, and the terms and conditions of the federal award pertaining to the program. (b) Condition Found, Including Perspective For one of 40 payroll disbursements tested during the fiscal year 2024 reporting period there was one disbursement totaling $1,988 in which expenditure was approved, requested for reimbursement, and reimbursed by the federal agency, however, per the terms of the grant agreement this disbursement was not allowable. This disbursement was specifically related to a payroll code that was not frequently used by the System and a code typically removed from the reimbursement request before being submitted. (c) Possible Cause While the System performs a review of documentation before payments are requested for reimbursement, controls were not designed or implemented effectively to ensure that unallowable payroll charges were not submitted for reimbursement by the federal agency. (d) Questioned Cost No questioned costs as amounts did not exceed the threshold for reporting. (e) Effect Federal funds were expended for unallowable amounts and evidence of the effective operation of management review controls was not consistently maintained in accordance with Federal requirements. (f) Statistical Validity The sample was not intended to be, and was not, a statistically valid sample. (g) Repeat Finding in the Prior Year This finding is not a repeat finding. (h) Recommendation We recommend that the System strengthen controls over the management review process to prevent unallowable costs from being charged to Federal programs. (i) View of Responsible Officials Management concurs with the finding. While appropriate controls exist relative to management review of expenditures, opportunities exist to retrain staff and further enhance controls related to procedures for submission, review, and approval of expenditures before submission for reimbursement.