2025-001 Costs Incurred Beyond the Period of Performance Program Name/Assistance Listing Number: 93.788 Opioid STR Federal Agency: Department of Health and Human Services Type of Finding: Significant Deficiency Compliance Requirement: Period of Performance Criteria: According to 2 CFR §§200.1, 200.308, 200.309, 200.344, and 200.403(h), a non-Federal entity may only charge allowable costs incurred during the approved budget period of the Federal award’s period of performance, and any costs incurred before the Federal award was made that were authorized by the Federal awarding agency or pass-through entity. All financial obligations incurred under the Federal award must be liquidated within the required time period. Costs incurred outside the approved period of performance are unallowable and constitute questioned costs. Condition: During cash disbursement testing, it was identified that costs totaling $56,017.62 were incurred after the end of the period of performance (which ended on September 30, 2024; grant ID 2401119 SOR 3.0 – SOS). Although the expenditures were allowable in nature, they were outside the approved period and therefore did not comply with the grant terms. Cause of Condition: The expenditures were incurred after the period of performance, possibly due to timing of invoicing. There was insufficient monitoring or review to ensure that all expenses were properly charged within the approved period. Potential Effect of Condition: The following are the potential effect based on the findings noted above: a. Non-Compliance: The Organization is at risk of non-compliance with the funding agreement, which may lead to questioned costs or repayment obligations. b. Financial Oversight Risk: Continued occurrence may indicate a lack of internal controls ensuring compliance with grant period requirements. Questioned Cost: $56,017.62 Recommendation: We recommend the following: a. Implement a monitoring process to ensure that all costs are incurred within the approved period of performance. b. Document and maintain a checklist of allowable expenses by period to prevent future occurrences of similar issues. Description of the Nature and Extent of Issues Reported: All expenditures outside the period of performance were identified during testing. The total known questioned cost is $56,017.62, which exceeds the $25,000 threshold for reporting under 2 CFR §200.516(a)(3). Management Response: Management concurred with the finding. During the current fiscal year, the Organization has implemented additional controls to ensure that all grant funding is expended within the timeframe allotted
2025-002 SEFA Presentation Error – Prior Year Program Name/Assistance Listing Number: 93.788 Opioid STR Federal Agency: Department of Health and Human Services Type of Finding: Significant Deficiency Compliance Requirement: Reporting Criteria: Uniform Guidance (2 CFR §200.510(b)) requires that the Schedule of Expenditures of Federal Awards (SEFA) accurately present all federal awards, including the correct identifying numbers assigned by pass-through entities for each award. Accurate reporting is essential to ensure compliance with funding requirements and enable proper tracking and monitoring of federal awards. Condition: During the current year audit, it was noted that the prior year’s SEFA contained an underreporting of $206,206.41 related to Grant ID 2401119 – Think Act and Live 2.0. While the total expenditures under the correct Assistance Listing Number (ALN) were accurate, the amounts assigned to this specific Grant ID were misclassified or omitted. Cause of Condition: The error occurred due to insufficient review procedures over SEFA preparation, specifically related to the accuracy of pass-through identifying numbers and grant-level allocations. Potential Effect of Condition: Although the error did not impact major program determination or the prior year audit opinion, it led to an incomplete and inaccurate SEFA presentation, which could affect tracking and monitoring of specific awards. Questioned Cost: Not applicable – the expenditures were allowable but misclassified. Recommendation: We recommend that management strengthen SEFA preparation and review controls by the following: a. Performing a detailed verification of grant-specific information, including Grant IDs, pass through numbers, and related allocations. b. Implementing a formal review process to ensure accuracy and completeness of the SEFA prior to submission. Description of the Nature and Extent of Issues Reported: During the current year audit, all misclassified expenditures related to Grant ID 2401119 – Think Act and Live 2.0 in the prior year SEFA were identified. The total underreported amount is $206,206.41, which exceeds both the program-level materiality threshold of $91,000 (based on a 5% benchmark of total awards expended for the major program 93.788) and the $25,000 SEFA reporting threshold under 2 CFR §200.516(a)(3). Management Response: Management concurred with the finding. The Organization has implemented the necessary internal controls to ensure that the grant reporting accurately reflects the expenditures for each of the respective grants.
2025-003 Lack of Formal Subrecipient Monitoring Program Name/Assistance Listing Number: 93.788 Opioid STR Federal Agency: Department of Health and Human Services Type of Finding: Significant Deficiency Compliance Requirement: Subrecipient Monitoring Criteria: According to 2 CFR §200.332 (Requirements for Pass-Through Entities), a pass-through entity must monitor the activities of subrecipients as necessary to ensure that federal funds are used for authorized purposes and in compliance with applicable statutes, regulations, and terms and conditions of the Federal award. Required monitoring includes, but is not limited to, the following: a. Reviewing financial and programmatic reports; b. Performing risk assessments of subrecipients; c. Following up on deficiencies identified through audits or reviews; and d. Ensuring subrecipients have required audits under 2 CFR §200.501. Lack of documented subrecipient monitoring constitutes noncompliance with Uniform Guidance. Condition: During our walkthrough and review of the Organization’s grant management processes, we noted that the Organization does not have formal subrecipient monitoring policies or procedures in place. While a monitoring memo exists, it documents only an informal process and does not provide structured oversight. Specifically: - No risk assessments, monitoring checklists, or follow-up documentation were maintained. - There is no formalized, structured process or standard for overseeing subrecipient activities. - Required monitoring under 2 CFR §200.332 could not be performed. Cause of Condition: Management has not developed formal policies and procedures for subrecipient monitoring or consistent documentation standards. Potential Effect of Condition: Noncompliance: Failure to monitor subrecipients increases the risk of noncompliance with Uniform Guidance requirements. Questioned Costs: Federal program expenditures passed through to subrecipients may become subject to questioned costs if insufficient oversight results in unallowable or unsupported charges. Financial & Operational Risk: The Organization may be exposed to reputational or financial consequences, including funding restrictions, if the lack of monitoring persists. Questioned Cost: Not quantifiable. Recommendation: We recommend the Organization develop and implement formal policies and procedures for subrecipient monitoring, including: a. Conducting and documenting subrecipient risk assessments; b. Establishing structured monitoring procedures, such as periodic reviews, report evaluations, and follow-ups; c. Maintaining written documentation of all monitoring activities; and d. Implementing policies to ensure consistent oversight of subrecipient performance and compliance. Description of the Nature and Extent of Issues Reported: The Organization did not perform or document any formal subrecipient monitoring activities during the fiscal year. This constitutes noncompliance with 2 CFR §200.332. Management Response: Management concurred with the finding. In the future, the organization will require midyear and year-end impact reports from each grant subrecipient.
2025-004 Inadequate Cash Management Procedures and Noncompliance with Period of Performance Requirements Program Name/Assistance Listing Number: 93.788 Opioid STR Federal Agency: Department of Health and Human Services Type of Finding: Significant Deficiency Compliance Requirement: Cash Management Criteria: Per 2 CFR §200.305(b), non-Federal entities must minimize the time elapsing between the transfer of funds from the U.S. Treasury and the disbursement of those funds for program purposes under the period of performance. Furthermore, entities must have written procedures that clearly outline the timing and methods for drawing down federal funds in accordance with cash management requirements. These procedures should be documented, reviewed, approved, and periodically revised to ensure ongoing compliance. Condition: During our testing of cash management procedures, we noted the following: 1. UMADAOP of Lucas’ written procedures lacked key information, including dates of preparation, approval, implementation, review, and revision. 2. For Grant ID 24001119 (budget period 9/30/2023–9/30/2024; NOSA received 5/22/2024), funds were drawn before the start of FY 2025: First drawdown: 6/6/2024 – $1,125,000 Second drawdown: 7/22/2024 – $375,000 Total expenditures as of 12/31/2024: $352,021 expended before FY 2025 start; $990,223 July–Sept 2024; $157,756 Oct–Dec 2024 The timing of these drawdowns did not fully align with the requirement to minimize the time elapsed between the receipt of federal funds and their disbursement for program expenditures, resulting in funds being held in advance of actual cash needs. Cause of Condition: Management has not developed formal policies and procedures for subrecipient monitoring or consistent documentation standards. Cause of Condition: Funds were drawn before the start of FY 2025 because the Notice of Subaward (NOSA) for Grant ID 24001119 was received on 5/22/2024, which was prior to the beginning of the fiscal year. UMADAOP of Lucas’ written procedures did not provide guidance on aligning drawdowns with actual cash needs, and there was no documented review or update of the procedures to ensure compliance with federal cash management requirements. As a result, funds were held in advance of actual program expenditures, reflecting a gap in internal controls over cash management. Potential Effect of Condition: The use of a predetermined drawdown schedule that is not based on actual cash needs could lead to excess federal funds being held unnecessarily, increasing the risk of non compliance with cash management requirements. Additionally, the absence of comprehensive documentation for cash management procedures could result in inconsistencies in implementation, a lack of accountability, and difficulties in ensuring that policies remain current and effective. Questioned Cost: Not quantifiable. Recommendation: UMADAOP of Lucas should revise its cash management procedures to ensure they are in full compliance with federal requirements. UMADAOP of Lucas should adopt a drawdown process that is based on actual cash needs, minimizing the time elapsing between the drawdown of federal funds and their disbursement for program expenditures. Additionally, the organization should update its written procedures to include documentation of when the policies were prepared, approved, implemented, reviewed, and revised. This will help ensure that cash management practices are transparent, consistent, and compliant with applicable regulations. Finally, the organization should consider training relevant staff on the updated procedures and the importance of compliance with cash management requirements. Description of the Nature and Extent of Issues Reported: Funds were drawn and held longer than necessary, and the organization lacks adequate cash management procedures, constituting noncompliance with 2 CFR §200.305. Management Response: Management concurred with the finding. The organization will revise its current draw-down procedures to reflect timing and methods for drawing down federal funds that are in compliance with cash management requirements.