Audit 402329

Finding #2025-004 – Reporting – Significant Deficiency and Other Noncompliance. Applicable federal programs: U.S. Department of Health and Human Services, Assistance Listing #93.959, Block Grants for Prevention and Treatment of Substance Abuse, Recovery Support Services, Contract Number: HHS000130500013, Contract Year: 09/01/24-08/31/25; Prevention and Behavioral Health Promotion Youth Prevention Services, Contract Number: HHS001344700032, Contract Year: 09/01/24-08/31/25. Criteria: Reporting – The U. S. Department of Health and Human Services requires quarterly and annual Federal Financial Reports be submitted to report expenditures under federal awards. Condition and context: During our testing of the Federal Financial Reports, we noted that the final financial status reports were submitted late and the reports did not have evidence of review and approval. Additionally, a recoupment was required by the funder upon review of the closeout report for contract number HHS000130500013. Cause: Management did not have controls in place to ensure reporting was submitted timely, accurately reflected only allowable costs in line with the total contract budget and have a secondary review prior to submission. Effect: Failure to adequately establish and maintain a system of internal controls over grant reporting may result in the Montrose Center violating or failing to meet the grant contract requirements. Recommendation: Re-emphasize policies and procedures to meet the grant reporting requirements and ensure that all reports are independently reviewed prior to submission. Views of responsible officials and planned corrective actions: Management agrees with the finding. See Corrective Action Plan.

Finding #2025-003 – Reporting – Significant Deficiency and Other Noncompliance. Applicable federal programs: All programs. Criteria: Schedule of Expenditures of Federal Awards – In accordance with the Uniform Guidance §200.508 and §200.510, management is required to prepare a schedule of expenditures of federal wards (SEFA) for the period covered by the auditee’s financial statements which must include the total federal awards expended. Condition and context: The SEFA originally provided by the Montrose Center did not reconcile to the underlying accounting records. Additionally, some funding was incorrectly reported as state funding instead of federal. the Montrose Center did not have procedures in place to identify and reflect all federal grants on the SEFA or have timely procedures to reconcile the federal expenditures to the federal program revenue. Cause: As a result of turnover and changes in responsibilities in key accounting and grant management positions, management did not implement an independent review process for the preparation of the SEFA. Effect: Failure to adequately establish and maintain a system of internal controls over preparation of the SEFA adversely affected the Montrose Center’s ability to correctly identify and summarize federal awards for reporting in accordance with the Uniform Guidance. Recommendation: Develop policies and procedures to identify and reflect all federal programs on the SEFA, reconcile the federal expenditures to the federal program revenue on a routine basis, and formalize the independent review process for the SEFA and grant billings. Views of responsible officials and planned corrective actions: Management agrees with the finding. See Corrective Action Plan.