Audit 403105

Federal Agency: Department of Health and Human Services Federal Program Name: Block Grants for Prevention and Treatment of Substance Abuse Federal Assistance Listing Number: 93.959 Pass-Through Agency: State of Connecticut Department of Mental Health and Addiction Services Award Period: 3/1/2023-8/31/2025 Type of Finding: Allowable Costs/Cost Principles – Cutoff Criteria or Specific Requirement: The Office of Management and Budget (OMB) Cost Principles and Uniform Guidance require expenditures charged to federal awards to be recorded in accordance with applicable cost standards and the entity’s cost allocation policies, including proper expenditure cutoff and reporting within the applicable grant period. Condition: Of the twenty-five expenditures tested, one exception was identified related to improper cutoff timing for reporting the expenditure. Questioned Costs: Immaterial Context: The exception related to employee reimbursement expenditures incurred during the prior fiscal year but submitted after the June 30, 2024 fiscal year-end. While the expenditures represented allowable costs, the related service period fell outside the applicable grant period. As a result, the expenditures were recorded in the fiscal year ended June 30, 2025 rather than the appropriate reporting period. Cause: Employee reimbursement requests were not submitted timely, resulting in the expenditures being recorded in the fiscal year in which payment was made rather than the fiscal year in which the related costs were incurred. Recommendation: Management should continue to strengthen year-end and subsequent review procedures over invoices and employee reimbursements to ensure expenditures are recorded in the appropriate reporting period and within the applicable grant period. Views of Responsible Officials and Planned Corrective Action: Management concurs with the finding.

Federal Agency: Department of Health and Human Services Federal Program Name: Block Grants for Community Mental Health Services and Block Grants for Prevention and Treatment of Substance Abuse Federal Assistance Listing Number: 93.958 and 93.959 Pass-Through Agency: State of Connecticut Department of Mental Health and Addiction Services, and State of Connecticut Department Children and Family Services Award Period: 7/1/2024-6/30/2025 and 3/1/2023-8/31/2025 Type of Finding: Allowed Costs in Relation of Payroll Allocations Criteria or Specific Requirement: The Office of Management and Budget (OMB) Cost Principles and Uniform Guidance require expenditures charged to federal awards to be recorded in accordance with applicable cost standards and the entity’s cost allocation policies, including proper allocations of payroll related costs. Time and effort reported must correspond to the actual hours worked and be consistent with the allocations of payroll costs reflected in the entity’s payroll records and general ledger. Condition: During testing of payroll transactions charged to federal awards, exceptions were identified across four employees in which the hours reflected on employee time cards did not agree to the labor costs allocated to federal awards in the general ledger and/or journal entries. The discrepancies noted indicate that payroll allocations to federal programs were not consistently supported by the underlying time records maintained by the entity. However, all federal funding is from Department of Health and Human Services. Questioned Costs: Immaterial Context: The exceptions identified relate to discrepancies between actual time worked as documented on employee time cards and the labor costs recorded and allocated to federal programs within the general ledger. While the employees performed work during the relevant periods and total payroll costs were accurately stated, the allocations to federal awards were not supported by the underlying time card records, resulting in labor charges to federal programs that were not reflective of actual time and effort spent on those programs. Cause: The payroll allocation process was not reconciled to individual employee time card records prior to posting journal entries to the general ledger. Recommendation: Management should implement reconciliation procedures to ensure that payroll allocations recorded to federal award programs are supported by and agree to actual time records prior to recording journal entries to the general ledger. Views of Responsible Officials and Planned Corrective Action: Management concurs with the finding.

Federal Agency: Department of Health and Human Services Federal Program Name: Block Grants for Community Mental Health Services and Block Grants for Prevention and Treatment of Substance Abuse Federal Assistance Listing Number: 93.958 and 93.959 Pass-Through Agency: State of Connecticut Department of Mental Health and Addiction Services, and State of Connecticut Department Child and Family Services Award Period: 7/1/2024-6/30/2025 and 3/1/2023-8/31/2025 Type of Finding: Reporting Criteria or Specific Requirement: Per the corresponding agreements, various financial reporting requirements on programs include interim and annual fiscal year-end financial reports. Condition: During testing of reporting requirements, certain financial reports submitted to the respective awarding agencies were identified for which supporting documentation was not available to confirm submission by the designated due dates established under the applicable grant agreements. As a result, it could not be determined whether certain interim and annual fiscal year-end financial reports were submitted in accordance with the deadlines required under the respective grant agreements. Questioned Costs: No costs were questioned. Context: While certain interim and annual fiscal year-end financial reports were submitted to the respective awarding agencies, timely submission in accordance with the applicable grant agreements could not be confirmed, as documentation evidencing the date of submission was not available or retained by the Organization. Cause: While management was aware of the reporting requirements, reporting practices lapsed, resulting in the inability to confirm whether submissions were made in accordance with the deadlines established under the applicable grant agreements. Recommendation: Management should implement a formal reporting calendar or tracking mechanism to monitor and ensure timely submission of all interim and annual fiscal year-end financial reports required under applicable grant agreements. Procedures should include designated responsibility for report submission and retention of supporting documentation evidencing the date of submission. Views of Responsible Officials and Planned Corrective Action: Management concurs with the finding.