Finding: 2024-004: Record Retention Federal Programs - Block grants for Community Mental Health Services. Federal Financial Assistance Listings - 93.958. Federal Award Numbers - 4529066471 and 4529064876. Federal Agencies - Department of Health and Human Services Pass-through Entity - ODMHSAS. Allowable Activities or Unallowed, Allowable Costs/Cost Principles, Eligibility, and Period of Performance. Significant Deficiency in Internal Control over Compliance. Criteria: Uniform Guidance (2 CFR 200.334) establishes recipients and subrecipients must retain all federal award records for three years from the date of submission of their final financial report. For awards that are renewed quarterly or annually, the recipient and subrecipient must retain records for three years from the date of submission of their quarterly or annual financial report, respectively. Records to be retained include but are not limited to financial records, supporting documentation, and statistical records. Condition: Hope was unable to provide support for reimbursed expenditures totaling 31,673, as reported in the SEFA. Cause: Management's internal control for retaining documentation was not adequately designed to ensure the population of costs and underlying support could be timely identified and supported under the Uniform Guidance requirements. Effect or Potential Effect: Without adequate retention of support for expenditures reported and reimbursed, the auditor was unable to determine if they were in compliance with requirements under the federal award. Questioned Costs: 31,673. Context: The management team and personnel responsible for overseeing document approval and retention changed from the period the costs were initially incurred and approved to the period they were under audit and the current management team was not able to locate the supporting documentation. Repeat Finding from Prior Year: No. Recommendation: Management may consider implementing specific retention policies and controls to ensure digital copies as well as sub-listing of all applicable costs being reimbursed are maintained in accordance with the 2 CFR 200.334. Views of Responsible Officials: Management's response is included in the corrective action plan.
Finding: 2024-005: Payroll Allocation. Federal Programs - Continuum of Care. Federal Financial Assistance Listing - 14.267. Federal Award Numbers - OK0024L6I021111, OK0024L6I022113, OK0024L6I022212, OK0024L6I022213, OK0024L6I022214, OK0024L6I022215, OK0024L6I022316. Federal Agencies - Department of Housing and Urban Development. Pass-through Entities - City of Oklahoma City and the City of Norman. Allowable Activities or Unallowed, Allowable Costs/Cost Principles. Material Weakness in Internal Control over Compliance and Material Noncompliance. Criteria: Per Uniform Guidance (2 CFR 200.403) as it relates to federal grants: Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under federal awards: a) Be necessary and reasonable for the performance of the federal award and be allocable thereto under these principles; b) Conform to any limitations or exclusions set forth in these principles or in the federal award as to types or amount of cost items; c) Be consistent with policies and procedures that apply uniformly to both federally financed and other activities of the nonfederal entity; d) Be accorded consistent treatment. A cost may not be assigned to a federal award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to the federal award as an indirect cost; e) Be determined in accordance with generally accepted accounting principles (GAAP) , except, for state and local governments and Indian tribes only, as otherwise provided for in this part; (f) Not be included as a cost or used to meet cost sharing or matching requirements of any other federally financed program in either the current or a prior period; g) Be adequately documented; h) Cost must be incurred during the approved budget period. 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition: Hope could not readily provide the appropriate documentation to support the allocations of compensation applicable to the referenced programs for actual time worked, or to support the drawdown from grant funding. Cause: Management did not have procedures and controls in place to ensure allocated payroll was for time-and-effort applied to the award and ensure time was not allocated across multiple awards. Effect or Potential Effect: We were unable to determine whether the payroll costs allocated to the federal awards were allowable due to the lack of systematic application of payroll allocations to time and effort of the employees. Questioned Costs: 262,125. Context: Total allocated salaries and fringe benefits equal 262,125. None of the amounts were able to be supported by records that accurately reflect the work performed. Repeat Finding from Prior Year: No. Recommendation: Controls should be put in place to ensure that expenditures of program funds for payroll expense are reviewed and approved by program management and are properly allocated based on time and activities worked consistent with the grant requirements. Additionally, level of effort requirements as made known in grant contracts should be substantiated by payroll allocation or other records. Views of Responsible Officials: Management's response is included in the corrective action plan.
Finding: 2024-006 Voided Rental Payments. Federal Programs - Continuum of Care. Federal Financial Assistance Listing - 14.267. Federal Award Numbers - OK0024L6I021111, OK0024L6I022113, OK0024L6I022212, OK0024L6I022213, OK0024L6I022214, OK0024L6I022215, OK0024L6I022316. Federal Agency - Department of Housing and Urban Development. Pass-through Entities - City of Oklahoma City and the City of Norman. Allowable Activities or Unallowed, Allowable Costs/Cost Principles. Significant deficiency in Internal Control over Compliance. Criteria: Uniform Guidance (2 CFR 200.302(b) ) requires recipients and subrecipients to maintain financial management systems that provide accurate, current, and complete disclosure of financial results. In addition, 2 CFR 200.403 requires costs charged to federal awards to be allowable and adequately supported. 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition: Hope received reimbursement for rental expenditures that were later voided due to tenants no longer being current residents. Cause: Management did not maintain controls to ensure that expenditures claimed for reimbursement were supported by actual costs incurred. Backdated and adjusting entries were recorded without reconciliation to underlying expense documentation or budget tracking schedules and ultimately claimed to the granting pass-through agency. Effect or Potential Effect: Expenditures claimed for reimbursement exceed actual expenditures incurred. As a result, a portion of grant expenditures recorded is unsupported and may be unallowable. Questioned Costs: 1,305 questioned and 9,675 of likely questioned costs. Context: A nonstatistical sampling of 54 out of over 3,000 transactions were selected for testing of Activities Allowed and Unallowed, and Allowable Costs/Cost Principles. Two transactions totaling 1,305 were selected for testing that were voided after invoicing. The expenditure detail included 9,675 of other expenditures with the description "voided." Repeat Finding from Prior Year: No. Recommendation: Management may consider a subsequent review or an additional review when adjusting and removing costs after drawdowns to ensure any claimed expenses that subsequently become voided are adjusted in future drawdowns. Views of Responsible Officials: Management's response is included in the corrective action plan.
Finding: 2024-007 Late Fees. Federal Programs - Continuum of Care. Federal Financial Assistance Listing - 14.267. Federal Award Number - OK0024L6I021111, OK0024L6I022113, OK0024L6I022212, OK0024L6I022213, OK0024L6I022214, OK0024L6I022215, OK0024L6I022316. Federal Agency - Department of Housing and Urban Development. Pass-through Entity - City of Oklahoma City and the City of Norman. Allowable Activities or Unallowed, Allowable Costs/Cost Principles. Significant deficiency in Internal Control over Compliance. Criteria: Uniform Guidance (2 CFR 200.302(b) ) requires recipients and subrecipients to maintain financial management systems that provide accurate, current, and complete disclosure of financial results. In addition, 2 CFR 200.403 requires costs charged to federal awards to be allowable and adequately supported. 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition: Hope incurred rental late fees related to housing units of participants in the program. These late fees resulted from rent payments remitted after the contractual due date and were claimed as part of rental costs. Late fees represent penalties and are not an allowable cost under the program. The tenant-caused damage exception permitted under 24 CFR Part 578 does not extend to late fees. Cause: Hope did not establish internal controls to identify and exclude unallowable late fees from rent charged to the program. Additionally, reimbursement requests were not reviewed to ensure penalties were segregated from allowable rental costs. Effect or Potential Effect: Hope incurred unallowable costs. Questioned Costs: 500. Context: A nonstatistical sampling of 54 out of over 3,000 transactions were selected for testing of Activities Allowed and Unallowed, and Allowable Costs/Cost Principles. Four transactions included rental late fees in the rent expense claimed. Repeat Finding from Prior Year: No. Recommendation: Management may consider reviewing both the approval of rental expenses prior to issuing rental assistance checks as well as reimbursement processing of rental costs to ensure late fees are not included. Views of Responsible Officials: Management's response is included in the corrective action plan.
Finding: 2024-008. Untimely Reimbursement Requests. Federal Programs - (1) Block Grants for Community Mental Health Services (2) Continuum of Care. Federal Financial Assistance Listings - (1) 93.958, (2) 14.267. Federal Award Numbers - (1) 4529066471 and 4529064876, (2) OK0024L6I021111, OK0024L6I022113, OK0024L6I022212, OK0024L6I022213, OK0024L6I022214, OK0024L6I022215, OK0024L6I022316. Federal Agencies - (1) Department of Health and Human Services, (2) Department of Housing and Urban Development. Pass-through Entity - (1) The ODMHSAS, (2) The City of Oklahoma City and the City of Norman. Special Tests - Timely Submission of Drawdowns. Significant deficiency in Internal Control over Compliance. Criteria: Performance requirements under the agreements with the ODMHSAS requires recipients and subrecipients to submit reimbursement requests within 60 days from the last day services were last rendered during the invoice month. Condition: The entity submitted reimbursement requests after the timeframe required by the grant agreement (60 days). The reimbursement was honored by the pass-through agency, resulting in no questioned costs, however, written approval or a waiver from the pass-through entity was not obtained for submitting reimbursement requests outside the required timeframe. As a result, costs included in the late reimbursement requests were not submitted in accordance with the terms and conditions of the subaward. Cause: The untimely submission of reimbursement requests were the result of changes in invoicing requirements and communication with pass-through agency. However, Hope did not obtain written approval or a formal waiver from the pass-through entity authorizing reimbursement requests to be submitted outside the timeframe required by the subaward agreement and corroborate approval of untimely submissions. Effect or Potential Effect: As a result of this condition, the entity did not comply with the terms and conditions of the subaward. Costs submitted outside the required timeframe may be ineligible for reimbursement. Questioned Costs: None. Context: A nonstatistical sample of 18 out of 134 drawdowns was selected for testing. Of the 18 transactions tested, seven were submitted outside of the 60-day requirement, with submission delays ranging from seven to 83 days. Repeat Finding from Prior Year: No. Recommendation: Management should implement procedures to ensure reimbursement requests are submitted within the timeframe required by the subaward agreement. In circumstances where this cannot be completed or will be delayed, a waiver and documentation of contact with the agency should be maintained. Views of Responsible Officials: Management's response is included in the corrective action plan.
Finding: 2024-009. Closeout Procedures and Reporting. Federal Program - Section 223 Demonstration Programs to Improve Community Mental Health Services. Federal Financial Assistance Listing - 93.829. Federal Award Number - H79SM085287. Federal Agency - Department of Health and Human Services. Pass-through Entity - Substance Abuse and Mental Health Services Administration (SAMHSA). Special Test - Closeout Procedures. Significant Deficiency in Internal Control over Compliance. Criteria: Uniform Guidance (2 CFR 200.344) establishes requirements for grantees to meet closeout terms and conditions listed in the notice of award. The notice of award included a requirement for a final progress report to be submitted as part of closeout procedures. Condition: Hope was unable to provide support of timely completing the closeout procedures required under SAMHSA's Notice of Award in compliance with 2 CFR 200.344 for closeout terms and conditions to accurately and timely report within 120 days after the project period (August 31, 2023). Cause: Management did not maintain controls to ensure that record retention was maintained for the required compliance period defined in the notice of award. Effect or Potential Effect: SAMHSA data collection was not complete for Hope's expenditures under the notice of award with pass-through agency. Questioned Costs: None. Context: Closeout requirements include reconciliation of financial expenditures to reported disbursements, which was not able to be supported. Hope supported submission of the Final Federal Financial Report (SF-425); however, the corresponding Final Progress Report was not able to be supported. Repeat Finding from Prior Year: No. Recommendation: Management may consider implementing specific retention policies and controls to ensure all required close-out reporting requirements are timely completed and to ensure retention of evidence of completion in accordance with the 2 CFR 200.344. Views of Responsible Officials: Management's response is included in the corrective action plan