Audit 408851

Finding 2024-002: Significant Deficiency – Allowable Costs / Cost Principles Repeat Finding – 2023-002 Federal Program: Opioid STR - SARC Federal Agency: U.S. Department of Health and Human Services Assistance Listing Number (ALN): 93.788 Pass-Through Agency: Minnesota Department of Health and Human Services Criteria: 2 CFR 200.403(e) and (f) state that charges to federal awards must be determined in accordance with generally accepted accounting principles (GAAP) and be adequately documented. These records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable and properly allocated; and support the distribution of the costs among specific activities or cost objectives if the expenses supported more than one federal award, or a federal award and non-federal award. Also, 2 CFR 200.430(i)(1)(i) & (vii) state that charges to federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable and properly allocated; and support the distribution of the employee's salary or wages among specific activities or cost objectives if the employee works on more than one federal award, or a federal award and non-federal award. Condition: Two of the forty non-payroll transactions that were tested did not have evidence of approval for the amount allocated to the federal program. Seven of the forty payroll transactions that were tested did not have evidence of an approved pay rate. The sample was not a statistically valid sample. Cause: The Organization's control process for expenditure and payroll authorizations were not properly implemented. Effect: Inadequate controls over the allocation of costs could result in unallowable costs being improperly applied to the federal program. Questioned Costs: Not required Recommendation: The Organization should have formal written procedures to ensure that all relevant authorization and reviews have been completed before allocating costs to federal programs. Views of Responsible Officials and Planned Corrective Action: Management agrees with the auditors' finding and will take action to implement controlling procedures over federal programs.