Finding 2025-003: Allowable Costs and Internal Controls Identification of the Federal Program - US Department of Health and Human Services 93.778 Grants to States for Medicaid Criteria - In accordance with 2 CFR 200.302(a) all recipient and subrecipient financial management systems must be sufficient to permit tracking expenditures to establish that funds have been used in accordance with Federal statues, regulations, and the terms and conditions of the Federal award. 2 CFR 200.302(b)(3) further clarifies that records must contain information necessary to identify Federal awards, authorizations, financial obligations, unobligated balances, as well as assets, expenditures, income, and interest. Condition - We noted during our testing of non-payroll direct cost that 8 out of 16 expenditures, totaling $4,907, did not have adequate supporting documentation, and were charged to the respective grants based on budgeted costs and allocations. These exceptions included 2 sample selections, totaling $4,345, that were submitted for reimbursement under another federal grant. The total federal portion of the invoice charged under another grant in 2025 was $20,908. Cause - Due to a lack of formal internal control policies and procedures, the Organization did not maintain sufficient and appropriate evidence of non-payroll expenditures incurred and applied to the program. Effect - Charges to Federal awards for non-payroll related costs may not reflect actual expenditures incurred and allocated to specific programs, even though the charges are not in excess of amounts approved for the grant period. Questioned Costs Known questioned costs: $21,371 Likely questioned costs: $25,753 Context - We selected 16 non-payroll transactions charged to the federal program to test controls over allowable costs. Total federal non-payroll costs under these awards total $47,124. We noted during our testing of non-payroll direct cost that 8 out of 16 expenditures, totaling $4,807, did not have adequate supporting documentation, and were charged to the respective grants based on budgeted costs and allocations. For 4 of the 8 exceptions noted, totaling $150, we noted the Organization was unable to demonstrate that the invoice provided related to the sample selection. For 2 out of the 8 exceptions noted, totaling $313, we noted the Organization was unable to provide documentation supporting the expenditure was incurred. For 2 out of the 8 exceptions noted, totaling $4,345, the Organization provided an invoice that was reimbursed by another federal grant. The total federal portion of the invoice charged under another grant in 2025 was $20,908. Repeat Finding – No Recommendation - We recommend the Organization implement internal controls and policies to ensure actual non-payroll expenditures charged to each federal award are properly tracked and supported. This may include maintaining a detailed listing of invoices and other supporting documentation that substantiates the actual allowable costs charged to each award. Management should review and verify this documentation for accuracy and completeness on a timely basis. View of Responsible Officials - Management will strengthen controls over non-payroll expenditures charged to federal awards to ensure costs are based on actual expenditures, adequate support, allowability under the applicable award, and not charged to or reimbursed by another federal award.
Finding 2025-004: Reporting and Internal Controls Identification of the Federal Program - US Department of Health and Human Services, 93.778 Grants to States for Medicaid Criteria - In accordance with 2 CFR 200.329(c)(1) recipients and subrecipients must submit performance reports as required by the Federal award. In accordance with 2 CFR 200.303(a) recipients and subrecipients of Federal Awards must establish, document, and maintain effective internal controls over the Federal award that provides reasonable assurance that they are managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Recipients and subrecipients of federal awards must maintain evidence that such internal controls were performed. Condition - The Organization was unable to provide sufficient and appropriate evidence that reports required under the federal program were reviewed and approved by appropriate personnel prior to submission to the granting agency. Additionally, the Organization was unable to provide sufficient and appropriate evidence that one out of five selected reports was prepared and submitted as required under the federal program. Cause - Due to a lack of formal documentation of current policies and procedures, the Organization did not maintain sufficient or appropriate evidence that reviews and approvals were performed for five of the five sampled reports. Due to a lack of formal policies and procedures, the Organization did not maintain sufficient or appropriate evidence that reports submitted through the Women & Minorities portal were prepared or submitted. Effect - Reports submitted to the granting agency may be incomplete or inaccurate. Questioned Costs – None Context - Management was unable to produce sufficient and appropriate evidence that five of the five reports selected for testing were reviewed and approved prior to submission to the granting agency. For one report selected, we noted the underlying data did not reconcile to the final report submitted to the granting agency. Additionally, for one report selected, the Organization was unable to provide sufficient and appropriate evidence that the report was prepared and submitted. Repeat Finding – No Recommendation - We recommend the Organization establish formal internal controls, and documentation of their performance, relating to the review and approval of reports by appropriate personnel who is knowledgeable of such reporting requirements. Additionally, we recommend the Organization develop internal controls relating to the documentation of reports submitted through the Women & Minorities portal. View of Responsible Officials - Management will formalize the review and approval process for required federal financial reports. Reports will be reviewed by appropriate personnel knowledgeable of grant requirements, and evidence of the review will be maintained.
Finding 2025-001 – Schedule of Expenditures of Federal Awards (SEFA) Preparation Information on Federal Program(s) – US Department of Health and Human Services and US Department of Housing and Urban Development, 93.224/93.527 Health Center Program Cluster, 93.778 Grants to States for Medicaid, 14.267 Continuum of Care Program Criteria - In accordance with the Code of Federal Regulations (CFR) Section 200.510(b), non-federal entities must prepare a SEFA for the period covered by the entity’s financial statements, including the total federal awards expended for each individual program and the Assistance Listings number (ALN). For a cluster of programs, the non-federal entity must provide the cluster name and total for the cluster. Condition - During our review of the SEFA, errors were identified in ALN classification, completeness of federal expenditures, inclusion of nonfederal expenditures, inclusion of out of period expenditures, and identification and presentation of clusters. Cause - The Organization’s review of the SEFA was not conducted at a level of precision sufficient to identify and prevent errors in the SEFA preparation process. As a result, the SEFA was not prepared in accordance with the Code of Federal Regulations. Effect - The SEFA was not accurately or completely prepared. The omission of certain federal expenditures resulted in a major program not being identified in the original major program determination process. In addition, the use of inaccurate ALN classifications resulted in changes to the expenditures reported within one of the major programs. Questioned Costs – None Context - During our review of the SEFA, we identified multiple errors in the Organization’s presentation and reporting of federal expenditures. The Organization did not properly identify applicable federal program clusters, reported incorrect ALNs for two federal grants, included $33,847 of non-federal expenses as federal expenditures, excluded $924,673 of expenditures related to two federal grants, and reported $118,099 of expenditures related to four federal grants in the incorrect reporting period. These errors affected major program determination and reporting. Repeat Finding – No Recommendation - We recommend the Organization enhance its review controls over SEFA preparation to ensure the SEFA is accurately and completely prepared in accordance with the Code of Federal Regulations. Management’s review should be performed at a sufficient level of precision to identify and prevent errors prior to issuance. View of Responsible Officials - Management agrees that appropriate controls are necessary to ensure the SEFA is complete, accurate, and prepared in accordance with federal requirements. The SEFA process will include reconciliation of federal expenditures to the general ledger and grant records, verification of Assistance Listing Numbers (ALNs), identification of applicable program clusters, and confirmation that expenditures are reported in the proper reporting period.
Finding 2025-002: Fringe Benefit Cost Objectives Internal Controls Identification of the Federal Program - US Department of Health and Human Services, 93.224/93.527 Health Center Program Cluster, 93.778 Grants to States for Medicaid Criteria - In accordance with 2 CFR 200.431(d), fringe benefits may be assigned to cost objectives by identifying specific benefits to specific individuals or by allocating on the basis of entity-wide salaries and wages of the employees receiving the benefits. When the allocation method is used, separate allocations must be made to selective groupings of employees unless the recipient or subrecipient demonstrates that costs in relationship to salaries and wages do not differ significantly for different groups of employees. Condition - Fringe benefit charges to federal awards were based on budgeted amounts rather than actual costs incurred. Specifically, for three grants, the entity did not maintain separate calculations supporting the allocation of fringe benefits to the relevant employee groupings, did not track the actual fringe benefits incurred by the individuals charged to each grant, and was unable to demonstrate that the relationship of fringe benefit costs to salaries and wages did not differ significantly among different groups of employees. Cause - The Organization’s current processes and controls do not allow for fringe benefit costs to be tracked by individual grant. In addition, the Organization did not implement controls to perform and document a review of budgeted-to-actual fringe benefit costs or to maintain separate calculations supporting the allocation of fringe benefits to the relevant employee groupings. Effect - Charges to federal awards for fringe benefits may not reflect specific amounts allocated to specific programs, however allowable fringe benefit costs incurred by the Organization exceeded the budgeted amounts charged the grant, and therefore there are no questioned costs to report. Questioned Costs – None Context - Fringe benefits were charged to each grant by applying a fringe benefit allocation rate to the actual salaries and wages of the applicable employee group. We tested the fringe benefit allocation rate calculation at the grant level for each of the in-scope grants. We noted that the rate used to allocate fringe benefit costs was based on entity-wide budgeted amounts rather than actual costs and was not supported by an analysis of the actual fringe benefit costs attributable to the relevant employee groups. Additionally, for three of the four in-scope grants, the Organization could not demonstrate that fringe benefits costs in relationship to salaries and wages at an entity-wide level did not differ significantly for different groups of employees assigned to each individual grant. Repeat Finding – No Recommendation - We recommend the Organization implement internal controls to ensure fringe benefit costs charged to each grant or federal program are supported and appropriate. This may include tracking actual fringe benefit costs by grant or program, reconciling actual fringe benefits incurred to amounts charged, and/or preparing and documenting fringe benefit allocation calculations by grant or program to support the rate used. Management should review and verify the reconciliation or allocation rate calculation for accuracy and appropriateness on a timely basis. View of Responsible Officials - Management will establish a formal process to support fringe benefit costs charged to federal awards using actual fringe benefits costs and documented allocation methodologies rather than relying on budgeted amounts. Supporting calculations will demonstrate the relationship between salaries, wages, and fringe benefit expenses associated with the applicable grant or employee grouping.