Statement of Condition: Twelve expenditures of direct costs were for the acquisition of equipment and other capital expenditures which did not receive timely written approval from HHHS. Criteria: Equipment and other capital expenditures require prior written approval by the HHS awarding agency or pass-through entity prior to obligating or incurring the costs. This section also disallows equipment and other capital expenditures as indirect costs. Further, the Office of Federal Financial Management (OMB) Compliance Supplement establishes that requests for prior approval must be explicit enough so that the Administration for Children and Families (ACF) can identify the purpose and cost of the expenditure. Approval of budgets that include general budgetary descriptions and budget line-item totals are insufficient. Additionally, grantees must receive written approval from an authorized member of ACF. A lack of response is not, in itself, approval. Cause: The Home considers approval during the budget and negotiation process as an implicit approval for proposed equipment and capital expenditures. Upon approval of the budget by the HHS, a Notice of Award is granted to the Home. This Notice of Award delineates the purchases of equipment approved and amounts budgeted for each line-item. Effect: Capital expenditures incurred may be disallowed. Context: The test found nine of sixty expenditures were not in compliance; with questioned costs totaling $371,642. Recommendation: The Home should obtain explicit prior written approval for equipment and other capital expenditures. Views of Responsible Officials and Planned Corrective Action: The Home agrees that the records maintained did not support prior written approval of aforementioned costs. However, the Home disagrees with the finding regarding the allowability of the vehicle leases. The Home provided ORR with the request to budget for the vehicle leases, as well as copies of lease terms, prior to the approval of the grant and the amounts budgeted were approved. Regarding the capital expenditures, these items were reasonable and necessary to facilitate the program and The Home will request to have these purchases approved retro-actively. The Home is currently in the process of appealing the capital lease ? vehicle rentals disallowed in the ACF?s Notice of Non-Compliance: Monetary Disallowance dated July 12, 2023. See additional information at Note 19.
Statement of Condition: Six expenditures of direct and indirect costs were inaccurately calculated by the Home. Criteria: Procedures should be established to ensure adequate separation of duties and review is performed on the calculation of direct and indirect costs. Cause: During 2022, the calculation of direct and indirect costs was conducted with minimal review. This environment was subject to human error in the performance of these calculations and respective drawdown of funds. Effect: The cost of assistance may be disallowed. Context: The test found six of sixty expenditures were not in compliance; with questioned costs totaling $254,173. Recommendation: The Home should segregate duties of measurement of direct and indirect costs, detailed review of measurement, and high-level review and drawdown to separate members of the accounting staff. Views of Responsible Officials and Planned Corrective Action: The Home agrees with the finding. The funds were drawn down from the grant due to human error. Shortly after discovering this mistake, The Home has developed a process in which the drawn down amounts is reviewed and approved before processing the drawdown. The amounts overdrawn were used to pay grant expenditures during FY2023, which still covers the grant budget period.
Statement of Condition: On July 12, 2023, the Home received notice from the Administration for Children and Families (ACF) of a final judgement of disallowance regarding several categories of expenditures. Criteria: During the period of August 1, 2019 through July 1, 2020, the Home failed to comply with statutory authority; the Code of Federal Regulations (CFR), Title 45 Part 75, particularly 45 CFR ?75.302 Financial Management and Standards for Financial Management Systems, 45 CFR ? 75.303 Internal Controls, 45 CFR ?75.309 Period of Performance and Availability of Funds, 45 CFR ? 75.361 Retention Requirements for Records, 45 CFR ?75.403 Factors Affecting Allowability of Costs, 45 CFR ?75.404 Reasonable Costs, 45 CFR ?75.405 Allocable Costs, 45 CFR ?75.407 Prior Written Approval, 45 CFR ?75.431 Compensation ? fringe benefits, 45 CFR ?75.421 Advertising and Public Relations, 45 CFR ?75.436 Depreciation, 45 CFR ?75.439 Equipment and Other Capital Expenditures, 45 CFR ?75.452 Maintenance and Repair Costs, 45 CFR ?75.465 Rental Costs of Real Property and Equipment, 45 CFR ?75.470 Taxes; the Department of Health and Human Services? Grants Policy Statement; and other regulations governing allowable costs under HHS awards. The Home is in the process of timely appealing this disallowance with the Departmental Appeals Board in accordance with 45 CFR Part 16 Procedures of the Departmental Grant Appeals Board. ause: Noncompliance stems from a lack of formal training, inadequate internal controls, an inadequate review process and procedures, and a lack of supporting documentation. Effect: Expenditures in the amount of $5,094,545, made during the period of August 1, 2019 through July 31, 2020, were deemed disallowable. Recommendation: The Home should plan for alternate scenarios for both favorable and unfavorable results from the appeals board. In addition, the Home should implement more thorough training, controls and review to their existing processes, including those mentioned in finding 2022-001, 2022-002, and 2002-003. Views of Responsible Officials and Planned Corrective Action: The Home disagrees with the disallowance and maintains that the ACF made legal and factual errors in taking the disallowance and that expenses incurred were necessary, reasonable, allocable and allowable. The Home is working with a consultant to establish standard operating procedures and workflows relating to the accounting function.
Statement of Condition: Twelve expenditures of direct costs were for the acquisition of equipment and other capital expenditures which did not receive timely written approval from HHHS. Criteria: Equipment and other capital expenditures require prior written approval by the HHS awarding agency or pass-through entity prior to obligating or incurring the costs. This section also disallows equipment and other capital expenditures as indirect costs. Further, the Office of Federal Financial Management (OMB) Compliance Supplement establishes that requests for prior approval must be explicit enough so that the Administration for Children and Families (ACF) can identify the purpose and cost of the expenditure. Approval of budgets that include general budgetary descriptions and budget line-item totals are insufficient. Additionally, grantees must receive written approval from an authorized member of ACF. A lack of response is not, in itself, approval. Cause: The Home considers approval during the budget and negotiation process as an implicit approval for proposed equipment and capital expenditures. Upon approval of the budget by the HHS, a Notice of Award is granted to the Home. This Notice of Award delineates the purchases of equipment approved and amounts budgeted for each line-item. Effect: Capital expenditures incurred may be disallowed. Context: The test found nine of sixty expenditures were not in compliance; with questioned costs totaling $371,642. Recommendation: The Home should obtain explicit prior written approval for equipment and other capital expenditures. Views of Responsible Officials and Planned Corrective Action: The Home agrees that the records maintained did not support prior written approval of aforementioned costs. However, the Home disagrees with the finding regarding the allowability of the vehicle leases. The Home provided ORR with the request to budget for the vehicle leases, as well as copies of lease terms, prior to the approval of the grant and the amounts budgeted were approved. Regarding the capital expenditures, these items were reasonable and necessary to facilitate the program and The Home will request to have these purchases approved retro-actively. The Home is currently in the process of appealing the capital lease ? vehicle rentals disallowed in the ACF?s Notice of Non-Compliance: Monetary Disallowance dated July 12, 2023. See additional information at Note 19.
Statement of Condition: Six expenditures of direct and indirect costs were inaccurately calculated by the Home. Criteria: Procedures should be established to ensure adequate separation of duties and review is performed on the calculation of direct and indirect costs. Cause: During 2022, the calculation of direct and indirect costs was conducted with minimal review. This environment was subject to human error in the performance of these calculations and respective drawdown of funds. Effect: The cost of assistance may be disallowed. Context: The test found six of sixty expenditures were not in compliance; with questioned costs totaling $254,173. Recommendation: The Home should segregate duties of measurement of direct and indirect costs, detailed review of measurement, and high-level review and drawdown to separate members of the accounting staff. Views of Responsible Officials and Planned Corrective Action: The Home agrees with the finding. The funds were drawn down from the grant due to human error. Shortly after discovering this mistake, The Home has developed a process in which the drawn down amounts is reviewed and approved before processing the drawdown. The amounts overdrawn were used to pay grant expenditures during FY2023, which still covers the grant budget period.
Statement of Condition: On July 12, 2023, the Home received notice from the Administration for Children and Families (ACF) of a final judgement of disallowance regarding several categories of expenditures. Criteria: During the period of August 1, 2019 through July 1, 2020, the Home failed to comply with statutory authority; the Code of Federal Regulations (CFR), Title 45 Part 75, particularly 45 CFR ?75.302 Financial Management and Standards for Financial Management Systems, 45 CFR ? 75.303 Internal Controls, 45 CFR ?75.309 Period of Performance and Availability of Funds, 45 CFR ? 75.361 Retention Requirements for Records, 45 CFR ?75.403 Factors Affecting Allowability of Costs, 45 CFR ?75.404 Reasonable Costs, 45 CFR ?75.405 Allocable Costs, 45 CFR ?75.407 Prior Written Approval, 45 CFR ?75.431 Compensation ? fringe benefits, 45 CFR ?75.421 Advertising and Public Relations, 45 CFR ?75.436 Depreciation, 45 CFR ?75.439 Equipment and Other Capital Expenditures, 45 CFR ?75.452 Maintenance and Repair Costs, 45 CFR ?75.465 Rental Costs of Real Property and Equipment, 45 CFR ?75.470 Taxes; the Department of Health and Human Services? Grants Policy Statement; and other regulations governing allowable costs under HHS awards. The Home is in the process of timely appealing this disallowance with the Departmental Appeals Board in accordance with 45 CFR Part 16 Procedures of the Departmental Grant Appeals Board. ause: Noncompliance stems from a lack of formal training, inadequate internal controls, an inadequate review process and procedures, and a lack of supporting documentation. Effect: Expenditures in the amount of $5,094,545, made during the period of August 1, 2019 through July 31, 2020, were deemed disallowable. Recommendation: The Home should plan for alternate scenarios for both favorable and unfavorable results from the appeals board. In addition, the Home should implement more thorough training, controls and review to their existing processes, including those mentioned in finding 2022-001, 2022-002, and 2002-003. Views of Responsible Officials and Planned Corrective Action: The Home disagrees with the disallowance and maintains that the ACF made legal and factual errors in taking the disallowance and that expenses incurred were necessary, reasonable, allocable and allowable. The Home is working with a consultant to establish standard operating procedures and workflows relating to the accounting function.