Finding 2022-001 ? Allowable Costs/Cost Principles (Allocation of Payroll) Federal Agency: U.S. Department of Health and Human Services Federal program title: Block Grants for Community Mental Health Services Assistance Listing Number: 93.958 Award Period: 09/30/2021 ? 09/29/2023 Type of Finding: Compliance and material weakness in internal control over compliance Criteria: Uniform Guidance section 200.430(h)(8)(i) indicates that the standards for documentation of personnel expenses are such that (1) Charges to federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must:(i) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; (ii) Be incorporated into the official records of the nonfederal entity and(iii) Reasonably reflect the total activity for which the employee is compensated by the nonfederal entity, not exceeding 100% of compensated activities. Furthermore, subsection (viii) indicates: Budget estimates alone do not qualify as support for charges to federal awards, but may be used for interim accounting purposes, provided that: (A) The system for establishing the estimates produces reasonable approximations of the activity actually performed; (B) Significant changes in the corresponding work activity are identified and entered into the records in a timely manner and (C) The nonfederal entity?s system of internal controls includes processes to review after-the-fact interim charges made to a federal awards based on budget estimates. Condition: The Organization is allocating payroll costs to grants based upon budgeted amounts/percentages submitted to the funding agency and does not currently have a system for ensuring that the estimates used produce reasonable approximations of the activity actually performed. Questioned Costs: Unknown Context: This condition occurred in all 60 payroll transactions selected for testing, and represented six different employees. Cause: The Organization has a tracking system in place to monitor the wages by employee charged to federal grants to avoid over-allocation of individual employee wages per the grant budget, but this tracking system does not contain a process for identifying and allocating wages based on submitted time records.Effect: Inaccurate payroll costs may be charged to federal programs if the Organization does not have procedures in place to monitor and record employee time devoted to federal programs. Recommendation: Management should develop a process whereby payroll costs allocated to federal grants are supported by a system of internal controls which provides reasonable assurance that the charges are accurate allowable and properly allocated, reasonably reflect the total activity for which the employee is compensated, and support the distribution of the employee?s wages among specific activities or cost objectives if the employee works on more than one federal award.
Finding 2022-003 ? Approval of Invoices Federal Agency: U.S. Department of Health and Human Services Federal program title: Block Grants for Community Mental Health Services Assistance Listing Number: 93.958 Award Period: 09/30/2021 ? 09/29/2023 and Federal Agency: U.S. Department of Labor Employment and Training Administration Federal program title: YouthBuild Assistance Listing Number: 17.274 Award Period: 01/01/2020 ? 03/31/2023 Type of Finding: Material Weakness in internal control over compliance Criteria: 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 statues, regulations, and conditions of the federal award. Condition: During our review of charges to the Block Grants for Community Mental Health Services program, many charges were incurred on employees? credit cards. The Organization?s credit card process does not have a formal approval process of the charges by the program director prior to being charged to the grant. Charges are to be sent to the program director for review to ensure they are allowable under the grant but the process was not completed consistently. In addition, all credit card receipts are sent to accounting for processing and there is no indication of approval before being charged to the grant or being processed for payment. During our review of charges for the YouthBuild program, we noted expenditures that did not have documentation of proper approval. Context: For the Block Grants for Community Mental Health Services, 42 out of the sample of 60 were relating to credit card charges that did not have documented approvals. For the YouthBuild program, we noted 6 out of the sample of 22 that did not have documentation of proper approval. 5 out of the 6 related to a signed memorandum of understanding with one vendor, however, the individual invoices were not approved.Cause: There is not a formal process to ensure all expenditures are appropriated documented and approved. Effect: For transactions related to federal grants, without the appropriate supporting documentation, charges may be disallowed. Recommendation: We recommend that management establish controls and implement policies to ensure that support is obtained and maintained for all expense transactions.
Finding 2022-002 ? Reporting Federal Agency: U.S. Department of Labor Employment and Training Administration Federal program title: YouthBuild Assistance Listing Number: 17.274 Award Period: 01/01/2020 ? 03/31/2023 Type of Finding: Compliance and material weakness in internal control over compliance Criteria: According to grant document and the Department of Labor reporting guidelines, the quarterly financial reports, form ETA-9130 are to be submitted 45 calendar days after the quarter end and certified by an authorized certifying official. Condition: The Organization?s ETA-9130 were submitted through the on-line portal, however, the certifying official was a member of management who had left the Organization prior to 2022. Context: This condition occurred in all quarterly reports submitted during 2022. Cause: As noted in the Financial Reporting Resources provided by the Department of Labor, states that Grant recipients that will be submitting/certifying ETA-9130 financial reports on behalf of their organization, should log in to the on-line portal (Payment Management System) and update the permissions to request access to the ETA-9130 financial reporting form. In addition, we noted the individual submitting the report, gathers the information, completes the ETA-9130 and submits for filing. There is no review completed of the ETA-9130 by any other individual before submission. Effect: Improper information could be submitted to the federal agency. The certifying official, is certifying that the report is true, complete and accurate and in accordance with U.S. Code Title 18, Section 1001 and Title 31, Sections 3729-3730 and 3801-3812. As the individual was not with the Organization at the time the reports were submitted, there is not proper representation from the Organization on compliance.Recommendation: Management should develop a process of internal controls over submission of the ETA-9130. We recommend a review of the financial reports by a member of management before submission. We also recommend the Organization review its permissions in the Payment Management System to ensure the proper individual have access and permissions to submit reports.
Finding 2022-003 ? Approval of Invoices Federal Agency: U.S. Department of Health and Human Services Federal program title: Block Grants for Community Mental Health Services Assistance Listing Number: 93.958 Award Period: 09/30/2021 ? 09/29/2023 and Federal Agency: U.S. Department of Labor Employment and Training Administration Federal program title: YouthBuild Assistance Listing Number: 17.274 Award Period: 01/01/2020 ? 03/31/2023 Type of Finding: Material Weakness in internal control over compliance Criteria: 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 statues, regulations, and conditions of the federal award. Condition: During our review of charges to the Block Grants for Community Mental Health Services program, many charges were incurred on employees? credit cards. The Organization?s credit card process does not have a formal approval process of the charges by the program director prior to being charged to the grant. Charges are to be sent to the program director for review to ensure they are allowable under the grant but the process was not completed consistently. In addition, all credit card receipts are sent to accounting for processing and there is no indication of approval before being charged to the grant or being processed for payment. During our review of charges for the YouthBuild program, we noted expenditures that did not have documentation of proper approval. Context: For the Block Grants for Community Mental Health Services, 42 out of the sample of 60 were relating to credit card charges that did not have documented approvals. For the YouthBuild program, we noted 6 out of the sample of 22 that did not have documentation of proper approval. 5 out of the 6 related to a signed memorandum of understanding with one vendor, however, the individual invoices were not approved.Cause: There is not a formal process to ensure all expenditures are appropriated documented and approved. Effect: For transactions related to federal grants, without the appropriate supporting documentation, charges may be disallowed. Recommendation: We recommend that management establish controls and implement policies to ensure that support is obtained and maintained for all expense transactions.
Finding 2022-001 ? Allowable Costs/Cost Principles (Allocation of Payroll) Federal Agency: U.S. Department of Health and Human Services Federal program title: Block Grants for Community Mental Health Services Assistance Listing Number: 93.958 Award Period: 09/30/2021 ? 09/29/2023 Type of Finding: Compliance and material weakness in internal control over compliance Criteria: Uniform Guidance section 200.430(h)(8)(i) indicates that the standards for documentation of personnel expenses are such that (1) Charges to federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must:(i) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; (ii) Be incorporated into the official records of the nonfederal entity and(iii) Reasonably reflect the total activity for which the employee is compensated by the nonfederal entity, not exceeding 100% of compensated activities. Furthermore, subsection (viii) indicates: Budget estimates alone do not qualify as support for charges to federal awards, but may be used for interim accounting purposes, provided that: (A) The system for establishing the estimates produces reasonable approximations of the activity actually performed; (B) Significant changes in the corresponding work activity are identified and entered into the records in a timely manner and (C) The nonfederal entity?s system of internal controls includes processes to review after-the-fact interim charges made to a federal awards based on budget estimates. Condition: The Organization is allocating payroll costs to grants based upon budgeted amounts/percentages submitted to the funding agency and does not currently have a system for ensuring that the estimates used produce reasonable approximations of the activity actually performed. Questioned Costs: Unknown Context: This condition occurred in all 60 payroll transactions selected for testing, and represented six different employees. Cause: The Organization has a tracking system in place to monitor the wages by employee charged to federal grants to avoid over-allocation of individual employee wages per the grant budget, but this tracking system does not contain a process for identifying and allocating wages based on submitted time records.Effect: Inaccurate payroll costs may be charged to federal programs if the Organization does not have procedures in place to monitor and record employee time devoted to federal programs. Recommendation: Management should develop a process whereby payroll costs allocated to federal grants are supported by a system of internal controls which provides reasonable assurance that the charges are accurate allowable and properly allocated, reasonably reflect the total activity for which the employee is compensated, and support the distribution of the employee?s wages among specific activities or cost objectives if the employee works on more than one federal award.
Finding 2022-003 ? Approval of Invoices Federal Agency: U.S. Department of Health and Human Services Federal program title: Block Grants for Community Mental Health Services Assistance Listing Number: 93.958 Award Period: 09/30/2021 ? 09/29/2023 and Federal Agency: U.S. Department of Labor Employment and Training Administration Federal program title: YouthBuild Assistance Listing Number: 17.274 Award Period: 01/01/2020 ? 03/31/2023 Type of Finding: Material Weakness in internal control over compliance Criteria: 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 statues, regulations, and conditions of the federal award. Condition: During our review of charges to the Block Grants for Community Mental Health Services program, many charges were incurred on employees? credit cards. The Organization?s credit card process does not have a formal approval process of the charges by the program director prior to being charged to the grant. Charges are to be sent to the program director for review to ensure they are allowable under the grant but the process was not completed consistently. In addition, all credit card receipts are sent to accounting for processing and there is no indication of approval before being charged to the grant or being processed for payment. During our review of charges for the YouthBuild program, we noted expenditures that did not have documentation of proper approval. Context: For the Block Grants for Community Mental Health Services, 42 out of the sample of 60 were relating to credit card charges that did not have documented approvals. For the YouthBuild program, we noted 6 out of the sample of 22 that did not have documentation of proper approval. 5 out of the 6 related to a signed memorandum of understanding with one vendor, however, the individual invoices were not approved.Cause: There is not a formal process to ensure all expenditures are appropriated documented and approved. Effect: For transactions related to federal grants, without the appropriate supporting documentation, charges may be disallowed. Recommendation: We recommend that management establish controls and implement policies to ensure that support is obtained and maintained for all expense transactions.
Finding 2022-002 ? Reporting Federal Agency: U.S. Department of Labor Employment and Training Administration Federal program title: YouthBuild Assistance Listing Number: 17.274 Award Period: 01/01/2020 ? 03/31/2023 Type of Finding: Compliance and material weakness in internal control over compliance Criteria: According to grant document and the Department of Labor reporting guidelines, the quarterly financial reports, form ETA-9130 are to be submitted 45 calendar days after the quarter end and certified by an authorized certifying official. Condition: The Organization?s ETA-9130 were submitted through the on-line portal, however, the certifying official was a member of management who had left the Organization prior to 2022. Context: This condition occurred in all quarterly reports submitted during 2022. Cause: As noted in the Financial Reporting Resources provided by the Department of Labor, states that Grant recipients that will be submitting/certifying ETA-9130 financial reports on behalf of their organization, should log in to the on-line portal (Payment Management System) and update the permissions to request access to the ETA-9130 financial reporting form. In addition, we noted the individual submitting the report, gathers the information, completes the ETA-9130 and submits for filing. There is no review completed of the ETA-9130 by any other individual before submission. Effect: Improper information could be submitted to the federal agency. The certifying official, is certifying that the report is true, complete and accurate and in accordance with U.S. Code Title 18, Section 1001 and Title 31, Sections 3729-3730 and 3801-3812. As the individual was not with the Organization at the time the reports were submitted, there is not proper representation from the Organization on compliance.Recommendation: Management should develop a process of internal controls over submission of the ETA-9130. We recommend a review of the financial reports by a member of management before submission. We also recommend the Organization review its permissions in the Payment Management System to ensure the proper individual have access and permissions to submit reports.
Finding 2022-003 ? Approval of Invoices Federal Agency: U.S. Department of Health and Human Services Federal program title: Block Grants for Community Mental Health Services Assistance Listing Number: 93.958 Award Period: 09/30/2021 ? 09/29/2023 and Federal Agency: U.S. Department of Labor Employment and Training Administration Federal program title: YouthBuild Assistance Listing Number: 17.274 Award Period: 01/01/2020 ? 03/31/2023 Type of Finding: Material Weakness in internal control over compliance Criteria: 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 statues, regulations, and conditions of the federal award. Condition: During our review of charges to the Block Grants for Community Mental Health Services program, many charges were incurred on employees? credit cards. The Organization?s credit card process does not have a formal approval process of the charges by the program director prior to being charged to the grant. Charges are to be sent to the program director for review to ensure they are allowable under the grant but the process was not completed consistently. In addition, all credit card receipts are sent to accounting for processing and there is no indication of approval before being charged to the grant or being processed for payment. During our review of charges for the YouthBuild program, we noted expenditures that did not have documentation of proper approval. Context: For the Block Grants for Community Mental Health Services, 42 out of the sample of 60 were relating to credit card charges that did not have documented approvals. For the YouthBuild program, we noted 6 out of the sample of 22 that did not have documentation of proper approval. 5 out of the 6 related to a signed memorandum of understanding with one vendor, however, the individual invoices were not approved.Cause: There is not a formal process to ensure all expenditures are appropriated documented and approved. Effect: For transactions related to federal grants, without the appropriate supporting documentation, charges may be disallowed. Recommendation: We recommend that management establish controls and implement policies to ensure that support is obtained and maintained for all expense transactions.