Reference Number: 2022-024 Prior Year Finding: 2021-024 Federal Agency: U.S. Department of Health and Human Services State Department Name: Department of Health and Social Services State Division Name: Division of Substance Abuse and Mental Health Federal Program: Block Grants for Prevention and Treatment of Substance Abuse, COVID-10 - Block Grants for Prevention and Treatment of Substance Abuse Assistance Listing Number: 93.959 Award Number and Year: B08TI083060 (10/1/2019 ? 9/30/2021), B08TI083488 (10/1/2020 ? 9/30/2022) Compliance Requirement: Subrecipient Monitoring Type of Finding: Material Weakness in Internal Control Over Compliance, Material Noncompliance Criteria or specific requirement: Compliance: 2 CFR ?200.332 - Requirements for Pass-Through Entities states in part, that all pass-through entities must: (a) Ensure that every subaward is clearly identified to the subrecipient as a subaward and includes information at the time of the subaward and if any of these data elements change, include the changes in subsequent subaward modification. When some of this information is not available, the pass-through entity must provide the best information available to describe the Federal award and subaward. (b) Evaluate each subrecipient?s risk of noncompliance with Federal statutes, regulations, and the terms and conditions of the subaward for purposes of determining the appropriate subrecipient monitoring described in paragraphs (d) and (e) of this section, which may include consideration of such factors as: (1) The subrecipient?s prior experience with the same or similar subawards; (2) The results of previous audits including whether or not the subrecipient receives a Single Audit in accordance with Subpart F - Audit Requirements of this part, and the extent to which the same or similar subaward has been audited as a major program; (3) Whether the subrecipient has new personnel or new or substantially changed systems; (4) The extent and results of Federal awarding agency monitoring (e.g., if the subrecipient also receives Federal awards directly from a Federal awarding agency). (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward; and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: (1) Reviewing financial and performance reports required by the pass-through entity. (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and other means. (3) Issuing a management decision for audit findings pertaining to the Federal award provided to the subrecipient from the pass-through entity as required by ? 200.521 Management decision. (e) Depending upon the pass-through entity?s assessment of risk posed by the subrecipient (as described in paragraph (b) of this section), the following monitoring tools may be useful for the pass-through entity to ensure proper accountability and compliance with program requirements and achievement of performance goals: (1) Providing subrecipients with training and technical assistance on program-related matters; and (2) Performing on-site reviews of the subrecipient?s program operations; (3) Arranging for agreed-upon-procedures engagements as described in ? 200.425 Audit services. (f) Verify that every subrecipient is audited as required by Subpart F - Audit Requirements of this part when it is expected that the subrecipient?s Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in ? 200.501 Audit requirements. Control: Per 2 CFR Section 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should comply with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework?, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: The Division was not able to provide support that it furnished required information to its subrecipients at the time of subaward, monitored its subrecipients, or ensured its subrecipients were audited as required by 2 CFR Part 200 Subpart F ? Audit Requirements (Subpart F). Context: Exceptions were noted in four of eight subrecipients selected for testing (exceptions listed include multiple exceptions for some subrecipients): ? Four of eight subrecipient agreements were missing the following required information: Subrecipient?s Unique Identifier, Federal Award Identification Number (FAIN), Federal Award Date, Federal Award Project Description, Assistance Listing Number and Title. ? For one of eight subrecipients, the Division was unable to provide support that it ensured the subrecipient was audited as required by Subpart F. The Division could not produce evidence of verification that the subrecipient?s Federal awards expended during the fiscal year were below the threshold set forth in ? 200.501 Audit requirements. ? For four of eight subrecipients, the Division was unable to provide support that it conducted during the award monitoring as required by the Division?s policies and procedures. Questioned costs: Undetermined. Cause: The Division did not establish effective internal controls and procedures over subrecipient monitoring. Effect: Excluding the required federal grant award information at the time of the subaward may cause subrecipients and their auditors to be uninformed about specific program and other regulations that apply to the funds they receive. There is also the potential for subrecipients to have incomplete Schedules of Expenditures of Federal Awards (SEFA) in their Single Audit reports, and federal funds may not be properly audited at the subrecipient level in accordance with the Uniform Guidance. Not conducting during the award monitoring may result in a failure of the Division to detect that its subrecipients used subawards for unauthorized purposes, managed them in violation of the terms and conditions of the subawards, or that subaward performance goals were not achieved. Without ensuring subrecipients have obtained audits as required by Subpart F, there is an increased risk that subrecipients could be inappropriately spending and/or inaccurately tracking and reporting federal funds over multiple year periods, and these discrepancies may not be properly monitored, detected, and corrected by Division personnel on a timely basis. Recommendation: The Division should review and enhance internal controls and procedures to ensure that all required information is included in all subawards and provided to the subrecipients, that proper subrecipient monitoring is conducted, and that evaluation of independent audits is performed. Views of responsible officials: The Division has been working to implement corrective action, as this was a prior finding. The implementation timeline overlapped into the current audit period. DSAMH continues to reevaluate its current process and to enhance internal controls and procedures to ensure that all required information is included in all subawards and provided to the subrecipients, also that proper subrecipient monitoring is conducted, and that evaluation of independent audits is performed.
Finding Number: 2021-002; Finding Type: Federal award finding and financial statement finding; Federal Assistance Listing No.: 1) 16.556 2) 93.591; Program Names: 1) State Domestic Violence and Sexual Assault Coalitions 2) Family Violence Prevention and Services/State Domestic Violence Coalition; Federal Agencies: 1) U.S. Department of Justice 2) U.S. Department of Health and Human Services; Pass-Through Entity: n/a; Grant Numbers: 1) 2019-MU-AX-0017, 2) 2001ORSDC3; Federal Award Year: 2021; Control Deficiency Type: Material weakness in internal controls over compliance and financial reporting Instance of Noncompliance: Yes; Compliance Requirement: Allowable costs; Questioned Costs: 1) ALN 16.556: none over $25,000 2) ALN 93.591: $53,351; Repeat Finding: No; Criteria: According to 2 CFR §200.405, costs of a federal award must be allowable and allocable. A cost is allocable to a particular federal award if the goods or services involved are chargeable to the federal award in accordance with relative benefits received. This standard is met if the cost was incurred specifically for the federal award; benefits both the federal award and other work of the non-federal entity and can be distributed in proportions that may be approximated using reasonable methods; and is necessary to the overall operation of the non-federal entity and is assignable in part to the federal award in accordance with cost principles in this section. An organization must use an equitable distribution base to allocate its indirect and administrative costs. The organization should have controls in place to ensure that indirect costs are charged uniformly to both federally funded activities and other activities of the organization, and the allocation methodology results in an equitable allocation of indirect and shared administrative costs. Condition: During the audit, it was noted that costs appearing administrative in nature were charged as direct costs to two federal awards, including $39,814 of the accounting manager’s salary and $26,797 in audit fees relating to the fiscal year 2020 audit, a year in which no Single Audit was require or performed. In accordance with CFR §200.425, costs of auditing a non-federal entity that is exempted from having an audit conducted under the Single Audit Act because its expenditures under federal awards are less than $750,000 during the non-federal entity’s fiscal year are considered unallowable costs. Cause: The organization did not have a proper understanding of the Uniform Guidance regulations governing the expenditure of federal funds. Effect: Costs that appeared to be administrative in nature and benefitted all programs were charged to two federal grants as direct expenses: $53,351 to ALN 93.591 and $13,260 to ALN 16.556. Audit Recommendation: We recommend the Coalition develop controls and procedures to correctly distinguish between direct and indirect costs, as well as, procedures to identify and exclude costs that the Uniform Guidance has indicated as unallowable costs. Management’s Response: OCADSV added an Administrative Cost Center to its General Ledger effective 10/01/22, the beginning of FY23 and began costing administrative payroll cost to that cost center. Additionally, the organization retrained administrative staff on direct cost allowable activities vs. administrative activities relative to timekeeping and timesheet preparation and the necessity of daily work descriptions supporting the hourly allocation. The Payroll policy that requires supervisors to review and sign off on timesheets and hourly allocations to cost centers was also reviewed. Audit costs for FY22 will be allocated in accordance with 2 CFR 200.405 requirements. Beginning with FY23 all accounting and other admin payroll related cost will be allocated to the administration cost center with the exception of time spent in activities related to a specific grant or other cost center. FY22 grant expenditures were reviewed post year-end and a line-by-line review was conducted to bring the di-rect and indirect expense cumulative total into compliance with audit findings. Any outstanding reports were adjusted to reflect the adjusted Life of Grant to current date reporting. Executive, Financial and Grant Management staff will, during FY24, complete the Online Grants Financial Management Training available at onlinegfmt.training.ojp.gov to improve knowledge and compliance with 2 CFR 200 guidance and requirements. The said training will be incorporated into onboarding processes for any newly hired employee who have direct responsibilities related to grant management and/or reporting
Finding Number: 2021-002; Finding Type: Federal award finding and financial statement finding; Federal Assistance Listing No.: 1) 16.556 2) 93.591; Program Names: 1) State Domestic Violence and Sexual Assault Coalitions 2) Family Violence Prevention and Services/State Domestic Violence Coalition; Federal Agencies: 1) U.S. Department of Justice 2) U.S. Department of Health and Human Services; Pass-Through Entity: n/a; Grant Numbers: 1) 2019-MU-AX-0017, 2) 2001ORSDC3; Federal Award Year: 2021; Control Deficiency Type: Material weakness in internal controls over compliance and financial reporting Instance of Noncompliance: Yes; Compliance Requirement: Allowable costs; Questioned Costs: 1) ALN 16.556: none over $25,000 2) ALN 93.591: $53,351; Repeat Finding: No; Criteria: According to 2 CFR §200.405, costs of a federal award must be allowable and allocable. A cost is allocable to a particular federal award if the goods or services involved are chargeable to the federal award in accordance with relative benefits received. This standard is met if the cost was incurred specifically for the federal award; benefits both the federal award and other work of the non-federal entity and can be distributed in proportions that may be approximated using reasonable methods; and is necessary to the overall operation of the non-federal entity and is assignable in part to the federal award in accordance with cost principles in this section. An organization must use an equitable distribution base to allocate its indirect and administrative costs. The organization should have controls in place to ensure that indirect costs are charged uniformly to both federally funded activities and other activities of the organization, and the allocation methodology results in an equitable allocation of indirect and shared administrative costs. Condition: During the audit, it was noted that costs appearing administrative in nature were charged as direct costs to two federal awards, including $39,814 of the accounting manager’s salary and $26,797 in audit fees relating to the fiscal year 2020 audit, a year in which no Single Audit was require or performed. In accordance with CFR §200.425, costs of auditing a non-federal entity that is exempted from having an audit conducted under the Single Audit Act because its expenditures under federal awards are less than $750,000 during the non-federal entity’s fiscal year are considered unallowable costs. Cause: The organization did not have a proper understanding of the Uniform Guidance regulations governing the expenditure of federal funds. Effect: Costs that appeared to be administrative in nature and benefitted all programs were charged to two federal grants as direct expenses: $53,351 to ALN 93.591 and $13,260 to ALN 16.556. Audit Recommendation: We recommend the Coalition develop controls and procedures to correctly distinguish between direct and indirect costs, as well as, procedures to identify and exclude costs that the Uniform Guidance has indicated as unallowable costs. Management’s Response: OCADSV added an Administrative Cost Center to its General Ledger effective 10/01/22, the beginning of FY23 and began costing administrative payroll cost to that cost center. Additionally, the organization retrained administrative staff on direct cost allowable activities vs. administrative activities relative to timekeeping and timesheet preparation and the necessity of daily work descriptions supporting the hourly allocation. The Payroll policy that requires supervisors to review and sign off on timesheets and hourly allocations to cost centers was also reviewed. Audit costs for FY22 will be allocated in accordance with 2 CFR 200.405 requirements. Beginning with FY23 all accounting and other admin payroll related cost will be allocated to the administration cost center with the exception of time spent in activities related to a specific grant or other cost center. FY22 grant expenditures were reviewed post year-end and a line-by-line review was conducted to bring the di-rect and indirect expense cumulative total into compliance with audit findings. Any outstanding reports were adjusted to reflect the adjusted Life of Grant to current date reporting. Executive, Financial and Grant Management staff will, during FY24, complete the Online Grants Financial Management Training available at onlinegfmt.training.ojp.gov to improve knowledge and compliance with 2 CFR 200 guidance and requirements. The said training will be incorporated into onboarding processes for any newly hired employee who have direct responsibilities related to grant management and/or reporting
Finding Number: 2021-002; Finding Type: Federal award finding and financial statement finding; Federal Assistance Listing No.: 1) 16.556 2) 93.591; Program Names: 1) State Domestic Violence and Sexual Assault Coalitions 2) Family Violence Prevention and Services/State Domestic Violence Coalition; Federal Agencies: 1) U.S. Department of Justice 2) U.S. Department of Health and Human Services; Pass-Through Entity: n/a; Grant Numbers: 1) 2019-MU-AX-0017, 2) 2001ORSDC3; Federal Award Year: 2021; Control Deficiency Type: Material weakness in internal controls over compliance and financial reporting Instance of Noncompliance: Yes; Compliance Requirement: Allowable costs; Questioned Costs: 1) ALN 16.556: none over $25,000 2) ALN 93.591: $53,351; Repeat Finding: No; Criteria: According to 2 CFR §200.405, costs of a federal award must be allowable and allocable. A cost is allocable to a particular federal award if the goods or services involved are chargeable to the federal award in accordance with relative benefits received. This standard is met if the cost was incurred specifically for the federal award; benefits both the federal award and other work of the non-federal entity and can be distributed in proportions that may be approximated using reasonable methods; and is necessary to the overall operation of the non-federal entity and is assignable in part to the federal award in accordance with cost principles in this section. An organization must use an equitable distribution base to allocate its indirect and administrative costs. The organization should have controls in place to ensure that indirect costs are charged uniformly to both federally funded activities and other activities of the organization, and the allocation methodology results in an equitable allocation of indirect and shared administrative costs. Condition: During the audit, it was noted that costs appearing administrative in nature were charged as direct costs to two federal awards, including $39,814 of the accounting manager’s salary and $26,797 in audit fees relating to the fiscal year 2020 audit, a year in which no Single Audit was require or performed. In accordance with CFR §200.425, costs of auditing a non-federal entity that is exempted from having an audit conducted under the Single Audit Act because its expenditures under federal awards are less than $750,000 during the non-federal entity’s fiscal year are considered unallowable costs. Cause: The organization did not have a proper understanding of the Uniform Guidance regulations governing the expenditure of federal funds. Effect: Costs that appeared to be administrative in nature and benefitted all programs were charged to two federal grants as direct expenses: $53,351 to ALN 93.591 and $13,260 to ALN 16.556. Audit Recommendation: We recommend the Coalition develop controls and procedures to correctly distinguish between direct and indirect costs, as well as, procedures to identify and exclude costs that the Uniform Guidance has indicated as unallowable costs. Management’s Response: OCADSV added an Administrative Cost Center to its General Ledger effective 10/01/22, the beginning of FY23 and began costing administrative payroll cost to that cost center. Additionally, the organization retrained administrative staff on direct cost allowable activities vs. administrative activities relative to timekeeping and timesheet preparation and the necessity of daily work descriptions supporting the hourly allocation. The Payroll policy that requires supervisors to review and sign off on timesheets and hourly allocations to cost centers was also reviewed. Audit costs for FY22 will be allocated in accordance with 2 CFR 200.405 requirements. Beginning with FY23 all accounting and other admin payroll related cost will be allocated to the administration cost center with the exception of time spent in activities related to a specific grant or other cost center. FY22 grant expenditures were reviewed post year-end and a line-by-line review was conducted to bring the di-rect and indirect expense cumulative total into compliance with audit findings. Any outstanding reports were adjusted to reflect the adjusted Life of Grant to current date reporting. Executive, Financial and Grant Management staff will, during FY24, complete the Online Grants Financial Management Training available at onlinegfmt.training.ojp.gov to improve knowledge and compliance with 2 CFR 200 guidance and requirements. The said training will be incorporated into onboarding processes for any newly hired employee who have direct responsibilities related to grant management and/or reporting
Finding Number: 2021-002; Finding Type: Federal award finding and financial statement finding; Federal Assistance Listing No.: 1) 16.556 2) 93.591; Program Names: 1) State Domestic Violence and Sexual Assault Coalitions 2) Family Violence Prevention and Services/State Domestic Violence Coalition; Federal Agencies: 1) U.S. Department of Justice 2) U.S. Department of Health and Human Services; Pass-Through Entity: n/a; Grant Numbers: 1) 2019-MU-AX-0017, 2) 2001ORSDC3; Federal Award Year: 2021; Control Deficiency Type: Material weakness in internal controls over compliance and financial reporting Instance of Noncompliance: Yes; Compliance Requirement: Allowable costs; Questioned Costs: 1) ALN 16.556: none over $25,000 2) ALN 93.591: $53,351; Repeat Finding: No; Criteria: According to 2 CFR §200.405, costs of a federal award must be allowable and allocable. A cost is allocable to a particular federal award if the goods or services involved are chargeable to the federal award in accordance with relative benefits received. This standard is met if the cost was incurred specifically for the federal award; benefits both the federal award and other work of the non-federal entity and can be distributed in proportions that may be approximated using reasonable methods; and is necessary to the overall operation of the non-federal entity and is assignable in part to the federal award in accordance with cost principles in this section. An organization must use an equitable distribution base to allocate its indirect and administrative costs. The organization should have controls in place to ensure that indirect costs are charged uniformly to both federally funded activities and other activities of the organization, and the allocation methodology results in an equitable allocation of indirect and shared administrative costs. Condition: During the audit, it was noted that costs appearing administrative in nature were charged as direct costs to two federal awards, including $39,814 of the accounting manager’s salary and $26,797 in audit fees relating to the fiscal year 2020 audit, a year in which no Single Audit was require or performed. In accordance with CFR §200.425, costs of auditing a non-federal entity that is exempted from having an audit conducted under the Single Audit Act because its expenditures under federal awards are less than $750,000 during the non-federal entity’s fiscal year are considered unallowable costs. Cause: The organization did not have a proper understanding of the Uniform Guidance regulations governing the expenditure of federal funds. Effect: Costs that appeared to be administrative in nature and benefitted all programs were charged to two federal grants as direct expenses: $53,351 to ALN 93.591 and $13,260 to ALN 16.556. Audit Recommendation: We recommend the Coalition develop controls and procedures to correctly distinguish between direct and indirect costs, as well as, procedures to identify and exclude costs that the Uniform Guidance has indicated as unallowable costs. Management’s Response: OCADSV added an Administrative Cost Center to its General Ledger effective 10/01/22, the beginning of FY23 and began costing administrative payroll cost to that cost center. Additionally, the organization retrained administrative staff on direct cost allowable activities vs. administrative activities relative to timekeeping and timesheet preparation and the necessity of daily work descriptions supporting the hourly allocation. The Payroll policy that requires supervisors to review and sign off on timesheets and hourly allocations to cost centers was also reviewed. Audit costs for FY22 will be allocated in accordance with 2 CFR 200.405 requirements. Beginning with FY23 all accounting and other admin payroll related cost will be allocated to the administration cost center with the exception of time spent in activities related to a specific grant or other cost center. FY22 grant expenditures were reviewed post year-end and a line-by-line review was conducted to bring the di-rect and indirect expense cumulative total into compliance with audit findings. Any outstanding reports were adjusted to reflect the adjusted Life of Grant to current date reporting. Executive, Financial and Grant Management staff will, during FY24, complete the Online Grants Financial Management Training available at onlinegfmt.training.ojp.gov to improve knowledge and compliance with 2 CFR 200 guidance and requirements. The said training will be incorporated into onboarding processes for any newly hired employee who have direct responsibilities related to grant management and/or reporting