Finding Text
Finding 2022-003 – Compliance Deficiencies (Material Weakness)
Information on the Federal Program – Block Grants for Community Mental Health Services FAL No. 93.958, December 31, 2022
Criteria – Federal regulations mandate that grantees maintain records of grant expenditures in their accounting systems to ensure segregation and accurate financial reporting.
Condition – The Organization did not segregate salaries in its general ledger. Salaries were lumped into one general ledger account regardless of whether incurred for unrestricted or restricted purposes. Also, there were no time and effort reports completed during the year to ensure only allowable salaries and fringes were charged to the grant.
Questioned Costs – Total salaries and fringes charged to the grant were $222,966.
Context – The Organization runs the risks of double counting salaries on multiple grants or recording unallowable costs to grants by not tracking time and effort or segregating the expenditures.
Effect – Total expenditures charged to the grant were not identifiable in the Organizations accounting records.
Cause – Improperly designed account structure, lack of training, significant turnover and manual processes.
Repeat Finding – No.
Recommendation – The Organization must record expenditures in the general ledger in a manner that facilitates segregation according to its purpose. This can be achieved by restructuring the chart of accounts or affixing project codes to restricted transactions. Further, time and effort reports must be routinely completed to account for 100% of an employee’s time if charged to a federal program. This ensures only allowable costs are charged to the grant.
Views of Responsible Officials – Management fully agrees and has transitioned from the old Abila system to the QuickBooks automated system. Additional measures will be identified in the Management Corrective Action Plan.