Finding Text
Finding Number 2023-004: Contract Requirements - Earmarking (Significant Deficiency over Internal
Control and Instances of Noncompliance over Major Federal Program – Matching, Level of Effort and
Earmarking) FALN Number 93.959 Block Grants for Prevention and Treatment of Substance Abuse, Award Number 900077, Award Year 2022-2023
Criteria: 2023 Compliance Supplement and 2 CFR 200.303(a) stated that the 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 terms and
conditions of the federal award.
Condition/Context: As a result of our audit procedures, we noted management did not have evidence retained to
support its compliance with the program’s earmarking requirements related to process objectives, quality
objectives and impact objectives.
Repeat Finding from Prior Year(s): No
Cause and Effect: The Health System did not have proper controls in place to ensure the fulfillment of the
earmarking requirements are properly documented, which led to non-compliance with program requirements.
Questioned Cost: None
Recommendation: We recommend management implement policies and procedures to clearly identify the
earmarking requirements of the program and retain proper documentations to support how the requirements are
fulfilled.
Views of Responsible Officials and Planned Corrective Action:
Management agrees with the finding. The Health System will implement policies and procedures to ensure
earmarking requirements are completed and evidence of review documented