Finding Text
2023-004 Late Submission of and Discrepancies within Final Expenditure Reports
Program Name/ Assistance Listing Number: 93. 959 Block Grants for Prevention and Treatment of Substance Abuse
Federal Agency: Department of Health and Human Services
Federal Award Identification: Unknown
Type of Finding: Material Weakness
Compliance Requirement: Reporting
Criteria: According to 2 CFR §200.302, entities that receive federal awards must have accurate financial management systems that allow for the preparation of reports that reflect accurate, current, and complete disclosure of financial results. Additionally, 2 CFR §200.415(a)
requires that financial reports must be based on the accounting records and accurately reflect the actual expenditures incurred. Furthermore, 2 CFR §200.328(b)(1) states that federal grant recipients are required to submit performance and financial reports within 90 days following the end of the grant period, unless an extension has been granted by the funding agency. Timely submission of these reports is essential to demonstrate compliance with grant terms and conditions.
Condition: The auditor noted that certain expenditures in the final expenditures report submitted by the Organization exceeded the actual expenditures recorded in the general ledger and/or exceeded the grant budget. In addition, the auditor also noted that final reports were submitted to funding sources at least 5 months (150 days) after the end of the grant period. This suggests that Cleveland UMADAOP did not submit the reports within the required timeframe and may not have an effective process in place to track and meet reporting deadlines.
Cause of Condition: The discrepancies appear to be the result of inadequate reconciliation processes between the general ledger and the financial reports. This may have been compounded by the misunderstanding of reporting requirements, leading to the inclusion of inaccurate figures in the final expenditures report. In addition, the late submission of final reports appears to result from the absence of a robust process for monitoring and tracking reporting deadlines. This may also indicate inadequate internal controls or insufficient staffing dedicated to managing grant compliance and reporting responsibilities.
Effect: Reporting expenditures in excess of actual amounts may lead to non-compliance with federal grant requirements, and could result in questioned costs and potential disallowance of funds. Moreover, such inaccuracies undermine the reliability of financial reports and could impair the organization’s credibility with federal agencies and other stakeholders. In addition, failure to submit timely reports can lead to non-compliance with grant agreements, which may result in funding delays, penalties, or even the potential loss of future funding opportunities. Furthermore, late submissions may strain relationships with funding sources and damage the Organization’s reputation.
Questioned Cost: $114,860
Recommendation: Cleveland UMADAOP should enhance its reconciliation procedures to ensure that reported expenditures accurately reflect actual amounts spent as recorded in the general ledger. Implementing a robust review process prior to the submission of final expenditure reports will help prevent discrepancies and ensure compliance with federal grant requirements. Additionally, the Organization should implement a formal process to track and monitor all reporting deadlines associated with its grants. This process could include a centralized calendar, regular reminders, and a designated individual or team responsible for ensuring that all reports are completed and submitted on time. Additionally, the Organization should consider conducting training for staff involved in grant management and financial reporting to reinforce the importance of adhering to reporting deadlines andcompliance to requirements.
Description of the Nature and Extent of Issues Reported: We consider the following materiality for consideration of materialnoncompliance for the major program 93.959 at 5% of the totalawards expended amounting to $51,253.
View of Responsible Official: Management agrees with the finding and will implement corrective action.