Finding Text
2023-004 Sufficiency of Documentation to Support Compliance to Allowable Cost Requirements (Repeat Finding 2022-003)
Program Name: State Opioid Response Federal Assistance
Listing No.: 93.788
Federal Agency: Department of Health and Human Services
Federal Award Identification: Unknown
Pass-Through Entity Number: Unknown
Applicable Pass-Through Entity: Ohio Department of Mental Health and Addiction Services and Cuyahoga County, Ohio
Type of Finding: Material Weakness
Compliance Requirement: Allowable Costs/Cost Principles
Criteria: Under Section 200.303 of the Uniform Guidance, a non-federal entity must establish effective internal controls to ensure compliance with Federal statutes, regulations, and award terms. Point of Freedom, receiving Federal Awards, must adhere to 2 CFR Part 200 Subpart E, which outlines cost principles. Adequate documentation is essential to ensure that costs are allowable, ensuring compliance, transparency, and accountability in fund utilization.
Condition: We identified five (5) disbursements that lacked supporting documentation to verify the accuracy and allowability of the costs incurred. Additionally, three (3) of these transactions involved contractors for whom no partnership agreements were in place.
Cause of Condition: The absence of formal monitoring for contractor charges and established documentation policies (i.e contractor invoices) indicates a control deficiency in compliance.
Effect: Incomplete documentation hinders timely verification of accuracy, increasing the risk of improper disbursement of federal funds.
Questioned Cost: $19,179
Context: Of the 714 disbursements, we examined 91 of which five (5) were identified with incomplete documentation and three (3) of these transactions involved contractors for whom no partnership agreements. In accordance with 2 CFR 200.516(a)(3), auditors are required to report known questioned costs when likely questioned costs are greater than $25,000. Although the sample uncovered five (5) transactions with incomplete documentation, resulting in $19,179 in questioned costs, extending the tests to the entire population projects questioned costs approximately $24,736 which is close to $25,000.
Recommendation: We recommend that management should establish a document retention policy. This policy should define clear procedures for maintaining and organizing transaction documentation, which will support accurate verification and enhance overall internal controls.
Views of Responsible Officials: As indicated in the 2022 POFCAP response to Finding 2022-003, and as reiterated herein, POF began to implement additional internal control procedures and practices effective July 1, 2024, to ensure that underlying cost documentation is adequate, reasonable, and complete in accordance with 2 CFR Part 200 Subpart E and other regulatory requirements. More specifically, vendor invoices as of that date and related supporting documents such as weekly meeting reports and sign-in sheets are being scanned and retained electronically. As in 2022, the contact information from the 2023 weekly reports was transmitted to either Wright State University or The Ohio State University for data mining purposes.
On July 22, 20224, the POF Board of Directors unanimously adopted the POF Record Retention Policy, as recommended by the auditors. The Board also unanimously adopted a Code of Conduct along with Conflict of Interest, and Whistleblower policies as further evidence of their commitment to instituting policies and procedures designed to strengthen internal controls and comply with federal regulations.
Questioned Cost Totaling $19,179
Effective July l, 2024, POF's new internal control policies, and procedures will eliminate or drastically reduce future discrepancies of this nature.