Finding 1085781 (2023-003)

2023-003 Substance Abuse Prevention and Treatment Block Grant - Assistance Listing No. 93.959; Oregon Health Authority Subgrant No. 167552; Grant period - Year ended June 30, 2023. Compliance Requirement: Allowable Costs Criteria and Condition: Title 2 U.S. Code of Federal Regulations 200.446 Interest states that costs incurred for interest on borrowed capital are unallowable. HIV Alliance included interest expense in reported allowable costs. Context: Unallowable interest expense transactions, totaling approximately $6,000, were not properly excluded from costs to be paid with federal funds. Cause: In the June reconciliation of total program expenses to allowable expenses, interest expense was not removed, resulting in interest expense being funded with federal awards. This reconciliation process had been effectively identifying and excluding unallowable costs up to that point. Internal controls in place were not sufficient to prevent or detect and correct this error. Effect: Small amounts of unallowable costs were funded with federal awards and may result in the requirement to reimburse these funds. Additionally, this could increase the risk of future non-compliance if corrective actions are not taken. Recommendation: Processes and procedures should be implemented to strengthen the grant expense reconciliation process and also implement review processes to ensure all unallowable costs are consistently identified and excluded. Management's Response: Processes will be designed to incorporate management reviews of grant invoices and reported expenses.