Finding Text
ALN 93.958 Block Grants for Community Mental Health Services
Pass-through Entity Identification Number GRK 213195
U. S. Department of Health and Human Services
Minnesota Department of Human Services
Finding 2023-001
Compliance Requirement: Allowable Costs/Cost Principles
Type of Finding: Material Weakness
Criteria: OMB’s Uniform Guidance requires non-federal entities to establish and maintain an effective financial reporting system over federal awards that provides reasonable assurance that the awards are being managed in compliance with federal statutes, regulations and the terms and conditions of the federal award.
Condition: Expenses charged to the federal grant cannot be traced into the Organization’s general ledger. Invoices submitted to the pass-through agency for reimbursement also cannot be traced into the general ledger.
Cause: The Organization did not establish cost centers in its general ledger that would have allowed direct expenses to be charged or indirect expenses to be allocated to each of its federal grants. Because accrual basis accounting was not in use, invoices to the pass-through agency for the reimbursement of these costs were not recorded in general ledger.
Effect or Potential Effect: There is no way to determine which specific expenses incurred by the Organization were included in costs that were charged to the federal grant. As such, the Organization is not in compliance with federal regulations regarding allowable costs.
Questioned Costs: Unknown
Repeat Finding: This finding is a repeat finding (see prior year finding number 2022-001)
Recommendation: The Organization should consider hiring an in-house accountant, expand its financial management team, and obtain additional training on Uniform Guidance and federal grant management and create a system of financial reporting to record expenditures directly to each federal grant award.
Views of Responsible Officials: American Child Wellness Institute, Inc. is in agreement with the audit finding.