Finding Text
Federal Agency: Department of Health and Human Services
Federal Program Name: Substance Abuse and Mental Health Services Projects of Regional and
National Significance
Assistance Listing Number: 93.243
Federal Award Identification Number and Year: 1H79SM087513-01 - 2024
Award Period: September 30, 2023 through September 29, 2027
Type of Finding:
• Significant Deficiency in Internal Control over Compliance
Criteria or specific requirement: According to the grant agreement and 2 CFR 200.430(g), charges to
Federal awards for salaries and wages must be based on records that accurately reflect the work
performed. In additions, according to 2 CFR 200.430(g)(1)(vii), budget estimates alone do not qualify as
support for charges to Federal awards, but may be used for interim accounting purposes, provided that
the system for establishing the estimates produces reasonable approximations of activity performed,
significant changes in work activity are promptly identified and entered into the records, and the
recipient’s system of internal controls includes processes to perform periodic after-the-fact reviews of
interim charges made to a Federal awards based on budget estimates. All necessary adjustments must
be made so that the final amount charges to the Federal award is accurate, allowable, and properly
allocated.
Condition: During our review of the grant expenditures, it was noted that budgeted amounts were
charged to the grant instead of the actual costs incurred. This practice was observed in multiple
instances, leading to discrepancies between the reported expenditures and the actual costs.
Management did not review time and effort to make after-the-fact adjustments to the amounts charged
to the grant.
Questioned costs: None
Context: The Organization had generally spent more than was funded for salaries and benefits under
federal grants or would have expenses that would not be reimbursable under the program. Due to the
actual salary amount expended exceeded the total grant budgeted amount, the Organization only
charged the monthly budgeted amount instead of the actual amount expended.
Cause: The incorrect charging of budgeted amounts instead of actual costs appears to be due to a lack
of proper oversight and understanding of the grant requirements by the personnel responsible for
financial reporting and grant management.
Effect: Charging budgeted amounts instead of actual costs can result in non-compliance with grant
requirements, potential disallowance of costs, and inaccurate financial reporting. This could also lead to
financial penalties and affect the organization's ability to secure future funding.
Recommendation: We recommend that the Organization establish a review process to ensure that all
costs charged to the grant are based on actual expenditures and are properly documented.
Views of responsible officials: There is no disagreement with the audit finding.