Finding Text
2022-005 - Reinforce Cash Management Compliance
Program Name/ Assistance Listing Number: 93.788
Federal Agency: U.S. Department of Health and Human Services
Federal Award Identification: Unknown
Applicable Pass-through Entity: Ohio Department of Mental Health and Addiction Services
(Ohio MHAS)
Type of Findings: Significant Deficiencies and Material Weakness
Compliance Requirement: Cash Management
Criteria: Cash management for reimbursement-based grants must be based on actual expenditures
paid, ensuring compliance with federal cash management regulations and preventing excess fund
retention.
Condition: Our audit identified areas where cash management can be reinforced based on these
specific instances:
1. Supporting documentation was not readily available to confirm that expenses were paid
before requesting reimbursement.
2. The general ledger did not reflect all transactions supporting grant disbursement requests for
the period January 1, 2022 to December 31, 2022.
Cause: Cash management procedures may not be fully aligned with federal compliance
requirements, leading to manual calculations instead of relying on real-time accounting data.
Furthermore, documentation and internal control procedures may need enhancement to ensure
consistency and transparency in financial reporting.
Potential Effect: Errors in cash management could result in non-compliance with federal cash
handling requirements. Missing documentation can delay audit procedures. Additionally, non
compliance may impact grant renewals.
Questioned Cost: $817,254
Context: Reimbursement requests were not always backed by documentation confirming expenses
were paid, and the general ledger did not fully capture all grant-related transactions. These issues
suggest gaps in internal controls, reliance on manual calculations, and misalignment with federal
compliance requirements. If unaddressed, these deficiencies could lead to non-compliance, audit
delays, and potential risks to future grant funding. Strengthening financial controls and
reconciliation processes is necessary to ensure compliance and transparency.
Recommendation: To enhance compliance, streamline reconciliation, and strengthen internal
controls, we recommend implementing the following practical, proactive measures:
1. Align Reimbursement Requests with the General Ledger
Ensure that all reimbursement requests are directly tied to actual expenditures recorded in
the general ledger, minimizing reliance on manual tracking.
2. Implement a Systematic Reconciliation Process
Establish a structured reconciliation process that links each reimbursement request to paid
expenses, with supporting documentation readily available for review.
3. Strengthen Real-Time Grant Cash Flow Tracking
Utilize existing accounting software to have a real-time tracking system for grant-related
cash flow to ensure compliance with reimbursement-based grant requirements.
4. Assign a Grant Compliance Lead
Designate a finance or administrative team member to oversee cash management
compliance, ensuring consistency and acting as the primary point of contact for grant
related financial matters.
5. Conduct Monthly Reconciliation Meetings
Facilitate monthly reconciliation meetings between finance and program teams to align
financial records with program expenditures and address any discrepancies proactively.
Views of Responsible Official: RSNEO agrees with the findings and will adhere to the
corrective action plan outlined.