Finding Text
Federal agency: U.S. Department of Health and Human Services Federal Award Project Title: Better Family Life’s Relationship, Education, Advancement, and Development for Youth for Life Project Assistance Listing Number: 93.086 Assistance Listing Program Title: Healthy Marriage Promotion and Responsible Fatherhood Grants Award Period: September 30, 2023 – September 29, 2024 Award Period: September 30, 2024 – September 29, 2025 Federal agency: U.S. Department of Health and Human Services Federal Award Project Title: Better Family Life’s Teen Pregnancy Prevention Education Assistance Listing Number: 93.297 Assistance Listing Program Title: Adolescent Health Programs Award Period: July 1, 2023 – June 30, 2024 Award Period: July 1, 2024 – June 30, 2025 Type of Finding: Significant Deficiency in Compliance and Internal Control over Compliance Criteria: Related to cash management, when entities are funded on a reimbursement basis, program costs must be incurred before the drawdown is requested according to CFR section 200.305. Nonprofits should document the basis, or calculation, used for each drawdown request to show that the amount requested matches the expenses incurred for the period. Additionally, CFR section 200.303 requires non-Federal entities receiving Federal awards to establish and maintain internal control over the Federal awards that provides reasonable assurance that the Federal expenditures are in compliance with Federal statutes, regulations, and the terms and conditions of the Federal awards. Drawdown requests should be reviewed and approved by appropriate personnel prior to submission by reviewing supporting documents to ensure amounts have been incurred.Condition: During audit testing of compliance and internal control over compliance, it was discovered funds were drawn down several times based on estimated bi-monthly expenses. Additionally, drawdown requests were not properly reviewed and approved by appropriate personnel. Cause: Due to staff turnover and timing constraints, the Organization utilized reasonable estimates rather than exact amounts for drawdown requests. Additionally, review and approval procedures related to drawdown requests were not being consistently performed. Effect: The estimated drawdown of funds could be different than actual expenditures incurred for the period, leading to costs being reimbursed prior to costs being incurred. As of December 31, 2024, all funds drawn were for expenses incurred prior to December 31, 2024. Additionally, the inconsistent application of internal controls could result in reimbursement of costs that were not incurred prior to drawdown. Questioned costs: No questioned costs were identified. Context: During audit testing of the Organization’s compliance and internal controls over compliance related to cash management, it was discovered the Organization at times utilized reasonable estimates rather than exact amounts for drawdown requests. Additionally, there was no review and approval of drawdown requests by appropriate personnel after February 2024, due to staff turnover. The audit team did not identify any questioned costs and concluded that the control failure was not indicative of fraud or illegal activities. Due to the compliance finding and lack of control, the audit team concluded the finding to be a significant deficiency in compliance and internal control over compliance. Recommendation: We recommend the Organization implement procedures to monitor drawdowns of funds so that funds are only requested when approved and documented reimbursable expenses have been incurred. Additionally, we recommend that management establish and enforce documented review and approval procedures of all drawdown requests. View of responsible officials: There is no disagreement with the audit finding.