Finding Text
Federal Agency: U.S. Department of Health and Human Services AL Program: 93.959 Block Grants for Prevention and Treatment of Substance Abuse Federal Award No.: 1B08TI083457-01, 6B08TI083457-01M001, 6B08TI083457-01M002, 6B08TI083457-01M003, 6B08TI083457-01M004, 1B08TI084652-01, 6B08TI084652-01M001, 6B08TI084652-01M002, COVID-19 1B08TI083536-01, COVID-19 6B08TI083536-01M001, COVID-19 6B08TI083536-01M002, COVID-19 6B08TI083536-01M003, COVID-19 1B08TI083948-01, COVID-19 6B08TI083948-01M001, and COVID-19 1B08TI084588-01 Area: Allowable Costs/Costs Principles Questioned Costs: $56,808 Criteria: In accordance with 2 CFR Part 200. Subpart E, cost must be necessary and reasonable for the performance of the federal award and be allocable thereto. Furthermore, costs must conform to any limitations or exclusions and be adequately documented. Condition: Of sixty expenditures tested, aggregating $84,703 of a total population of $997,874, for twenty-four (or 40%), the FSM National Government was unable to provide supporting documents, such as purchase requisition, contracts, invoices, receiving report or equivalent documentation and cancelled checks, to support that expenditures were for allowable costs and that payments were made to eligible parties or for eligible good or services. In addition, the purchase orders for TR Numbers 422031, 421187 and 413829 were also not provided. Cause: The FSM National Government did not provide sufficient and appropriate audit evidence to substantiate the expenditures over compliance with applicable allowable costs/cost principles requirement and lacks monitoring control over adequate documentation and systematic filing of relevant documentations supporting program costs. Effect: The FSM National Government is in noncompliance with applicable allowable costs/cost principles requirements and questioned cost of $56,808 result. Recommendation: The FSM National Government should strengthen and enforce compliance with the applicable allowable costs/cost principles requirements and establish and implement systematic filing of relevant documentation supporting program costs for easy retrieval. Views of Responsible Officials: Management disagrees with the finding. Refer to FSM NG’s Views of Responsible Officials for their detailed response. Auditor Response: Our request for tagging documents was for those underlying accounting records that are part of the bulk files provided. Our engagement letter included a paragraph saying our scheduled performance is dependent on client providing a reasonable level of assistance. It is not the auditor’s responsibility to go through bulk files and search for underlying accounting records, but rather, it is the responsibility of the FSMNG to provide the specific underlying accounting records supporting program costs. It is also the responsibility of the FSMNG to coordinate audit requests within its department agencies. Further, during our audit finding resolution meeting on 12/09/25, the FSMNG management acknowledged that the cited missing documents were in fact not made available during our audit fieldwork.