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, COVID-19 1B08TI083536-01, COVID-19 6B08TI083536-01M001, COVID-19 6B08TI083536-01M002, COVID-19 6B08TI083536-01M003, 1B08TI085814-01, 1B08TI084652-01, 6B08TI084652-01M001, 6B08TI084652-01M002, COVID-19 1B08TI083948-01 and COVID-19 1B08TI084588-01 Area: Reporting Questioned Costs: $-0- Criteria: 1. The recipient is required to submit a Federal Financial Report (SF-425), ninety (90) days after the close of the statutory grant period (45 CFR § 96.30) that are accurately presented, comparable and reconcilable. The SF-425 shall report total funds obligated and total funds expended by the grantee. 2. In accordance with grant terms and conditions, a grantee must report each action that obligates $25,000 or more in federal funds that does not include recovery funds (as defined in § 1512(a)(2) of the American Recovery and Reinvestment Act of 2009, Public Law 111-5) for a subaward to an entity. A grantee is exempt from Federal Financial Accountability and Transparency (FFATA) reporting requirements if in the previous year the grantee had gross income, from all sources, under $300,000. Condition: 1. Of two SF-425 reports tested, for two (or 100%), the underlying accounting records supporting the cash receipts and cash disbursements reported in the SF-425 reports were not provided: 2. FSM National Government had income for the prior fiscal year ended September 30, 2022 in excess of the $300,000 gross income exemption; however, the FSM National Government did not file the required reports in accordance with FFATA requirements. The following are the obligation actions in the amount of $25,000 or more in federal funds to subrecipients during FY2023: Cause: 1. FSM National Government lacks monitoring control in ensuring data included in the SF-425 reports are supported with underlying accounting records; and 2. FSM National Government lacks internal controls over the preparation and submission of the required FFATA reporting requirements as stipulated in the grant terms and conditions. Effect: FSM National Government is in noncompliance with the applicable SF-425 and FFATA reporting requirements. Identification as a Repeat Finding: Finding No. 2022-013. Recommendation: 1. FSM National Government should strengthen and enforce compliance over applicable reporting requirements; 2. Establish and implement monitoring controls over the preparation and submission of the required FFATA reports; and 3. Establish and implement systematic filing of relevant documentation 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. 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.