FAC Explorer

Finding 1168334 (2025-002)

Material Weakness Repeat Finding
Requirement
L
Questioned Costs
-
Year
2025
Accepted
2026-01-08
Audit: 380132
Organization: Phoenix Houses of Texas, Inc. (TX)
Auditor: BLAZEK & VETTERLING

AI Summary

  • Core Issue: Reports were submitted late, violating compliance timelines for federal grant contracts.
  • Impacted Requirements: Internal controls for contract compliance and timely reporting as per Uniform Guidance and THHS requirements.
  • Recommended Follow-up: Strengthen internal procedures to ensure timely grant billing and reporting to avoid future delays.

Finding Text

Finding #2025-002 – Significant Deficiency and Other Noncompliance – Reporting. Applicable federal program: U. S. Department of Health and Human Services, Assistance Listing #93.959, Passed through Texas Health and Human Services Commission, All contracts, Contract years: 09/01/23 – 08/31/24 and 09/01/24 – 08/31/25. Criteria: Management is responsible for establishing internal controls for contract compliance for reporting in accordance with the Uniform Guidance and requirements in the pass-thru agency grant contract. Condition and context: In our testing of a sample of monthly billings and quarterly reports from throughout the fiscal year, we noted that reports were not being submitted within the required timelines for several reporting periods. Management communicated their delays to Texas Health and Human Services Commission (THHS), and their plan to rectify the delays. Phoenix Houses of Texas were able to file all delayed quarterly reports and monthly billings prior to June 30, 2025. THHS has approved all the delayed monthly billings and quarterly reports. Cause and effect: Phoenix Houses was awarded a new 5-year grant agreement in July 2024 with an effective date of September 1, 2024 from the Texas Health and Human Services Commission to support prevention programming in Dallas, Austin, and Houston. The discontinuation of residential treatment services and exclusive focus on new prevention service grants necessitated organizational restructuring and related changes in personnel. The accounting system also required updates to enable proper budgeting, accounting and reporting for the new grants. Late reporting may result in delayed management decision-making, potential non-compliance with THHS reporting timelines and impacts on grant reimbursement collections. Recommendation: Re-emphasize internal procedures for timely grant billing and reporting to comply with grant contracts. Views of responsible officials and planned corrective actions: Management agrees with the finding. See Corrective Action Plan.

Corrective Action Plan

Finding #2025-002 – Significant Deficiency and Other Noncompliance – Reporting. Applicable federal program: U. S. Department of Health and Human Services, Assistance Listing #93.959, Passed through Texas Health and Human Services Commission, All contracts, Contract years: 09/01/23 – 08/31/24 and 09/01/24 – 08/31/25. Condition and context: In our testing of a sample of monthly billings and quarterly reports from throughout the fiscal year, we noted that reports were not being submitted within the required timelines for several reporting periods. Management communicated their delays to Texas Health and Human Services Commission (THHS), and their plan to rectify the delays. Phoenix Houses of Texas were able to file all delayed quarterly reports and monthly billings prior to June 30, 2025. THHS has approved all the delayed monthly billings and quarterly reports. Recommendation: Re-emphasize internal controls over timely grant billing and reporting to comply with grant contracts. Planned corrective action: All outstanding billings were subsequently submitted and billings are now current and submitted in accordance with required timelines. Corrective actions implemented include updates to Finance Department policies and procedures to formalize month-end closing and billing timelines and to strengthen oversight and monitoring controls. These changes ensure that billing and reporting are performed on a timely and ongoing basis. Responsible officer: Drew Dutton, CEO and Anunoy Mou, Finance Director. Estimated completion date: Completed September 2025.

Categories

Reporting Subrecipient Monitoring Cash Management HUD Housing Programs Significant Deficiency

Programs in Audit

ALN Program Name Expenditures
93.959 BLOCK GRANTS FOR PREVENTION AND TREATMENT OF SUBSTANCE ABUSE $2.06M