Finding 1205675 (2023-005)

Finding: Internal Control Over Compliance Federal Assistance Listing Number 93.959 - Block Grants for Prevention and Treatment of Substance Abuse U.S. Department of Health and Human Services Criteria: According to 2 CFR Part 200.403 factors affecting allowability of costs - costs must meet the following general criteria in order to be allowable under Federal awards: (a) be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles, (b) conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items, (c) be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the non-Federal entity, (d) be accorded consistent treatment, (e) be determined in accordance with generally accepted accounting principles, (f) to be included as a cost or used to meet cost sharing or matching requirements of any other federally-financed program in either the current or a prior period and (g) be adequately documented. In addition, according to 2 CFR Part 200.303, the non-Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition: The Organization did not maintain documentation to support the review and approval of allowable costs and draw requests as designed by their internal control structure. Questioned Costs: N/A Context: We tested 40 payroll and nonpayroll expense for allowable costs and allowable activities applied to the grant for the year ended June 30, 2023 for transactional expenses approval process based on the Organization's internal control design. Four selections did not have approval documentation maintained. We tested 8 invoices for cash management for review and approval prior to the Organization requesting federal funds based on the Organization's internal control design. Five selections did not have review and approval documentation maintained. We tested 8 invoices for period of performance for review and approval prior to the Organization requesting federal funds based on the Organization's internal control design. Six selections did not have review and approval documentation maintained. Effect: The Organization did not maintain documentation to support that costs and reimbursement invoices had been approved in accordance with their internal control design. Cause: The entity did not have policy and procedures in place to maintain adequate supporting documentation to show internal controls were operating as designed. Identification as a Repeat Finding: 2022-003 Recommendation: We recommend that the Organization implement policies and procedures to maintain documentation of internal controls over compliance to support controls are operating as designed. Views of Responsible Officials: The Organization agrees with the finding. See separate auditee document for planned corrective action.