Finding Text
Assistance Listing, Federal Agency, and Program Name ALN 93.982, U.S. Department of Health and Human Services, Mental Health Disaster Assistance and Emergency Mental Health Regular Services Program Wayne County Strong Federal Award Identification Number and Year 20255313 00, 2025 Pass through Entity Michigan Department of Health and Human Services Finding Type Significant deficiency Repeat Finding No Criteria Per 2 CFR 200.303, the recipient must establish, document, and maintain effective internal control over the federal award that provides reasonable assurance that the recipient is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should align with the guidance in Standards for Internal Control in the Federal Government, issued by the Comptroller General of the United States, or the Internal Control Integrated Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition DWIHN’s internal controls were not sufficiently designed and/or operating effectively to prevent the submission of unallowable costs for reimbursement under the federal award. Questioned Costs None If questioned costs are not determinable, description of why known questioned costs were undetermined or otherwise could not be reported Not applicable Identification of How Questioned Costs Were Computed Not applicable Context DWIHN submitted unallowable costs for reimbursement to the funding agency, including unallowable indirect costs and a duplicate invoice from one vendor. While DWIHN had a detective control in place to review expenditures included in reimbursement requests, the control was performed after the expenditures had been paid and included in reimbursement submissions. Due to the timing of this review, the detective control did not prevent DWIHN from paying the unallowable costs and subsequently requesting reimbursement for those costs. Upon identification of the unallowable expenditures, DWIHN took prompt corrective action, including recoupment of the funds from the applicable sources and repayment to the funding agency for the disallowed amounts. Ultimately, the grant was properly accounted for at the end of the grant period. Cause and Effect Although DWIHN had preventive and detective controls in place related to reimbursement requests, those controls did not operate effectively as designed for this grant program. As a result, unallowable costs were reimbursed to DWIHN by the granting agency prior to being identified and remediated. Recommendation We recommend that DWIHN strengthen and timely execute its review procedures over reimbursement requests and supporting documentation to ensure that all expenditures submitted for reimbursement comply with the terms and conditions of the grant award. This may include enhancing preventive controls or adjusting the timing of existing reviews to ensure unallowable or duplicate costs are identified and excluded prior to submission to the funding agency. Views of Responsible Officials and Corrective Action Plan DWIHN concurs with the finding. However, it should be noted that it is customary and standard practice to charge the indirect de minimis rate to federal grants in accordance with 2 CFR 200.414(f) Indirect Costs and the Department of Health & Human Services Grants Policy Statement section 2.3.4.6. Indirect Cost Rates. In addition, one (1) out of the seven (7) contracted vendors submitted FSR’s with indirect costs to the project; six (6) providers submitted the FSR’s without indirect cost thus adhering to the instructions. Further, the unallowed costs and duplicate payment were identified, corrected, and remediated by the finance staff prior to submission of the final reports, closeout of the grant and audit fieldwork. Finally, program and finance staff responsible for the approving and processing of FSR’s have been informed of the need to review FSR’s in greater detail before they are submitted, approved, and payment occurs. A more detailed review of the FSR’s as adherence to established policies and procedures, will eliminate the risk of errors and omissions.