Finding Text
Federal Agency: U.S. Department of Health and Human Services Federal Program Name: Community Service Block Grant Assistance Listing Number: 93.569 Federal Award Identification Numbers and Year: 2301MDCOSR 2401MDCOSR Pass-Through Agency: Maryland Department of Housing and Community Development Pass-Through Number(s): CSBG-ND-2023-NSCI CSBG-ND-2024-NSCI Award Period: 10/1/2022 - 9/30/2024 10/1/2023 - 9/30/2025 Compliance Requirement: Allowable Costs Type of Finding: Material Weakness in Internal Control over Compliance, Other Matters Criteria or specific requirement: Compliance: Per 2 CFR Section 200.403 Factors Affecting Allowability of Costs states that: Except where otherwise authorized by statute, costs must meet the following criteria 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 recipient or subrecipient. (d) Be accorded consistent treatment. For example, a cost must not be assigned to a Federal award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to the Federal award as an indirect cost. (e) Be determined in accordance with generally accepted accounting principles (GAAP), except, for State and local governments and Indian Tribes only, as otherwise provided for in this part. (f) Not be included as a cost of used to meet cost sharing requirements of any other federally financed program in either the current or a prior period. (g) Be adequately documented. (h) Administrative closeout costs may be incurred until the due date of the final report(s). If incurred, these costs must be liquidated prior to the due date of the final report(s) and charged to the final budget period of the award unless otherwise specified by the Federal agency. All other costs must be incurred during the approved budget period. At its discretion, the Federal agency is authorized to waive prior written approval to carry forward unobligated balances to subsequent budget periods. Control: Per 2 CFR section 200.303(a), a 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. These internal controls should comply 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/Context: The Neighborhood Service Center, Inc. was unable to provide documentation to substantiate that authorized signers reviewed and approved expenditures related to the federal program. Neighborhood Service Center, Inc. did not have effective controls in place for review and approval of expenditures charged to the federal program. Questioned costs: Undetermined Cause: Authorized signers pre-signed checks and did not review and approve support for cash disbursements. Effect: There is an increased risk of charging unallowed costs to the program. Repeat Finding: No. Recommendation: We recommend the Neighborhood Service Center, Inc. require both check signers to evidence review and approval of supporting documentation for each federal program cash disbursement prior to signing the check. Documentation of that review and approval should be readily available for audit. Views of responsible officials: In response to the recommendations, effective for immediate implementation, all checks presented for signatures have supporting documentation attached. Authorized check signers are instructed to review all documentation for appropriate authorization, payee name, and amounts prior to signing checks. No checks are to be signed without supporting documentation. The agency will require check signers to initial the check request page or other supporting documentation when signing checks for expenditures. The Neighborhood Service Center, Inc. is implementing a procedure to provide the Finance Committee of the Board with a listing of all checks issued between Board meetings for their review/reference. The Finance Director keeps all check stock locked in their office to avoid any potential misuse of the check stock.