Finding 1228673 (2025-006)

Finding 2025-006: Reporting and Expenditure Cutoff - Material Weakness Federal Program: Substance Abuse and Mental Health Services Projects of Regional and National Significance Assistance Listing Number: 93.243 Federal Agency: U.S. Department of Health and Human Services Federal Award Identification Number: 5H79TI084739-02 Award Year: 2024 Criteria: Recipients of federal awards are required to submit financial reports in accordance with the reporting requirements and deadlines established by the applicable grant agreement and federal program requirements. Amounts reported should relate to the applicable grant period and should accurately reflect the financial activity of that period. Condition: During our testing of reporting requirements for two grants, we noted the financial report for one grant was not submitted within the required reporting timeframe. In addition, the report included expenditures and related receipts attributable to the subsequent grant period rather than limiting reported activity to the period covered by the report. Cause: Management did not have adequate procedures in place to ensure that required reports were submitted timely and that reported expenditures and receipts were limited to activity applicable to the appropriate grant period. Effect: Failure to submit required reports timely may result in noncompliance with federal award requirements. Additionally, including activity from a subsequent grant period may result in inaccurate reporting of grant activity and could affect the federal awarding agency's ability to appropriately monitor the award. Questioned Costs: None noted. Context: The audit procedures included testing the reporting compliance for two grants. One of the two grants tested had a report that was submitted after the required due date and included financial activity related to the subsequent grant period. No reporting exceptions were identified for the other grant tested. The transactions tested were selected using a nonstatistical sampling approach and were not intended to be statistically representative of the population. Recommendation: We recommend that management strengthen its procedures over federal award reporting to ensure that required reports are prepared and submitted by established deadlines. Such procedures should also include a review of reported expenditures and receipts to verify that amounts are attributable to the applicable reporting and grant period prior to submission. Views of Responsible Officials: Management acknowledges this finding and will address remediation in management's corrective action plan.