Finding Text
Finding 2025-003: Allowable Costs and Internal Controls Identification of the Federal Program - US Department of Health and Human Services 93.778 Grants to States for Medicaid Criteria - In accordance with 2 CFR 200.302(a) all recipient and subrecipient financial management systems must be sufficient to permit tracking expenditures to establish that funds have been used in accordance with Federal statues, regulations, and the terms and conditions of the Federal award. 2 CFR 200.302(b)(3) further clarifies that records must contain information necessary to identify Federal awards, authorizations, financial obligations, unobligated balances, as well as assets, expenditures, income, and interest. Condition - We noted during our testing of non-payroll direct cost that 8 out of 16 expenditures, totaling $4,907, did not have adequate supporting documentation, and were charged to the respective grants based on budgeted costs and allocations. These exceptions included 2 sample selections, totaling $4,345, that were submitted for reimbursement under another federal grant. The total federal portion of the invoice charged under another grant in 2025 was $20,908. Cause - Due to a lack of formal internal control policies and procedures, the Organization did not maintain sufficient and appropriate evidence of non-payroll expenditures incurred and applied to the program. Effect - Charges to Federal awards for non-payroll related costs may not reflect actual expenditures incurred and allocated to specific programs, even though the charges are not in excess of amounts approved for the grant period. Questioned Costs Known questioned costs: $21,371 Likely questioned costs: $25,753 Context - We selected 16 non-payroll transactions charged to the federal program to test controls over allowable costs. Total federal non-payroll costs under these awards total $47,124. We noted during our testing of non-payroll direct cost that 8 out of 16 expenditures, totaling $4,807, did not have adequate supporting documentation, and were charged to the respective grants based on budgeted costs and allocations. For 4 of the 8 exceptions noted, totaling $150, we noted the Organization was unable to demonstrate that the invoice provided related to the sample selection. For 2 out of the 8 exceptions noted, totaling $313, we noted the Organization was unable to provide documentation supporting the expenditure was incurred. For 2 out of the 8 exceptions noted, totaling $4,345, the Organization provided an invoice that was reimbursed by another federal grant. The total federal portion of the invoice charged under another grant in 2025 was $20,908. Repeat Finding – No Recommendation - We recommend the Organization implement internal controls and policies to ensure actual non-payroll expenditures charged to each federal award are properly tracked and supported. This may include maintaining a detailed listing of invoices and other supporting documentation that substantiates the actual allowable costs charged to each award. Management should review and verify this documentation for accuracy and completeness on a timely basis. View of Responsible Officials - Management will strengthen controls over non-payroll expenditures charged to federal awards to ensure costs are based on actual expenditures, adequate support, allowability under the applicable award, and not charged to or reimbursed by another federal award.