Finding 1241386 (2025-002)

2025-002 –ALN 93.623 Basic Center Program Federal Agency: U.S. Department of Health and Human Services Pass-Through Agency: N/A Compliance Requirement: Allowable Activities and Allowable Costs/Cost Principles Type of Finding: Material Weakness in Internal Control over Compliance; Noncompliance Criteria: Under Uniform Guidance, costs charged to a federal award must be necessary, reasonable, and allocable to the federal program. Costs must be assigned to federal awards in proportion to the relative benefits received. Additionally, Uniform Guidance requires recipients to maintain financial management systems that provide accurate, current, and complete financial information supported by appropriate accounting records. Condition: During our testing of expenditures charged to the Basic Center Program (ALN 93.623), we were unable to reconcile the population of program expenditures provided by management to the Organization's general ledger. As discussed in the financial statement findings section, the Organization did not consistently apply an allowable cost allocation methodology and was unable to provide sufficient documentation supporting its allocation process. Consequently, we were unable to determine whether all costs included in the expenditure population were properly allocated to the Basic Center Program in accordance with federal cost principles. Questioned Costs: $0 Cause: Management did not establish or maintain effective controls to ensure that shared costs were allocated using an allowable methodology, adequately documented, and reconciled to the accounting records prior to charging costs to the federal award. Effect: The Organization cannot demonstrate that expenditures charged to the Basic Center Program were properly allocated and supported in accordance with Uniform Guidance. As a result, there is an increased risk that unallowable or unallocable costs may have been charged to the federal award. Recommendation: See the recommendation for finding 2025-002 in the financial statement findings section of this schedule.