Finding 2005 (2023-001)

Significant Deficiency
Requirement
C
Questioned Costs
-
Year
2023
Accepted
2023-11-16
Audit: 3451
Auditor: Rsm US LLP

AI Summary

  • Core Issue: An advance of federal funds occurred due to requesting reimbursement that exceeded actual expenses in one month.
  • Impacted Requirements: Non-federal entities must minimize the time between receiving federal funds and disbursing them for program costs (2 CFR section 200.305(b)).
  • Recommended Follow-Up: Review and update policies to ensure timely reimbursement of federal funds to prevent future advances.

Finding Text

Identification of the federal program: Assistance Listing Number 93.958, Block Grants for Community Mental Health Services, United States Department of Health and Human Services. Criteria: Non-federal entities must minimize the time elapsing between the transfer of funds from the U.S. Treasury or pass through entity and disbursement by the non-federal entity for direct program or project costs and the proportionate share of allowable indirect costs, whether the payment is made by electronic funds transfer, or issuance or redemption of checks, warrants, or payment by other means (2 CFR section 200.305(b)). Condition: In one of three months selected for testing, we noted that the amount requested for reimbursement was greater than the expenses incurred resulting in an advance of federal funds. The overdraw was corrected over the subsequent two-month period. Cause: Management indicated that this error occurred due to a change in the budgeted indirect costs allowed for in year two vs. year one, and that resulted in an oversight in the calculation. Effect or potential effect: In one of three months tested, the amount overdrawn approximated $58,000 and the error was corrected over the subsequent two-month period. Questioned costs: not applicable. Context: In one of three months selected for testing, Bellefaire did receive an advance of federal funds. Management was able to provide supporting documentation which appeared to indicate that the error was corrected in the subsequent two-month period. Given the interest rate environment and the amount of time the advance was maintained, any interest income earned would be considered trivial. Recommendation: We recommend that existing policies and procedures be reviewed to ensure that reimbursement of federal funds is made within the required timeframe to minimize the time elapsing between the receipt of funds from the U.S. Treasury and disbursement. Views of responsible officials: Management concurs with this finding. See page 43 for corrective action.

Corrective Action Plan

The Agency is updating its process to calculate the indirect costs in accordance with the revised notice of award (NOA) dated March 10, 2023. Additionally, the Agency will provide further training to all individuals involved in the financial management of federal awards. On a monthly basis, the calculation of indirect costs eligible for reimbursement under this award will be compared to the indirect costs allowed for in the NOA. This calculation will be secondarily reviewed by an individual having financial oversight on federal awards to ensure that any reimbursement request is computed in accordance with the NOA. The reimbursement request will then be submitted only after this verification has been completed. Contact person responsible for corrective action: Scott Moore, Chief Financial Officer Anticipated completion date: December 31, 2023

Categories

Cash Management Matching / Level of Effort / Earmarking Internal Control / Segregation of Duties

Other Findings in this Audit

  • 578447 2023-001
    Significant Deficiency

Programs in Audit

ALN Program Name Expenditures
93.958 Block Grants for Community Mental Health Services $2.37M
93.243 Substance Abuse and Mental Health Services_projects of Regional and National Significance $562,735
93.498 Provider Relief Fund $230,092
93.556 Promoting Safe and Stable Families $228,557
93.623 Basic Center Grant $187,864
93.550 Transitional Living for Homeless Youth $185,517
93.557 Education and Prevention Grants to Reduce Sexual Abuse of Runaway, Homeless and Street Youth $142,437
10.555 National School Lunch Program $80,622
10.553 School Breakfast Program $46,288
93.558 Temporary Assistance for Needy Families $5,895
84.425 Education Stabilization Fund $4,036