Finding Text
Grants for Capital Development in Health Centers - Assistance Listing No. 93.526 U.S. Department of Health and Human Services Award Criteria or Specific Requirement - Activities Allowed/Unallowed and Cost Principles (45 CFR 75.403) Condition - The Organization did not use grant funds under this award for allowable costs as defined within the grant agreement. Questioned Costs - $1,047,063 Context - The Organization drew down grant funds under this award and used the funds for expenditure reimbursement for salaries and wages which is not an allowable expenditure under the award. The drawdown had originally been intended to be requested under a different award in which reimbursement for salary and wages expenditures was allowable. The error in drawdown of funds had not been noted by management until the auditor notified them of the error which was identified during financial statement audit testing. Management requested a transfer of funds from the Grants for Capital Development in Health Centers award to the appropriate award which was approved and completed by HRSA. Effect - Grant funds were used for nonallowable expenses as defined within the grant agreement. Cause - The Organization did not identify the incorrect grant award had been selected during the drawdown process. Identification as a Repeat Finding - Not a repeat finding Recommendation - Management should solidify grants management procedures, specifically regarding drawdowns of grant funds and review of expenditures allowed and unallowed per the terms of the grant agreement. Views of Responsible Officials and Planned Corrective Actions - During our fiscal year 2022 audit, the Organization drew down grant funds under this award and spent them on expenditures that were not allowable. This was a clerical error as finance staff thought they were drawing down funds under the Community Health Center grant instead of this capital grant. The draw was used to pay salaries instead of capital items that this grant was intended for. We have self-reported this issue to HRSA and have been approved to transfer these funds to the appropriate award so they could be spent properly. Although controls are in place to help prevent these types of errors to occur and were effective for the Organization?s other Federal awards, they were not effective for this award. We have reviewed our grant drawdown procedures and have discussed this error internally with finance staff and provided training as appropriate. Our audit partner has discussed this issue with the Organization?s Chief Executive Officer (CEO) and the Board of Directors. A robust discussion occurred in our February board meeting about this issue, how it occurred and what measures need to be taken to help prevent this type of error in the future. At this time, all corrective actions have been taken. We are currently without a Chief Financial Officer but K. Brooks Miller, CEO supervised these corrections and took responsibility to make sure these corrective actions were taken.