Finding Text
ALN 93.958 Block Grants for Community Mental Health Services
Pass-through Entity Identification Number GRK 213195
U. S. Department of Health and Human Services
Minnesota Department of Human Services
Finding 2022-001
Noncompliance – Allowable Costs/Cost Principles
Material Weakness
Criteria: OMB’s Uniform Guidance requires nonfederal entities to establish and maintain an effective financial reporting system over federal awards that provides reasonable assurance that the awards are being managed in compliance with federal statutes, regulations and the terms and conditions of the federal award.
Condition: The Organization did not create and install a system of financial reporting for federal funds that would record expenses charged to each federal grant into a cost center as those expenses were incurred.
Cause: The Organization changed accounting services during 2022 and did not establish cost centers in its general ledger that would have allowed expenses to be charged or allocated to each of its federal grants. Additionally, the financial management of the Organization does not have adequate training on OMB Uniform Guidance guidelines and federal grant management to prioritize and maintain an accounting system that complies with this requirement.
Effect or Potential Effect: Expenses charged to the grant and reported to the pass-through agency cannot be traced into the accounting records.
Questioned Costs: Unknown
Repeat Finding: N/A
Recommendation: The Organization’s financial management team should obtain additional training on Uniform Guidance and federal grant management and create a system of financial reporting to record expenditures directly to each federal grant award.
Views of Responsible Officials: American Child Wellness Institute, Inc. is in agreement with the audit finding.