Finding 372231 (2022-001)

Federal program Block Grants for Community Mental Health Services – 93.958 – Activities Allowed or Unallowed, Allowable Costs/Cost Principles Criteria or specific requirement To be allowable under a federal award, costs must be reasonable, allocable, and adequately documented. A cost is reasonable if it does not exceed what a prudent person would incur under similar circumstances. A cost is allocable to a federal award to the extent the goods or services benefited the program. A cost is adequately documented if it is supported by accounting records and source documentation, such as purchase orders, vouchers, invoices, payroll allocation reports, payroll summaries, timesheets, etc. Condition During testing, Family Service and Guidance Center, Inc. decided to remove health insurance costs as an allowable cost under the Federal Mental Health Block Grant. These costs had originally been included as allowable costs for the period under audit. Context Family Service and Guidance Center, Inc. did not have a process in place in which to adequately document the health insurance allocation to the Federal Mental Health Block Grant. The total amount of health insurance costs considered unallowable within the Federal Mental Health Block Grant totaled $5,010.05. Effect Unallowable costs were charged to the Federal Mental Health Block Grant. Cause While health insurance is considered an allowable expense per the Federal Mental Health Block Grant program, after initially including it within allowable expenses internally, Family Service and Guidance Center, Inc. determined it was too complex to determine the allocation of health insurance costs attributable to the Federal Mental Health Block Grant program. Recommendation We recommend that costs charged to federal programs be reviewed for allowableness to ensure compliance requirements are being met and expenses are allowable per the program. Views of responsible officials and planned corrective actions See corrective action plan.