Finding Text
2023-001 – Allowable Cost/Cost Principles – Internal Control Over Compliance –Noncompliance
Information on Federal Program:
U.S. Department of Health and Human Services
ALN Number: 93.243
ALN Name: Substance Abuse and Mental Health Service Projects of Regional and National
Significance
Grant Award Number: 1H79TI084507-01
Contract Period: 07/01/2022 - 6/30/2023
Criteria:
In accordance with the Uniform Guidance §200.405, if costs benefit multiple programs, the costs should be allocated to the programs based on the proportional benefit. Per the Uniform Guidance §200.413, direct costs are those costs that can be identified specifically or directly assigned to such activities relatively easily with a high degree of accuracy. Additionally, Uniform Guidance §200.302 states that the non-federal entity’s financial management systems, including records documenting compliance with federal statutes, regulations, and the terms and conditions of the federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions; and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the federal statutes, regulations, and the terms and conditions of the federal award.
Condition:
During our examination of the Company’s internal control over compliance and compliance with the allowable costs/cost principles of the program, we identified one expense item amounting to $170 allocated to the program. A supporting invoice amounting to $3,500 was provided by the client, but the basis and calculation of the amount allocated to the program was not provided. The Organization did not maintain adequate documentation supporting this allocation expense claimed under the grant.
Cause:
Policies and procedures were not appropriately adhered to in instance noted to ensure that supporting documentation was maintained correctly to evidence that costs were allowable and that an appropriate level of review and approval was completed prior to charging costs to a federal program.
Effect:
The Company was unable to provide supporting documentation to support the basis and calculation of the amount charged to the program for us to conclude whether the expense was properly allocated to the program.
Questioned Costs:
Known questioned costs of $170 in relation to our sample population. Unable to determine unknown questioned costs on the untested population.
Context:
We tested a sample of 40 items and found one exception amounting to $170 as noted in the condition. This is a condition identified per review of the Organization’s compliance with specified requirements using a statistically valid sample.
Recommendation:
In order to facilitate accurate reporting and compliance with terms and conditions of federal awards, we recommend management implements a process by which the Organization maintains a separate file with the records for each individual invoice, including supporting allocations, to be included in future submissions to ensure all expenses can be supported.
Views of Responsible Official and Planned Corrective Action:
The Company agrees with the finding identified. The Company’s response to the finding is described in the accompanying management’s corrective action plan.