Finding Text
2020-102 Lack of Cash Management Documentation (prior two years 2019-104 and 2018-007) (initially reported 2016)
Assistance Listing Number: 93.224
Name of Federal Agency: Department of Health and Human Services, HRSA
Program Title: Health Center Program (Community Health Centers, Migrant Health Centers, Health Care for the Homeless, and Public Housing Primary Care)
Compliance Requirement: Cash Management
Pass-through Entity: N/A
Federal Grant/Contract Number and Grant Year: 6H80CS06452-15 (2020), COVID-19 1H8CCS35035-01 (2020), COVID-19 1H8DCS36007-01 (2020) and COVID-19 1H8ECS39010-01 (2020)
Finding Type: Significant Deficiency in Internal Control
Known Questioned Costs: $0
Condition: The Organization made drawdowns after month-end based on budgeted period expenditures. Insufficient documentation was kept to clearly document that the amount requested was reviewed for accuracy.
Criteria: 2 CFR section 200.303 requires that nonfederal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the nonfederal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. Based on grant compliance requirements related to cash management for grants and cooperative agreements to nonfederal entities that are paid on a reimbursement basis, supporting documentation should include the actual costs for which reimbursement was requested and were paid prior to the date of the reimbursement request.
Cause: Reimbursement was requested based on the budgeted payroll expenses made for a particular period, adjusted to exclude certain employees that are not related to the grant or are highly paid employees to be conservative in the calculation. No indication of a review process involved beyond the CFO preparing a calculation to request reimbursement and making the request from the grantor.
Effect: The Organization could request funds that may not have adequate supporting documentation. These errors could lead to the Organization losing funding under this program.
Recommendation: Documentation should be based on actual and not budgeted payroll and it should be prepared and reviewed by someone other than the preparer. Also, it should directly link the amount requested to the related expenses to clearly document those funds are being used in a timely manner, that more was not requested than was expended, specifically what expenses are being considered expended through these funds, and that funds were requested and applied to the correct period. Update policies and procedures as needed to reflect changes, as applicable.
Views of Responsible Officials and Planned Corrective Actions: The Organization has hired a new Chief Financial Officer as well as additional supporting staff within the finance department. The Organizations policy and procedures related to support documentation retention has been evaluated and updated. Supporting documentation for all drawdown requests are retained by grant. The corrective action for this finding has been approved and implemented by the Organization.