Finding 399179 (2022-006)

FINDING 2022-006 Subject: Comprehensive Community Mental Health Services for Children with Serious Emotional Disturbances (SED) - Reporting Federal Agency: Department of Health and Human Services Federal Program: Comprehensive Community Mental Health Services for Children with Serious Emotional Disturbances (SED) Assistance Listings Number: 93.104 Federal Award Number and Year (or Other Identifying Number): 1H79SM082981-01 Compliance Requirement: Reporting Audit Finding: Material Weakness Condition and Context The County entered into a memorandum of understanding (MOU) with Oaklawn Psychiatric Center, Inc. (Oaklawn) on June 22, 2020, covering a four-year period from August 31, 2020 to August 30, 2024. The MOU was for use of the Comprehensive Community Mental Health Services for Children with Serious Emotional Disturbances (SED) grant. During the audit period, $914,863 was passed through to Oaklawn (i.e., the subrecipient) as reimbursement for payment of services and other costs. INDIANA STATE BOARD OF ACCOUNTS 26 ELKHART COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) As the designated pass-through entity, the County's administrative responsibilities as outlined in the agreement included the submission of the annual Federal Financial Report (FFR) (SF-425) through the eRA Commons web-based platform. The FFR (SF-425) detailed cumulative balances of federal funds authorized and disbursed by the subrecipient during the grant period. In order to accumulate the required information for the FFR (SF-425), the County Health Department Manager of Administration worked in conjunction with subrecipient personnel. Subrecipient personnel submitted monthly financial information to the Manager of Administration, which was then used to compile the FFR (SF-425). The FFR (SF-425) was then submitted by the Manger of Administration without evidence of an oversight, review, or approval process to ensure the report was complete and accurate. The lack of internal controls was a systemic issue throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." Cause A proper system of internal controls, which would include segregation of key functions, was not designed by management of the County to ensure the County provided the state with complete and accurate information related to the Community Mental Health Services for Children with Serious Emotional Disturbances (SED) award. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the County's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. Effect Without the proper design or implementation of the components of a system of internal controls, including policies and procedures that provide segregation of duties and additional oversight as needed, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. Questioned Costs There were no questioned costs identified. INDIANA STATE BOARD OF ACCOUNTS 27 ELKHART COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Recommendation We recommended that management of the County establish a proper system of internal controls, including policies and procedures that would provide segregation of duties to ensure appropriate reviews, approvals, and oversight are taking place to ensure reports are complete and accurate prior to submission. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report. INDIANA STATE BOARD OF ACCOUNTS 28