Finding 401926 (2022-003)

Federal Program: Section 223 Demonstration Programs to Improve Community Mental Health Services Federal Agency: U.S. Department of Health and Human Services Pass-Through Entity: Not Applicable Assistance Listing Number (ALN): 93.829 Federal Award Number: H79SM083269 Federal Award Year: December 31, 2022 Criteria: 2 CFR 200.303 states that recipients of federal program funding must 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). Condition/Context: Evidence of proper segregation of duties or internal controls over the federal program's billing process could not be provided. Cause: The Organization's process for compiling the reimbursable expenditures and billing those amounts to the Federal awarding agency were completed by a single individual. Both this individual and the personnel that would have been responsible for reviewing and approving the amounts billed are no longer with the Organization. As such there was no evidence provided of segregation of duties or internal control over the amounts charged to the Federal program Effect: Inadequate controls over the cash management process could result in reimbursable costs billed to Federal programs that are inaccurate or unallowable. Questioned Costs: None noted Recommendation: The Organization should have formal policies that provide documentary evidence of proper segregation of duties and control structures over Federal program cash management. Views of responsible officials: Management agrees with the auditors' finding and will take action to implement controlling procedures over federal programs.