Finding 404782 (2023-003)

Material Weakness Repeat Finding
Requirement
A
Questioned Costs
-
Year
2023
Accepted
2024-07-01
Audit: 311180
Organization: Santa Fe Recovery Center, Inc. (NM)
Auditor: Sjt Group LLC

AI Summary

  • Core Issue: SFRC lacks accurate documentation for costs charged to federal programs, leading to potential non-compliance with federal requirements.
  • Impacted Requirements: Costs must be documented, reasonable, and properly allocated as per 2 CFR Part 200.403 and 2 CFR Part 200.430.
  • Recommended Follow-Up: SFRC should establish a bi-annual process to compare actual employee time to budget estimates and ensure all disbursements align with source documentation.

Finding Text

2023-003 – Allowable Costs/Cost Principles Federal program information: Funding agency: U.S. Department of Health and Human Services Title: Substance Use Disorder Residential Treatment for Pregnant and Postpartum Women Assistance listing number: 93.243 Award year: 9/30/2018 – 9/29/2023 Criteria: According to 2 CFR Part 200.403, to be allowable under federal awards, costs must be adequately documented, be necessary and reasonable for the performance of the federal award, and be allocable thereto under the principles in 2 CFR Part 200, Subpart E. Additionally, according to 2 CFR Part 200.430, charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed, be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated, and comply with established accounting policies and practices of the entity. Condition: Accurate and complete records to support disbursements were not maintained for the program. We specifically noted the following: • SFRC is currently allocating payroll costs to the program based on budget estimates. There is not a process in place to compare the budget estimates to actual time and effort to ensure that budget estimates are accurate. • For one month during fiscal year 2023, the amounts charged to the program were not supported by wages paid to the employee (used as the basis for the amount allocated to the program). • For two of six non-payroll disbursements tested, the amount allocated to the program did not agree to the amount paid to the vendor. • Indirect costs charged to the program were not allocated correctly based on SFRC’s approved indirect cost rate. Context: 15 of 15 payroll transactions tested were allocated to the program based on budget estimates. Two of six non-payroll disbursements did not agree with source documentation. Questioned Costs: $33,429 Cause: SFRC has not developed a process to compare the budget estimates to actual time and effort to ensure that budget estimates are accurate. There was not adequate review of reimbursement requests to ensure that payroll and non-payroll disbursements agree with source documentation. Indirect costs were not charged to the program using the approved indirect cost rate for fiscal year 2023. Effect: SFRC may not be able to demonstrate that costs charged to federal programs are allowable. Auditor’s Recommendation: SFRC should implement a process of comparing actual time and effort of employees to SFRC’s budget estimates at least bi-annually. Alternatively, SFRC could require employees to report their actual daily time on federal awards to ensure amounts charged are accurate and properly allocated. SFRC should implement a review process of reimbursement requests to ensure that disbursements agree with source documentation, and that indirect costs are charged to the program accurately. Management’s Response: Management implemented a process to evaluate time spent each month. That allocation is used to classify actual salary paid to particular federal awards on a pay period basis.

Corrective Action Plan

2023-003 – Allowable Costs/Cost Principles Corrective action plan: Management implemented a process to evaluate time spent each month. That allocation is used to classify actual salary paid to particular federal awards on a pay period basis. Personnel responsible for corrective action: Timothy Jodway, Interim Chief Financial Officer; Peg Clark, Grant Accountant; Reyann James, Senior Accountant. Estimated corrective action completion date: May 2024

Categories

Allowable Costs / Cost Principles

Other Findings in this Audit

Programs in Audit

ALN Program Name Expenditures
93.243 Substance Abuse and Mental Health Services_projects of Regional and National Significance $620,026
93.912 Rural Health Care Services Outreach, Rural Health Network Development and Small Health Care Provider Quality Improvement $356,661
16.575 Crime Victim Assistance $8,107