Finding Text
Statement of Condition: Twelve expenditures of direct costs were for the acquisition of equipment and other capital expenditures which did not receive timely written approval from HHHS. Criteria: Equipment and other capital expenditures require prior written approval by the HHS awarding agency or pass-through entity prior to obligating or incurring the costs. This section also disallows equipment and other capital expenditures as indirect costs. Further, the Office of Federal Financial Management (OMB) Compliance Supplement establishes that requests for prior approval must be explicit enough so that the Administration for Children and Families (ACF) can identify the purpose and cost of the expenditure. Approval of budgets that include general budgetary descriptions and budget line-item totals are insufficient. Additionally, grantees must receive written approval from an authorized member of ACF. A lack of response is not, in itself, approval. Cause: The Home considers approval during the budget and negotiation process as an implicit approval for proposed equipment and capital expenditures. Upon approval of the budget by the HHS, a Notice of Award is granted to the Home. This Notice of Award delineates the purchases of equipment approved and amounts budgeted for each line-item. Effect: Capital expenditures incurred may be disallowed. Context: The test found nine of sixty expenditures were not in compliance; with questioned costs totaling $371,642. Recommendation: The Home should obtain explicit prior written approval for equipment and other capital expenditures. Views of Responsible Officials and Planned Corrective Action: The Home agrees that the records maintained did not support prior written approval of aforementioned costs. However, the Home disagrees with the finding regarding the allowability of the vehicle leases. The Home provided ORR with the request to budget for the vehicle leases, as well as copies of lease terms, prior to the approval of the grant and the amounts budgeted were approved. Regarding the capital expenditures, these items were reasonable and necessary to facilitate the program and The Home will request to have these purchases approved retro-actively. The Home is currently in the process of appealing the capital lease ? vehicle rentals disallowed in the ACF?s Notice of Non-Compliance: Monetary Disallowance dated July 12, 2023. See additional information at Note 19.