Finding Text
Finding No. 2022-002: Allowable Costs/Cost Principles Federal Agency: U.S. Department of Health and Human Services (HHS) Program: ALN: 93.829, Section 223 Demonstration Programs to Improve Community Mental Health Services Criteria: Program requirements state that only allowable expenses to support the program can be expended to the program under the grant. Condition: The required allowable cost sample size included 60 payroll expense selections and 25 other/general expenditure selections. Of that sample size, 5 other/general expenditure selections that were charged to the program were not allowable expenses under the program. Cause: The individual?s involved in the Organization?s internal control process did not have the appropriate understanding of the allowable costs charged to the program, which allowed a clerical error charging unallowable expenditures to the program to not be detected and corrected. Effect: Unallowable costs were charged to the program. Improper reporting could result in the HHS withholding payments or recouping payments to the Organization. Questioned Costs: $29,034 which consisted of 5 general expenditure transactions that were charged to the program that were not allowable under the program. Upon further investigation by management, additional unallowable expenditures totaling $21,968 were charged to the program during the year ended June 30, 2022. Context: 5 of 85 expenditure expense selections tested were determined to be unallowable. All of the expenditures identified as errors, including the additional expenditures identified by management were the same type of expense. Recommendation: We recommend the Organization implement additional trainings for management and operations staff working on the program to ensure a thorough understanding of the program and the related allowable costs and that management implement additional control procedures for the review the allowability of expenses charged to the program. View of Responsible Officials and Planned Corrective Actions: Management agrees with the finding. See accompanying Corrective Action Plan.