Department of Health and Human Services, Assistance Listing No. 93.829 Section 223
Demonstration Programs to Improve Community Mental Health Services,
1H79SM083255‐01, 2/15/2022 – 2/14/2023; Assistance Listing No. 93.696, Certified
Community Behavioral Health Clinics Expansion Grants, 1H79SM087079‐
01/1H79SM087007‐01, 9/30/2022 – 9/29/2023
Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Matching, Level of
Effort, and Earmarking
Material Weakness in Internal Control over Compliance and Material Noncompliance
Criteria: Per Uniform Guidance (2 CFR Section 200.430(i), Standards for Documentation of
Personnel Expenses) as it relates to federal grants:
(1) Charges to Federal awards for salaries and wages must be based on records that
accurately reflect the work performed. These records must:
(i) Be supported by a system of internal control which provides reasonable
assurance that the charges are accurate, allowable, and properly allocated;
(ii) Be incorporated into the official records of the non‐Federal entity;
(iii) Reasonably reflect the total activity for which the employee is compensated by
the non‐Federal entity, not exceeding 100% of compensated activities (for IHE,
this per the IHE's definition of IBS);
(iv) Encompass federally‐assisted and all other activities compensated by the non‐
Federal entity on an integrated basis, but may include the use of subsidiary
records as defined in the non‐Federal entity's written policy;
(v) Comply with the established accounting policies and practices of the non‐Federal
entity (See paragraph (h)(1)(ii) above for treatment of incidental work for IHEs.);
and
(vii) Support the distribution of the employee's salary or wages among specific
activities or cost objectives if the employee works on more than one Federal
award; a Federal award and non‐Federal award; an indirect cost activity and a
direct cost activity; two or more indirect activities which are allocated using
different allocation bases; or an unallowable activity and a direct or indirect cost
activity. 2 CFR Part 200, OMB Compliance Supplement, defines Level of Effort as follows:
Level of effort includes requirements for (a) a specified level of service to be provided
from period to period, (b) a specified level of expenditures from non‐federal or federal
sources for specified activities to be maintained from period to period, and (c) federal
funds to supplement and not supplant non‐federal funding of services
Condition: The Center could not readily provide the appropriate documentation to support the
allocations of compensation applicable to the referenced programs for actual time
worked, or to support allowable costs or that the level of effort requirements, as
outlined in the grant contracts, were achieved.
Cause: The process used to track employee payroll does not adequately track the allocations
of payroll or time worked to the respective activities or federal programs. As a result,
certain expenditures were inappropriately claimed as program expenditures, but could
not be substantiated for purposes of allowable costs or level of effort.
Effect: The Center is at risk for noncompliance with allowable activities and allowable costs,
as well as level of effort requirements.
Questioned costs: $872,088 in payroll was identified as allowable costs for Section 223, Demonstration
Programs to Improve Community Mental Health Services, which could not be
substantiated. $1,187,041 in payroll was identified as allowable costs for Certified
Community Behavioral Health Clinics Expansion Grants, which could not be
substantiated.
Context: A nonstatistical sampling of 40 out of over 14,000 transactions were selected for
testing of Activities Allowed and Unallowed, and Allowable Costs/Cost Principles, in
Section 223, Demonstration Programs to Improve Community Mental Health Services,
which accounted for $114,123 of $1,187,041 total program expenditures. 2 of 2
employees were tested with respect to level of effort requirements as outlined in the
program contract, but supporting information could not be provided.
A nonstatistical sampling of 25 out of 206 transactions were selected for testing of
Activities Allowed and Unallowed, and Allowable Costs/Cost Principles, in Certified
Community Behavioral Health Clinics Expansion Grants, which accounted for $139,829
of $910,628 total program expenditures. 4 of 4 employees were tested with respect to
level of effort requirements as outlined in the program contracts, but supporting
information could not be provided.
Repeat Finding
From Prior Year: No Recommendation: Controls should be put in place to ensure that expenditures of program funds allocated
through payroll expense are reviewed and approved by program management and are
properly allocated based on time and activities worked consistent with the grant
requirements. Additionally, level of effort requirements as made known in grant
contracts should be substantiated by payroll allocation or other records.
Views of
Responsible Officials: We agree with the finding. See additional response in the Corrective Action Plan.