Finding 499929 (2023-004)

Material Weakness
Requirement
C
Questioned Costs
$1
Year
2023
Accepted
2024-09-30

AI Summary

  • Core Issue: The Organization drew down federal funds exceeding actual expenditures, leading to questioned costs of $339,667.
  • Impacted Requirements: Compliance with 2 CFR Part 200 on cash management and timely fund draw procedures was not met due to insufficient review and approval processes.
  • Recommended Follow-Up: Establish a clear approval process for fund draws, implement regular monitoring of expenditures, and ensure timely submission and processing of draw requests to strengthen internal controls.

Finding Text

Criteria: 2 CFR Part 200 Uniform Administration Requirements, Cost Principles, and Audit Requirements for Federal Awards requires compliance with the provisions of cash management. The Organization should have procedures in place to ensure the draw down of federal funds in a timely manner and proper documentation of approval should be maintained to support the draw of the funds. Condition: During our testing, we noted the Organization’s draw downs were more than the expenditures on the schedule of federal awards as well as the support provided from the general ledger. Questioned costs: $339,667 Context: During our testing, it was noted there was a lack of review or approval on the calculation to actual costs incurred. Cause: The Organization had significant turnover within the finance department and was operating with insufficient resources to manage the cash management process. Recommendation: We recommend the Organization implement a clear approval process and review for the drawing of federal funding. In addition, it is important to establish a clear process and timeline for performing draws. This should involve regular monitoring of expenditures, timely submission of draw requests, and efficient processing of those requests. By implementing an approval and a timely draw process, the Organization enhance internal controls, reduce the risk of fraud, and ensure the accuracy and integrity of the fund draw process, and can better manage its cash flow, and meet its financial obligations. Grantee Comment: Refer to the Correction Action Plan

Corrective Action Plan

The Organization secured Attain Partners, a professional services firm, to assist with grants management and reporting. Attain Partners reviewed the SEFA report, as well as the grantbudget, general ledger information, documentation, and drawdowns for the grant from the U.S. Department of Health and Human Services (CFDA 93.958) internally known as theSAMHSA R&R grant. They discovered that the budgets were submitted incorrectly, without requesting any indirect costs (IDC), which led to the grant being awarded without IDC. The FY23 draws totaled $2,094,362.95, while the FY23 expenditures recorded in the general ledger amounted to $1,754,696.48, excluding IDC, resulting in $339,667 in questioned costs. As the grant closed on 9/30/2023, the organization is unable to request reimbursement for the IDC. The Grants Management team will undertake a comprehensive revision of the existing policies and procedures and will develop new ones as needed. These policies and procedures will encompass the following processes to ensure proper levels of review and compliance with authorized drawdowns: • The Grants Management team will ensure grant budgets are submitted with the correct IDC and the award includes the IDC in the total amount. • The Grants Management team will ensure the IDC is calculated correctly and included in the drawdown amount. • The Grants Administrator and the Sr. Grants and Budget Analyst will reconcile the grant expenditures monthly to ensure the expenditures allocated to grants are documented, allowable and the drawdowns are equal to actual expenditures.

Categories

Questioned Costs Cash Management Internal Control / Segregation of Duties

Other Findings in this Audit

  • 499927 2023-002
    Material Weakness Repeat
  • 499928 2023-003
    Material Weakness Repeat
  • 499930 2023-002
    Material Weakness Repeat
  • 499931 2023-003
    Material Weakness Repeat
  • 1076369 2023-002
    Material Weakness Repeat
  • 1076370 2023-003
    Material Weakness Repeat
  • 1076371 2023-004
    Material Weakness
  • 1076372 2023-002
    Material Weakness Repeat
  • 1076373 2023-003
    Material Weakness Repeat

Programs in Audit

ALN Program Name Expenditures
93.676 Unaccompanied Children Program $3.34M
93.958 Block Grants for Community Mental Health Services $1.75M
93.696 Certified Community Behavioral Health Clinic Expansion Grants $737,721
93.243 Substance Abuse and Mental Health Services Projects of Regional and National Significance $604,780
14.267 Continuum of Care Program $450,170
16.839 Stop School Violence $270,044
16.123 Community-Based Violence Prevention Program $197,230
16.575 Crime Victim Assistance $99,914
17.271 Work Opportunity Tax Credit Program (wotc) $69,056