Finding Text
Federal agency: U.S. Department of Health and Human Services
Federal program title: Health Centers Cluster
Assistance Listing Numbers: 93.224/93.527
Award Period: Varying project and budget periods: 2/1/21 – 1/31/22, 2/1/22 – 1/31/23, 4/1/21 – 3/31/23
Type of Finding:
• Significant Deficiency in Internal Control over Compliance
Criteria or specific requirement: 2 CFR 200.303(a) states that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and conditions of the federal award.
Condition: The Organization did not have sufficient internal control processes or review in place to identify errors in grant expenditure tracking spreadsheets, resulting in summarized expenditures that exceeded the total of the underlying detailed expenditures for H8F grant. Grant draws and revenue recognition utilized the summarized expenditures. There was also no documentation of review and approval process occurring related to drawdowns tested in the audit procedures.
Questioned costs: None.
Context: The Organization's detailed expenditures initially were not sufficient to support the full amount of the grant funds drawn down and recognized as revenue on the H8F grant. There was, however, more than sufficient eligible expenditures when additional indirect costs under an approved indirect cost rate were considered. The Health Center does have a review process in place around federal grant drawdowns, however formal documentation was not maintained to support that review process occurring.
Cause: There were insufficient reconciliation procedures in place between the detailed expenditures identified to the grant and the summary schedules used for drawing down federal funds and required reporting.
Effect: Had there not been sufficient eligible indirect costs to make up for the deficit between detailed expenditures and grant draws, grant draws would have exceeded the related eligible expenditures, and revenue recorded per the general ledger and SEFA would have been overstated. Without detailed review and approval process, there is greater risk of future errors.
Recommendation: We recommend reviewing reconciliation procedures between detailed grant expenditures and summary schedules used in reporting/draw down requests to ensure sufficient detail to support draw downs. Also recommend a detailed review and approval process for federal grant eligible expenditures and draw downs, to identify issues prior to draw down or reporting in the future. Documentation should be retained to support review/approval occurrence.
View of responsible officials: No disagreement with the finding. Management will review and improve reconciliation and review process around eligible expenditures for federal grants, and drawdowns of federal funds.