Finding Text
Finding 2023-001, Material Weakness - Allowable Costs and Cash Management
Identification of federal program : U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES 93.224 and 93.527 Health Center Program Cluster
Criteria: 2CFR200.302(b) requires federal award recipients to maintain a financial management system that provides for the identification of all federal awards received and expended as well as accurate, current and complete disclosure of the financial results of each federal award program in addition to comparison of expenditures with budget amounts for each federal award.
Condition: The Organization was unable to generate reports from its accounting system detailing expenditures incurred by federal award. In addition, the Organization was also unable to provide reports distinguishing federal award expenditures from non-federal award expenditures.
Effect: Management drew down federal funds based on payroll estimations. Payroll expenses had to be manually compiled for the entire year to substantiate personnel costs charged to all grants. Management created spreadsheets to identify the details of non-payroll expenditures incurred under federal awards.
Cause: A significant amount of payroll and other expenses were not coded to grants within the accounting system. Time records and invoices allocated to specific grants were not entered into the accounting system under the actual account segment for the funding source and were left in the general operating fund. Staff turnover in the fiscal department contributed to the breakdown in internal controls and process.
Questioned costs: None
Repeat finding: Yes
Recommendation: We recommend that the Organization implement accounting processes and controls over financial reporting to ensure accurate financial reporting. Oversight responsibilities should include review of financial reporting by grants (segments) to verify proper posting and allocation of costs.
Views of responsible officials and planned corrective actions: See attached corrective action plan.