Finding Text
Health Center Program Cluster – Assistance Listing Nos. 93.224 and 93.527
U.S. Department of Health and Human Services
Award No. 6 H80CS00751-22-03, April 1, 2023 – March 31, 2024
Criteria or Specific Requirement – Reporting and Period of Performance –
45 CFR 75.342 and 45 CFR 75.309.
Condition – A financial report submitted during the year was not prepared accurately based on financial information. As a result, grant funds were carried over into the subsequent grant budget period even though allowable costs had been incurred.
Questioned Costs – $381,630. Questioned costs were determined based on the amount of grant expenditures reported as unobligated but incurred by March 31, 2023.
Context – The Organization is required to report federal funding awarded and expended, along with program income earned and expended, on annual Federal Financial Reports (FFRs) for each federal award. A sample of one FFR was tested out of a population of four financial reports submitted by the Organization during the year. Samples were not, and were not intended to be, statistically valid. Federal funding expended was understated by $381,630, the amount of grant expenditures incurred, but not disbursed at year-end, on the annual FFR for Award No. 6 H80CS00751, resulting in an overstatement of the unobligated balance at March 31, 2023, and carryover of grant funds into the grant period ending March 31, 2024. Additionally, the Organization failed to report program income earned and expended cumulatively.
Effect – The Organization improperly reported $381,630 of grant funds as unobligated at March 31, 2023, resulting in the carryover of grant funds into the grant period ending March 31, 2024, although funds had already been obligated as of March 31, 2023. The Organization’s cumulative tracking of unearned program income and, therefore, its reserve, is not accurate.
Cause – The annual FFR was not prepared based on accurate accrual-basis and cumulative financial information.
Identification as a repeat finding, if applicable – Not a repeat finding
Recommendation – The Organization should consider revising the annual FFR due to inappropriate carryover of obligated grant funds. Going forward, the Organization should ensure financial reporting is prepared based on accurate accrual-basis financial information and, where appropriate, presented cumulatively.
Views of responsible officials and planned corrective actions – The Organization is unable to amend its erroneously submitted FFR. As funds that had already been spent on expenditures within the initial period of performance were erroneously reported as needing to be carried over, no reallocation of grant expenditures was needed. The Organization has also reviewed our internal process for FFR submission. In general, we do not have carryover on our FFR, and this error occurred due to the additional Covid-19 funding the organization had received. Relevant staff participated in a training focused on CHC grants management matters, including preparation of the FFR, in December 2024 and will continue to look for learning opportunities to support and challenge compliance matters.