Finding Text
Department of Health and Human Services, Passed Through Oklahoma Department of
Mental Health and Substance Abuse Services,
Block Grants for Community Mental Health Services
Listing 93.958, 4529063664/4529063519, 7/1/2022 – 6/30/2023
Allowable Activities or Unallowed and Allowable Costs/Cost Principles
Material Weakness in Internal Control over Compliance and Material Noncompliance
Criteria: Per Uniform Guidance (2 CFR Section 200.403) as it relates to federal grants:
Except where otherwise authorized by statute, costs must meet the following general
criteria in order to be allowable under Federal awards:
a) Be necessary and reasonable for the performance of the Federal award and be
allocable thereto under these principles;
b) Conform to any limitations or exclusions set forth in these principles or in the
Federal award as to types or amount of cost items;
c) Be consistent with policies and procedures that apply uniformly to both
federally financed and other activities of the non-Federal entity;
d) Be accorded consistent treatment. A cost may not be assigned to a Federal
award as a direct cost if any other cost incurred for the same purpose in like
circumstances has been allocated to the Federal award as an indirect cost; e) Be determined in accordance with generally accepted accounting principles
(GAAP), except, for state and local governments and Indian tribes only, as
otherwise provided for in this part;
f) Not be included as a cost or used to meet cost sharing or matching
requirements of any other federally-financed program in either the current or a
prior period;
g) Be adequately documented;
h) Cost must be incurred during the approved budget period.
2 CFR 200.303(a) establishes 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 the
terms and conditions of the federal award.
Condition: Hope 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.
Cause: The process used to track employee payroll does not adequately track the allocations of
payroll or time worked to the respective federal grant programs. Or, if such
documentation did exist, it could not be provided as audit evidence. As a result, certain
expenditures were claimed as program expenditures, but could not be substantiated for
purposes of allowable costs. Much of the issue can be attributed to employee turnover.
Effect: Hope is at risk for noncompliance with allowable activities and allowable costs.
Questioned costs: $116,222 in payroll was identified as questionable allowable costs that could not be
substantiated.
Context: A nonstatistical sampling of 40 out of over 4,000 transactions were selected for testing of
Activities Allowed and Unallowed, and Allowable Costs/Cost Principles. Allocation support
could not be provided for any of the 40 items selected.
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. Such support should be retained.
Views of Responsible
Officials: We agree with the finding.