Finding Text
2022-105 Use of Budgeted Versus Actual Costs for Reimbursements (prior year 2021-105 and 2020-106) (initially reported 2020)
Assistance Listing Number: 93.224, and 93.527
Name of Federal Agency: Department of Health and Human Services, HRSA
Program Title: Health Center Program (Community Health Centers, Migrant Health Centers, Health Care for the Homeless, and Public Housing Primary Care), Grants for New and Expanded Services Under the Health Center Program
Compliance Requirement: Allowable Activities, Allowable Costs and Period of Performance
Pass-through Entity: N/A
Federal Grant/Contract Number and Grant Year: H80CS06452 (2022) and COVID-19 ARP H8FCS40324 (2021)
Finding Type: Material Weakness in Internal Control
Known Questioned Costs: $0
Condition: The Organization made drawdowns after month-end based on budgeted period expenses rather than actual salary expenses to support the amounts being requested for reimbursement.
Criteria: 2 CFR section 200.303 requires that nonfederal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the nonfederal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. In addition, based on grant compliance requirements related to allowable activities, allowable costs and period of performance, direct costs are those costs that can be specifically identified with a particular actual cost.
Cause: Reimbursement was requested based on the budgeted payroll expenditures made for a particular period, adjusted to exclude certain employees that are not related to the grant or are highly paid employees to be conservative in the calculation. Adequate documentation was not maintained, and there was no indication of a review process beyond the CFO preparing the calculation to request reimbursement and making the request from the grantor.
Effect: The Organization could request funds that may not have adequate supporting documentation. These errors could lead to the Organization losing funding under this program.
Recommendation: Documentation should be provided that directly links the amount requested to the related expenditures to clearly document those funds are being used in a timely manner, that more was not requested than was expended, specifically what expenditures are being considered expended through these funds, and that funds requested applied to the correct period. Update policies and procedures as needed to reflect changes, if applicable.
Views of Responsible Officials and Planned Corrective Actions: The Organization has hired a new Chief Financial Officer as well as additional supporting staff within the finance department. The Organization has reviewed and updated its grant drawdown procedures to include only actual cost and for the request to be reviewed and approved by someone other than the preparer prior to submission. The corrective action for this finding has been approved and implemented by the Organization.