Finding 554927 (2022-005)

Material Weakness
Requirement
C
Questioned Costs
$1
Year
2022
Accepted
2025-04-14

AI Summary

  • Core Issue: Cash management practices are not fully compliant with federal regulations, leading to significant deficiencies and potential non-compliance risks.
  • Impacted Requirements: Reimbursement requests must be based on actual expenditures and supported by proper documentation, which is currently lacking.
  • Recommended Follow-up: Implement systematic reconciliation processes, strengthen internal controls, and designate a compliance lead to ensure alignment with federal cash management requirements.

Finding Text

2022-005 - Reinforce Cash Management Compliance Program Name/ Assistance Listing Number: 93.788 Federal Agency: U.S. Department of Health and Human Services Federal Award Identification: Unknown Applicable Pass-through Entity: Ohio Department of Mental Health and Addiction Services (Ohio MHAS) Type of Findings: Significant Deficiencies and Material Weakness Compliance Requirement: Cash Management Criteria: Cash management for reimbursement-based grants must be based on actual expenditures paid, ensuring compliance with federal cash management regulations and preventing excess fund retention. Condition: Our audit identified areas where cash management can be reinforced based on these specific instances: 1. Supporting documentation was not readily available to confirm that expenses were paid before requesting reimbursement. 2. The general ledger did not reflect all transactions supporting grant disbursement requests for the period January 1, 2022 to December 31, 2022. Cause: Cash management procedures may not be fully aligned with federal compliance requirements, leading to manual calculations instead of relying on real-time accounting data. Furthermore, documentation and internal control procedures may need enhancement to ensure consistency and transparency in financial reporting. Potential Effect: Errors in cash management could result in non-compliance with federal cash handling requirements. Missing documentation can delay audit procedures. Additionally, non compliance may impact grant renewals. Questioned Cost: $817,254 Context: Reimbursement requests were not always backed by documentation confirming expenses were paid, and the general ledger did not fully capture all grant-related transactions. These issues suggest gaps in internal controls, reliance on manual calculations, and misalignment with federal compliance requirements. If unaddressed, these deficiencies could lead to non-compliance, audit delays, and potential risks to future grant funding. Strengthening financial controls and reconciliation processes is necessary to ensure compliance and transparency. Recommendation: To enhance compliance, streamline reconciliation, and strengthen internal controls, we recommend implementing the following practical, proactive measures: 1. Align Reimbursement Requests with the General Ledger Ensure that all reimbursement requests are directly tied to actual expenditures recorded in the general ledger, minimizing reliance on manual tracking. 2. Implement a Systematic Reconciliation Process Establish a structured reconciliation process that links each reimbursement request to paid expenses, with supporting documentation readily available for review. 3. Strengthen Real-Time Grant Cash Flow Tracking Utilize existing accounting software to have a real-time tracking system for grant-related cash flow to ensure compliance with reimbursement-based grant requirements. 4. Assign a Grant Compliance Lead Designate a finance or administrative team member to oversee cash management compliance, ensuring consistency and acting as the primary point of contact for grant related financial matters. 5. Conduct Monthly Reconciliation Meetings Facilitate monthly reconciliation meetings between finance and program teams to align financial records with program expenditures and address any discrepancies proactively. Views of Responsible Official: RSNEO agrees with the findings and will adhere to the corrective action plan outlined.

Corrective Action Plan

Align Reimbursement Requests with the General Ledger Ensure that all reimbursement requests are directly tied to actual expenditures recorded in the general ledger, minimizing reliance on manual tracking. 1. 2022-005: We will ensure that all reimbursement requests are accurately aligned with the general ledger by basing them solely on actual, recorded expenditures. This will reduce reliance on manual tracking methods and promote transparency, accuracy, and compliance in grant reporting. Implement a Systematic Reconciliation Process Establish a structured reconciliation process that links each reimbursement request to paid expenses, with supporting documentation readily available for review. 2. A formal reconciliation process will be implemented to connect each reimbursement request to the corresponding paid expenses. Supporting documentation will be organized and readily accessible for internal review and external audits, ensuring a complete and accurate audit trail. Strengthen Real-Time Grant Cash Flow Tracking Utilize existing accounting software to have a real-time tracking system for grant-related cash flow to ensure compliance with reimbursement-based grant requirements. 3. We will utilize our existing accounting software to enable real-time tracking of grant-related cash inflows and outflows. This will improve our ability to monitor available funds, ensure timely reimbursement submissions, and remain compliant with reimbursement-based grant requirements. Assign a Grant Compliance Lead Designate a finance or administrative team member to oversee cash management compliance, ensuring consistency and acting as the primary point of contact for grant related financial matters. 4. A dedicated member of the finance or administrative team will be assigned as the Grant Compliance Lead. This individual will oversee all aspects of grant cash management compliance, maintain documentation standards, and serve as the primary point of contact for grant-related financial matters. Conduct Monthly Reconciliation Meetings Facilitate monthly reconciliation meetings between finance and program teams to align financial records with program expenditures and address any discrepancies proactively. 5. Monthly reconciliation meetings will be held between the finance and program teams to review financial records, align them with program expenditures, and proactively address any discrepancies. This collaboration will support accurate reporting and effective grant management.

Categories

Questioned Costs Cash Management Subrecipient Monitoring Material Weakness Reporting

Other Findings in this Audit

  • 554926 2022-004
    Material Weakness
  • 554928 2022-006
    Material Weakness Repeat
  • 554929 2022-004
    Material Weakness
  • 554930 2022-005
    Material Weakness
  • 554931 2022-006
    Material Weakness Repeat
  • 554932 2022-004
    Material Weakness
  • 554933 2022-005
    Material Weakness
  • 554934 2022-006
    Material Weakness Repeat
  • 1131368 2022-004
    Material Weakness
  • 1131369 2022-005
    Material Weakness
  • 1131370 2022-006
    Material Weakness Repeat
  • 1131371 2022-004
    Material Weakness
  • 1131372 2022-005
    Material Weakness
  • 1131373 2022-006
    Material Weakness Repeat
  • 1131374 2022-004
    Material Weakness
  • 1131375 2022-005
    Material Weakness
  • 1131376 2022-006
    Material Weakness Repeat

Programs in Audit

ALN Program Name Expenditures
93.788 Opioid Str $145,344
93.243 Substance Abuse and Mental Health Services Projects of Regional and National Significance $136,430
93.498 Provider Relief Fund and American Rescue Plan (arp) Rural Distribution $3,575