Finding Text
Identification of the federal program: Assistance Listing Number 93.958, Block Grants for Community Mental Health Services, United States Department of Health and Human Services.
Criteria: Non-federal entities must minimize the time elapsing between the transfer of funds from the U.S. Treasury or pass through entity and disbursement by the non-federal entity for direct program or project costs and the proportionate share of allowable indirect costs, whether the payment is made by electronic funds transfer, or issuance or redemption of checks, warrants, or payment by other means (2 CFR section 200.305(b)).
Condition: In one of three months selected for testing, we noted that the amount requested for reimbursement was greater than the expenses incurred resulting in an advance of federal funds. The overdraw was corrected over the subsequent two-month period.
Cause: Management indicated that this error occurred due to a change in the budgeted indirect costs allowed for in year two vs. year one, and that resulted in an oversight in the calculation.
Effect or potential effect: In one of three months tested, the amount overdrawn approximated $58,000 and the error was corrected over the subsequent two-month period.
Questioned costs: not applicable.
Context: In one of three months selected for testing, Bellefaire did receive an advance of federal funds. Management was able to provide supporting documentation which appeared to indicate that the error was corrected in the subsequent two-month period. Given the interest rate environment and the amount of time the advance was maintained, any interest income earned would be considered trivial.
Recommendation: We recommend that existing policies and procedures be reviewed to ensure that reimbursement of federal funds is made within the required timeframe to minimize the time elapsing between the receipt of funds from the U.S. Treasury and disbursement.
Views of responsible officials: Management concurs with this finding. See page 43 for corrective action.