Finding 607704 (2022-002)

Significant Deficiency
Requirement
N
Questioned Costs
$1
Year
2022
Accepted
2023-08-02
Audit: 28321
Organization: Horizon House, Inc. (IN)
Auditor: Pile CPAS

AI Summary

  • Core Issue: The auditee missed the 30-day payment deadline for a subrecipient, violating compliance requirements.
  • Impacted Requirements: Timely payments are essential for maintaining cash flow and project success, as outlined in federal funding rules.
  • Recommended Follow-Up: Develop a written policy for processing subrecipient payments on time, detailing roles, approval processes, and handling exceptions.

Finding Text

Finding 2022-002 Timeliness of Subrecipient Payments Type of Finding: Compliance finding in procuring payments to subrecipients Condition and Context: During our audit, it was determined that the auditee failed to adhere to the 30-day payment requirement for a specific subrecipient. We reviewed the payment request documentation and verified that it was complete and accurate. However, the auditee did not process the payment within the stipulated timeframe. Criteria: According to the rules and conditions of the program funding, the Organization must pay each subrecipient for allowable costs within 30 days after receiving the subrecipient?s complete payment request. Cause: Our assessment suggests that the delayed payment resulted from inadequate internal controls and processes related to payment processing and monitoring. The auditee lacked a systematic approach to promptly review, approve, and process subrecipient payment requests, leading to the violation of the 30-day requirement. Effect: The auditee's failure to make timely payments to the subrecipient negatively affects the subrecipient's cash flow, potentially hampering their ability to carry out their activities as planned and jeopardizing the success of the funded project. Additionally, the noncompliance with the 30-day payment requirement violates the terms and conditions of the federal award and the Uniform Guidance. This deficiency could impact the auditee's eligibility for future federal funding. Questioned Costs: Known questioned costs of $12,452 were identified. Recommendation: Based on our findings, we recommend that the auditee should establish a written policy outlining the procedures for processing subrecipient payment requests within the required 30-day timeframe. This policy should include clear roles and responsibilities, approval processes, and escalation procedures for exceptional circumstances. Views of Responsible Officials: During the year ended December 31, 2022, management began reconciling federal grants monthly, ensuring revenues and expenses for the month and year to date net to zero. In conjunction with this process, management reviews accounts payable schedules on a monthly basis for outstanding sub-recipient invoices due and invoices due are paid prior to the 30-day payment requirement.

Categories

Questioned Costs Subrecipient Monitoring

Other Findings in this Audit

  • 31261 2022-001
    Significant Deficiency
  • 31262 2022-002
    Significant Deficiency
  • 607703 2022-001
    Significant Deficiency

Programs in Audit

ALN Program Name Expenditures
14.231 Covid-19 Emergency Solutions Grant Program $622,021
14.218 Community Development Block Grants/entitlement Grants $88,297
14.231 Emergency Solutions Grant Program $55,030
14.267 Continuum of Care Program $29,810
21.027 Covid-19 Coronavirus State and Local Fiscal Recovery Funds $24,720
93.493 Covid-19 Congressional Directives $3,150