Finding Text
Statement of Condition: On July 12, 2023, the Home received notice from the Administration for Children and Families (ACF) of a final judgement of disallowance regarding several categories of expenditures. Criteria: During the period of August 1, 2019 through July 1, 2020, the Home failed to comply with statutory authority; the Code of Federal Regulations (CFR), Title 45 Part 75, particularly 45 CFR ?75.302 Financial Management and Standards for Financial Management Systems, 45 CFR ? 75.303 Internal Controls, 45 CFR ?75.309 Period of Performance and Availability of Funds, 45 CFR ? 75.361 Retention Requirements for Records, 45 CFR ?75.403 Factors Affecting Allowability of Costs, 45 CFR ?75.404 Reasonable Costs, 45 CFR ?75.405 Allocable Costs, 45 CFR ?75.407 Prior Written Approval, 45 CFR ?75.431 Compensation ? fringe benefits, 45 CFR ?75.421 Advertising and Public Relations, 45 CFR ?75.436 Depreciation, 45 CFR ?75.439 Equipment and Other Capital Expenditures, 45 CFR ?75.452 Maintenance and Repair Costs, 45 CFR ?75.465 Rental Costs of Real Property and Equipment, 45 CFR ?75.470 Taxes; the Department of Health and Human Services? Grants Policy Statement; and other regulations governing allowable costs under HHS awards. The Home is in the process of timely appealing this disallowance with the Departmental Appeals Board in accordance with 45 CFR Part 16 Procedures of the Departmental Grant Appeals Board. ause: Noncompliance stems from a lack of formal training, inadequate internal controls, an inadequate review process and procedures, and a lack of supporting documentation. Effect: Expenditures in the amount of $5,094,545, made during the period of August 1, 2019 through July 31, 2020, were deemed disallowable. Recommendation: The Home should plan for alternate scenarios for both favorable and unfavorable results from the appeals board. In addition, the Home should implement more thorough training, controls and review to their existing processes, including those mentioned in finding 2022-001, 2022-002, and 2002-003. Views of Responsible Officials and Planned Corrective Action: The Home disagrees with the disallowance and maintains that the ACF made legal and factual errors in taking the disallowance and that expenses incurred were necessary, reasonable, allocable and allowable. The Home is working with a consultant to establish standard operating procedures and workflows relating to the accounting function.