Finding Text
United States Department of Health and Human Services Pass-through from North Carolina Department of Health and Human Services Program Name: Block Grants for Prevention and Treatment of Substance Abuse Federal Assistance Listing Number - 93.959 Finding 2022-003 Significant Deficiency and Nonmaterial Noncompliance - Allowable Costs/Activities Criteria: An entity should have adequate controls in place to ensure that costs included in federal grant reimbursement requests are allowable under the terms of the award. Condition and Context: During our review of allowable costs for the year ended June 30, 2022, we noted the following matters: (1) two instances in which state sales taxes that could have been legally recouped by means of refund were included in the grant reimbursement request, (2) two instances in which there was inadequate documentation supporting the current pay rate of an employee whose wages were included in the program costs, and (3) one instance where the reported indirect costs exceeded the amount allowed under the terms of the award. The total questioned costs related to these findings were immaterial to the federal program; however, we have identified a significant deficiency as there were multiple instances of disallowed costs noted through our testing. Cause: Clerical oversight and failure to follow the Organization's internal control activities for maintaining supporting documentation for changes in employee pay rates. Effect: The Organization may receive reimbursements through federal programs to which it is not entitled. Recommendation: Reinforce controls whereby an individual who is not responsible for preparing the cost reimbursement report reviews the supporting documentation for the included costs to verify that only allowable costs are included in the reimbursement request, and adhere to control activities related to employee pay rate changes. Views of Management: Management agrees with the finding and is implementing procedures that are further discussed in the corrective action plan. See Corrective Action Plan.