Finding 6705 (2022-003)

Material Weakness Repeat Finding
Requirement
ABCHL
Questioned Costs
$1
Year
2022
Accepted
2023-12-28
Audit: 8675
Auditor: Marcum LLP

AI Summary

  • Core Issue: HRDI lacks proper documentation and approval for payroll and expenses across multiple grants, leading to a material weakness in internal controls.
  • Impacted Requirements: Compliance with federal regulations for payroll support, expense approvals, cash management documentation, and timely reporting is not being met.
  • Recommended Follow-Up: Implement a system for better documentation, ensure separation of duties in voucher preparation and submission, and establish a schedule for timely report submissions.

Finding Text

Finding No. 2022-003: Material Weakness in Internal Control Over Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Cash Management, Period of Performance and Reporting U.S. Department of Health and Human Services AL No. 93.958 Block Grant for Community Mental Health Services U.S. Department of Health and Human Services AL No. 93.959, Block Grant for Prevention and Treatment of Substance Abuse U.S. Department of Health and Human Services AL No. 21.027 Coronavirus State and Local Fiscal Recovery Funds U.S. Department of Health and Human Services AL No. 93.778 Medicaid Cluster Medical Assistance Program. Criteria Human Resources Development, Inc. and Affiliates’ (HRDI) is responsible for keeping an accurate accounting and all of the required documentation in accordance with applicable federal regulations. Condition For AL No. 93.958, Block Grant for Community Mental Health Services, we chose a sample size of 40 payroll and 20 expense items to test for Activities Allowed or Unallowed, Allowable Costs/Cost Principles and Period of Performance. During our payroll testing, we noted no instances where HRDI was able to provide support and approval for the current pay rate in an employees’ personnel file. HRDI was not able to provide an indication as to which grant the employees’ salary and fringe benefits should be charged for any of our selected sample. We noted two instances for which we did not receive a timecard. There were nine instances where the department on the timecard did not match the general ledger department. During our expense testing, HRDI was unable to provide approval for two expenses and was unable to provide neither an invoice nor an approval for one invoice. For Cash Management, we noted that all four of the vouchers tested did not have all of the proper documentation for reimbursement. We also noted that one person prepared, reviewed and submitted all vouchers. For Reporting, for our sample of two quarterly financial reports, we were unable to trace the quarterly financial reports to the underlying accounting records and noted one of the reports was not submitted timely. For our sample of four monthly reports, we were unable to trace the monthly financial reports to the underlying accounting records and noted one of the reports was not submitted timely. The reports were also prepared, reviewed and submitted by one individual. For AL No. 93.959, Substance Abuse Prevention and Treatment Block Grant, we chose a sample size of 42 payroll and 27 expense items to test for Activities Allowed or Unallowed, Allowable Costs/Cost Principles and Period of Performance. During our payroll testing, we noted no instances where HRDI was able to provide support and approval for the current pay rate in an employees’ personnel file. We noted two instances for which we did not receive a timecard. HRDI was not able to provide an indication as to which grant the employees’ salary and fringe benefits should be charged for any of our selected sample. For Cash Management, we noted that one person prepared, reviewed and submitted the vouchers. For Reporting, we sampled three financial close-out reports. We noted that the reports did not equal the underlying accounting records and that the selected reports were prepared, reviewed and submitted by one individual. HRDI indicated that no financial reports were submitted quarterly and that they were not asked to provide any quarterly reports although there was a requirement in each of the three grant agreements. We tested six quarterly performance reports and noted that two were not submitted timely. All of the selected reports were also prepared, reviewed and submitted by one individual. HRDI indicated that no close-out performance reports were submitted and that they were not asked to provide any close-out performance reports although there was a requirement in each of the three grant agreements. For AL No. 93.778, Medicaid Cluster, we chose a sample size of 43 payroll and 17 expense items to test for Activities Allowed or Unallowed, Allowable Costs/Cost Principles and Period of Performance. During our payroll testing, we noted no instances where HRDI was able to provide support and approval for the current pay rate in an employees’ personnel file. HRDI was not able to provide an indication as to which grant the employees’ salary and fringe benefits should be charged for any of our selected sample. During our expense testing, HRDI was unable to provide approval for three expenses and was unable to provide neither an invoice nor an approval for three invoices. During our expense testing, HRDI was unable to provide invoices for three selections. In addition, there was a duplicate payment. For Reporting, HRDI indicated that no statistical information reports were submitted and that they were not asked to provide any statistical information reports although there was a requirement in the grant agreement. For AL No. 21.027, Coronavirus State and Local Fiscal Recovery Funds, we chose a sample size of 24 payroll and 36 expense items to test for Activities Allowed or Unallowed, Allowable Costs/Cost Principles. During our payroll testing, we noted no instances where HRDI was able to provide support and approval for the current pay rate in an employees’ personnel file. HRDI was not able to provide an indication as to which grant the employees’ salary and fringe benefits should be charged for any of our selected sample. We noted three instances for which we did not receive a timecard. There were five instances where the department on the timecard did not match the general ledger department. For Reporting, we tested four quarterly financial reports and one financial close-out report. We noted none of the reports were submitted timely. We tested three quarterly performance reports and noted that two were not submitted timely. All of the selected reports were also prepared, reviewed and submitted by one individual. HRDI indicated that no close-out performance reports were submitted and that they were not asked to provide any close-out performance reports although there was a requirement in each of the two grant agreements. The data collection form for June 30, 2021 was not submitted timely in that it was submitted on June 29, 2023 when it was due March 31, 2022. There was no extension requested or granted for the late submission. Cause HRDI did not follow its established policies and procedures which resulted in there being a lack of appropriate documentation for its compliance with applicable federal regulations. Effect HRDI is not in compliance with the Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Cash Management, Period of Performance and Reporting requirements of the grant agreement and OMB Uniform Guidance. Questioned CostsSee scope limitation. SECTION III - FEDERAL AWARD FINDING AND QUESTIONED COSTS. Repeat Finding Yes Recommendation We recommend that HRDI implement the following: • Enforce its current specific internal control procedures to ensure compliance with applicable federal regulations. • All personnel files should have authorization and approval of current pay rates along with correspondence regarding to which grant an employees’ salary and fringe benefits should be expensed including any allocations if the employee worked on several grants. • All expenses should have proper invoices with approvals and that they be organized within HRDI’s office. • Vouchers should have all related invoices attached to them and be reconciled with the financial reporting. • All vouchers and reports should be prepared by one individual and reviewed and approved by a second individual prior to submission. There should be documentation of the review such as a sign-off or initials. • All vouchers and reports should be filed timely in accordance with the various grant agreements. • For reports that were not prepared despite their requirement in the respective grant agreements, we recommend that correspondence be received from those agencies indicating that required reports per the written grant agreements are not necessary. • The data collection form should be filed the earlier of thirty days after the report date or no later than nine months after the fiscal year-end. Views of Responsible Officials and Planned Corrective Actions See corrective action plan.

Categories

Questioned Costs Allowable Costs / Cost Principles Cash Management

Other Findings in this Audit

  • 6673 2022-001
    Material Weakness
  • 6674 2022-002
    Material Weakness
  • 6675 2022-003
    Material Weakness
  • 6676 2022-001
    Material Weakness
  • 6677 2022-002
    Material Weakness
  • 6678 2022-003
    Material Weakness
  • 6679 2022-001
    Material Weakness
  • 6680 2022-002
    Material Weakness
  • 6681 2022-003
    Material Weakness
  • 6682 2022-001
    Material Weakness Repeat
  • 6683 2022-002
    Material Weakness Repeat
  • 6684 2022-003
    Material Weakness Repeat
  • 6685 2022-001
    Material Weakness Repeat
  • 6686 2022-002
    Material Weakness Repeat
  • 6687 2022-003
    Material Weakness Repeat
  • 6688 2022-001
    Material Weakness Repeat
  • 6689 2022-002
    Material Weakness Repeat
  • 6690 2022-003
    Material Weakness Repeat
  • 6691 2022-001
    Material Weakness Repeat
  • 6692 2022-002
    Material Weakness Repeat
  • 6693 2022-003
    Material Weakness Repeat
  • 6694 2022-001
    Material Weakness Repeat
  • 6695 2022-002
    Material Weakness Repeat
  • 6696 2022-003
    Material Weakness Repeat
  • 6697 2022-001
    Material Weakness Repeat
  • 6698 2022-002
    Material Weakness Repeat
  • 6699 2022-003
    Material Weakness Repeat
  • 6700 2022-001
    Material Weakness Repeat
  • 6701 2022-002
    Material Weakness Repeat
  • 6702 2022-003
    Material Weakness Repeat
  • 6703 2022-001
    Material Weakness Repeat
  • 6704 2022-002
    Material Weakness Repeat
  • 6706 2022-001
    Material Weakness Repeat
  • 6707 2022-002
    Material Weakness Repeat
  • 6708 2022-003
    Material Weakness Repeat
  • 6709 2022-001
    Material Weakness Repeat
  • 6710 2022-002
    Material Weakness Repeat
  • 6711 2022-003
    Material Weakness Repeat
  • 583115 2022-001
    Material Weakness
  • 583116 2022-002
    Material Weakness
  • 583117 2022-003
    Material Weakness
  • 583118 2022-001
    Material Weakness
  • 583119 2022-002
    Material Weakness
  • 583120 2022-003
    Material Weakness
  • 583121 2022-001
    Material Weakness
  • 583122 2022-002
    Material Weakness
  • 583123 2022-003
    Material Weakness
  • 583124 2022-001
    Material Weakness Repeat
  • 583125 2022-002
    Material Weakness Repeat
  • 583126 2022-003
    Material Weakness Repeat
  • 583127 2022-001
    Material Weakness Repeat
  • 583128 2022-002
    Material Weakness Repeat
  • 583129 2022-003
    Material Weakness Repeat
  • 583130 2022-001
    Material Weakness Repeat
  • 583131 2022-002
    Material Weakness Repeat
  • 583132 2022-003
    Material Weakness Repeat
  • 583133 2022-001
    Material Weakness Repeat
  • 583134 2022-002
    Material Weakness Repeat
  • 583135 2022-003
    Material Weakness Repeat
  • 583136 2022-001
    Material Weakness Repeat
  • 583137 2022-002
    Material Weakness Repeat
  • 583138 2022-003
    Material Weakness Repeat
  • 583139 2022-001
    Material Weakness Repeat
  • 583140 2022-002
    Material Weakness Repeat
  • 583141 2022-003
    Material Weakness Repeat
  • 583142 2022-001
    Material Weakness Repeat
  • 583143 2022-002
    Material Weakness Repeat
  • 583144 2022-003
    Material Weakness Repeat
  • 583145 2022-001
    Material Weakness Repeat
  • 583146 2022-002
    Material Weakness Repeat
  • 583147 2022-003
    Material Weakness Repeat
  • 583148 2022-001
    Material Weakness Repeat
  • 583149 2022-002
    Material Weakness Repeat
  • 583150 2022-003
    Material Weakness Repeat
  • 583151 2022-001
    Material Weakness Repeat
  • 583152 2022-002
    Material Weakness Repeat
  • 583153 2022-003
    Material Weakness Repeat

Programs in Audit

ALN Program Name Expenditures
93.778 Medical Assistance Program $3.52M
93.958 Community Mental Health Services Block Grant $500,683
21.027 Temporary Assistance for Needy Families - Tanf Cluster $317,501
14.267 Continuum of Care - Shelter Plus Care $206,008
93.959 Substance Abuse Prevention and Treatment Block Grant $205,009
14.241 Housing Opportunities for Persons with Aids $162,701
93.558 Temporary Assistance for Needy Families - Tanf Cluster $155,260
93.667 Title Xx Block Grant $108,150
21.027 Il Opioid Sor Program $12,288